The Cost Of Safety Programs

As a member of the GAWDA (formerly NWSA) Safety Committee for over 16 years, I am amazed when I hear distributors say that they cannot afford the cost of a safety compliance program or defer sending employees to training programs because of the expense. Some owners do not see safety as improving the company’s bottom line; if it does not generate revenue or reduce costs, they are not interested. Others appreciate the value of safety programs but still view safety as a cost item to be minimized.

This is backwards. Safety programs are means to preserve revenue. Last year I heard a GAWDA distributor complain that his company was disqualified from contracting with a Fortune 500 manufacturer because the distributor’s OSHA 300 record was too bad (too many small injuries). What was the cost of safety at that company?

I also hear that the infrequency of audits or enforcement actions by federal and state regulatory agencies means that some distributors might choose to overlook some compliance practices and take their chances on not receiving an audit. This is bad policy for two reasons. First, look at the actual cost of a nominal civil fine in an enforcement action. If an agency fines your company $5,000, what is the amount of increased sales necessary to recoup that fine? At a five percent profit margin, a company would need to generate an additional $100,000 in sales just to break even on the fine. That does not include the lost administrative time necessary to respond to the citation.

Second, and perhaps more important, failure to comply with government regulations may mean that a court will automatically find that a company was negligent if the noncompliance led to an injury and the company is sued. Conversely, compliance with regulations is strong evidence that a company acted reasonably in a situation, even if someone was injured.

According to a new study by the Federal Motor Carrier Safety Administration, the average total cost of an accident involving a commercial truck over 10,000 pounds GVW is $59,153 (in 2000 dollars). If there are injuries involved, the average total cost jumps to $164,730 per crash. And the average total cost of a fatal accident involving a commercial truck is $4.2 million.

Moreover, even for minor workplace injuries, the costs to a company’s productivity are staggering. According to the National Safety Council, each disabling workplace injury costs an employer about $38,000. But that figure does not include the cost to hire and train a replacement worker, or the loss of productivity because a key employee is no longer able to work.

Managers need to view safety compliance as an investment in their company’s greatest asset, their employees. Keeping employees healthy and working productively is perhaps the single largest contribution that a company can make to its bottom line.

Accidents happen for a reason, and a well-conceived safety program with daily follow-through is the best method to prevent accidents from disrupting your operations. GAWDA has state-of-the-art safety materials available for all members and a team of industry consultants who may be accessed by phone, fax or e-mail. Use these resources to ensure that your company’s operations are safe, legal and efficient.

Gases and Welding Distributors Association
Meet the Author
GAWDA Government Affairs and Human Resources Legal Consultant Richard P. Schweitzer, Esq., is president of Richard P. Schweitzer, PLLC, in Washington, D.C. Members can reach him at 202-223-3040 and at rpschweitzer@rpslegal.com.