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Speaking of Precision

Speaking of Precision is a knowledge preservation and thought leadership blog covering the precision machining industry, its materials and services. With over 36 years of hands on experience in steelmaking, manufacturing, quality, and management, Miles Free (Milo) Director of Industry Research and Technology at PMPA helps answer "How?" "With what?" and occasionally "Really?"

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Seven Indirect Costs of a Failed Safety Program

Posted April 08, 2011 8:30 AM by Milo

Indirect costs are 4 to 10 times the actual direct costs of an accident or serious OSHA violation.

Accidents don't just happen.

We all know the direct cost of a failed safety program - an accident that results in Fines, Medical Costs, Temporary Total Disability, Permanent Partial Disability, Penalty Ratings on Workers Comp, and increased Actuarial Fees.

But what are the indirect costs?

But here are 7 indirect costs to consider the next time you think that safety training isn't worth your time:

  1. Downtime
  2. Accident Investigation
  3. Additional Training
  4. Replacement Wages including benefits, pension, social security, unemployment and workers compensation premiums
  5. Production slow down
  6. Equipment damage, replacement and associated costs
  7. Miscellaneous costs such as customer perception

Indirect costs plus direct costs have been estimated to be as much as 1% of total sales.

Thats about $10,000 per $1,000,000 in Sales.

What else can you invest in today that will have such an impact on your shop's bottom line?

- James Pryor

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Editor's Note: CR4 would like to thank Milo for sharing this post, which originally appeared here.

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