Protect your bottom line with safety investments

May 22, 2017 By    

Photo credit: Foter.com

As costs related to safety escalate, it’s time to evaluate and measure safety costs as an investment in profitable results.

The costs involved in maintaining a safe business include the cost of employee training, safe equipment, management to monitor and inspect process compliance, insurance, claims, consumer training and the education of emergency personnel.

Speaking of costs, the United Airlines incident involving a passenger being forcibly removed from a flight illustrates the out-of-balance cost of doing business when things go wrong. In hindsight, everyone shares opinions on negative actions and less costly solutions. Costly after-the-fact speculations are common with propane accidents, as well.

Many operations personnel are reluctant to discuss the cost of safety. Yet the truth remains that all suppliers, manufacturers and marketers co-opt exposures and ultimately share the cost of safety and liabilities incurred. In theory, those costs are ultimately borne by the consumer in the form of product cost, assuming the individual stakeholders are still in business.

When stakeholders are not invested in comprehensive compliance, the cost of safety can be staggering. Post-accident hindsight always shines a light on training, code compliance, accident prevention efforts, adequate warning material and product safety. I recommend that all stakeholders learn to look at the cost of safety as an investment in protecting the golden goose.

Consumer safety compliance can be a factor, but getting consumers to buy into their stake in the safety process can be a hard row to hoe. Some do not want to pay for the cost of doing things safely and may subterfuge the safety of their own propane systems through unauthorized and untrained work.

The propane industry is blessed with a wealth of safety training and educational materials that are readily available to propane marketers and consumers alike. The original industry investment in generating these materials is a cost wasted if marketers fail to use the products for the end to which they were designed: to facilitate safe and profitable propane operations.

Numerous insurance companies, industry educators and trainers offer marketer insight on loss control, how to comply with codes and best practice techniques. Yet some marketers fail to embrace valuable insight on the perils of safety ignorance, code ignorance, associated liabilities and costs.

To some marketers, accidents are always the result of bad luck and outside influence. While those factors may contribute, thousands of accidents are prevented each year by propane safety education efforts directed at industry employees and consumers. In that light, no news is safe news.

The Propane Education & Research Council (PERC) poured millions of dollars into safety programs and educational processes designed to help marketers comply with CETP safety training, regulation education, consumer education and safe practices. In part, both gallon assessments and volunteer industry members who contribute their time and knowledge to the generation of these training and safety promotion products pay for the cost of safety.

One safety-related cost is the cost of insurance. A marketer friend of mine recently sent me an old article from the 1950s about his grandfather’s propane company. According to the article, it seems his grandfather’s company had experienced a string of serious accidents that increased insurance costs by 230 percent. The company designed an eight-point safety plan to address exposures that had caused accidents.

Just a few years later, those efforts paid off and premiums came down below the company’s costs prior to the increase. The company’s investment in the cost of safety resulted in a cost reduction in operations. Without that investment, operational costs may have continued to skyrocket.

That message is as true today as it was three generations ago.

At your next management or employee safety meeting, spend some time discussing safety as to whether it is a cost, an investment or both. Make an effort to review PERC-generated marketer and consumer education tools, industry supplier provided training and other outsource training tools at your disposal.

Plan to achieve profitable results through safety education and view that expense as an investment in reducing the cost of safety for all industry stakeholders.


Jay Johnston is an insurance executive, safety management consultant and motivational safety speaker in the propane industry. He can be reached at jay@thesafetyleader.com or 612-802-0663.

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