September 28, 2015
Is safety a key component of your growth strategy? While every manufacturer understands the value of having a safe work environment to avoid costly accidents and worker’s compensation payments, not many recognize the value of leveraging your safety efforts to grow your business.
In 1987, the newly appointed CEO of Alcoa, Paul O’Neil, began his first meeting with Wall Street analysts by announcing “I want to talk about worker safety. Every year numerous Alcoa workers are injured so badly that they miss a day of work.” The audience expected talk about profit margins, inventory levels or new markets. O’Neil stuck to the theme of worker safety and suggested if you want to know how well Alcoa is doing you should look at our safety figures. Profits did not matter as much as safety.”
Some analysts rushed to the phones to issue sell orders on Alcoa—did they get it right? No, within a year profits hit record highs and by the time O’Neil retired 13 years later the company’s net income was five times larger than when he arrived, its market capitalization had risen by $27 billion and stock prices were five times higher.
How as this possible? O’Neil created a culture of worker engagement by focusing on safety and demanding his management team respond aggressively to make Alcoa safe. The workers responded positively, first with safety suggestions, then with productivity and innovation ideas. Management was more receptive to these ideas having established better communication channels.
An Industry Example
Almost 30 years have passed since O’Neil took the reins of Alcoa but the approach is just as relevant today as it was in the 1990’s. A recent article in Plastics Technology highlighted the safety first environment that Sekisui Polymer Innovations (SPI) has worked diligently to create over the last five years. SPI executed a successful strategy to increase exports that helped the company grow; however, the additional demand also required additional capacity.
What does this have to do with safety?
For SPI, much of their increased output can be credited to safety. According to Ronn Cort, SPI COO and president, “By focusing on safety and not just speed, our employees came up with better methods to improve die and roll changes, which had the unintended impact of improving efficiency.” The increased efficiency has allowed them to keep lower in-stock inventory and still fill customer orders in five days.
So, how did SPI create their safety first culture?
First, they looked to two of their sister companies in Japan to learn more about their successful safety training. One thing that stood out to Cort was “in both places, no one is in charge of safety. Everyone is in charge of safety.” It took about nine months for employees to become engaged in the program, but the results were worth the wait. Workers began to point out safety concerns and participate in finding solutions. Employee involvement is a key component. Instead of just pointing out problems or making suggestions, employees champion an idea by collecting the information needed for a detailed explanation and help develop a solution.
SPI metrics show at dramatic improvement in safety, but also they increased capacity by 18% without changing or installing any new equipment. Cort says the capacity resulted from “looking at a 100 different things. It starts with safety, creating a culture that encourages and rewards initiative.”
Ready to Make Safety First?
Let’s discuss your how a safety culture can help you drive better business performance. Contact us to get the conversation started today! PolymerOhio Works to Accelerate Growth, Competitiveness, and Innovation in Ohio. We are a resource, connector, and collaboration builder that is committed to encouraging, expanding and supporting the polymer industry in Ohio.