June 5, 2015
Safety Should Not Take a Back Seat in Tough Economic Times
Written by: EHS Insight Staff
As world economies bubble and burst, and as oil prices continue to fall, experts are increasingly worried that major companies will begin to cut corners on safety procedures. While these cuts may not seem drastic in isolation, they can create a chain of events that leads to profit loss, environmental harm, and even casualties.
As Oil Prices Run Low, Will Companies Cut Corners on Safety?
As oil prices continue to plummet, fears amount that companies will begin cutting corners on safety procedures, equipment maintenance, and workforce skills competency. These fears are not unfounded: the Deepwater Horizon explosion and subsequent oil spill in 2011 was the result of a long series of cost-cutting decisions.
Today, BP and other energy giants are more aware of the financial and reputational risks of another disaster like Deepwater Horizon. In theory this is reassuring, however, ordering cuts during a slow period will continue to happen. While regulations aim to keep companies in line, many of the mistakes being made are often overlooked until it's too late.
Energy companies are far from the only culprits. In 2013, a Montreal train company was under scrutiny after a "single-man" policy lead to a derailment. A policy of having only one man operate the train came into place after the company was acquired 10 years prior, in order to cut down on employee costs. This accident lead to nearly 50 deaths and millions of dollars in property damage.
Everything's OK Until It’s Not
When a major disaster occurs, it's always easy to point out the warning signs that could have prevented or minimized the event. Japan's Fukushima nuclear disaster is one of the most recent examples where, looking back, the writing was on the wall.
The cutting of corners and costs began in 1976, when a major electric utility began falsifying records related to design safety. It continued up to 2008 when corporate and facility staff ignored warnings of an impending tsunami that could compromise the area. In isolation, each design flaw and manipulated result was allowed in order to save money. In the end, each of these allowed the facility to be compromised which lead to not only a severe loss of profits, but mass destruction and a long-term negative health effect on the surrounding area.
This last point about profits is not to undermine the human loss caused by Fukushima's destruction. The landscape around the site and its people suffered the most; however, companies looking to save on expenses in the future should recognize that it’s more efficient to avoid a disaster than it is to make reparations after the fact. Had the utility provider paid for upgrades when necessary, and their staff been trained to full competency, they may not have had to ask for $137 billion in bailouts after the disaster.
Moving forward, the hope is that companies can be vigilant in not compromising these best practices during economic downturns. Efforts to streamline and enhance efficiency don’t imply that corners can be cut or participation in safety measures dropped. Responsible activity depends on cooperation and collaboration between companies and their operational workforce.
