Today’s manufacturing work floor is safer than ever. This is due in large part to safety advances in equipment and the increased emphasis manufacturing firms have placed on creating a strong safety culture. But injury accidents do happen, which can cost business owners hundreds of thousands of dollars per year. The extra expense to pay for injuries has a powerfully negative effect on a company’s bottom line.

The Real Cost of Workplace Injuries

It may be surprising to hear that most companies do not have a high profit margin — 3 percent is about average. Expenses take a large chunk of the income, and competition limits the amount that can be charged for outgoing products.

Each time an accident occurs, the cost of the injury must be subtracted from profits. Consider the following two examples:

• At a 5 percent profit margin, an extra $20,000 in sales is needed to compensate for a $1,000 injury.
• If the profit margin is nearer to 1 percent, an additional $100,000 of new income is necessary to maintain that profit level for the same injury.

Numbers like these add up to a lot of extra sales just to compensate for a single injury. That means that every time a worker gets hurt on the job, other employees are affected, too. Workers may need to put in extra hours to achieve necessary production levels to compensate for losses, or the company may be forced to make tough budget decisions, such as cutting hours or laying off employees.

Practice Prevention

Maintaining a strong safety culture and minimizing accidents require employees who are committed to making accident prevention a top priority. That’s why it’s important to practice good safety principles. For example, follow all safety guidelines and procedures, stay alert for unsafe working conditions and wear appropriate personal protective equipment. This will go a long way to keeping workers safe, building job security and boosting profitability.

Reach Out to a Workplace Safety Expert

To learn more about safety in the manufacturing workplace, talk to the safety professionals at VTC Insurance Group. Give us a call at 248.828.3377 or visit vtcins.com.

This blog is for informational purposes only and is not intended as legal advice.