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Workers’ Compensation for Manufacturing – Changes on the Horizon

Post written by: Danny Ramsey

shutterstock_165341840The United States is once again a “rising star” of global manufacturing thanks to falling domestic natural gas prices, rising worker productivity and a lack of upward wage pressure, according to a recent report by the Boston Consulting Group.

The report found that while China remains the world’s No. 1 country in terms of manufacturing competitiveness, its position is “under pressure” as a result of rising labor and transportation costs and lagging productivity growth. Meanwhile, the United States has lost nearly 7.5 million industrial jobs since employment in the sector peaked in 1979 as manufacturers shipped production to low-cost countries. Despite this fact, the U.S. is now No. 2 in terms of overall competitiveness, BCG found. The biggest factor driving the U.S. rebound, according to BCG: cheap natural gas prices, which have tumbled 50 percent during the last decade because of the shale gas revolution.

What else is driving this competitive growth?

Also contributing to the country’s attractiveness, according to BCG, is stable wage growth. “The trend is great for the U.S. economy,” said Maine Employers’ Mutual Insurance Company President and CEO John T. Leonard. But Leonard also sees some challenges ahead for the workers’ comp line because of new workers entering into the manufacturing process.

For most manufacturers, there is an elevated potential for an upsurge in claims frequency, brought on by the expansion of manufacturing due in part to the new workers. The growth expected in the manufacturing sector also has the potential to advance a relaxed prospective for safety, further overstraining workers’ compensation costs from the influx of new and perhaps untrained workers.

While the rise in manufacturing will lead to higher loss costs for workers’ comp due to the increased exposures that come with more workers, a future with higher-educated workers in manufacturing could result in fewer injuries overall.

According to Santa Monica, California-based physician, Dr. Dina Kiseleva, “When people feel appreciated, their job satisfaction skyrockets.”

Is there any indication that the manufacturing industry will be more focused on employees that are better educated and are more motivated?

Many business leaders realize that manufacturing is the future, and have invested in technical trade schools that develop students with advanced technology skills suitable for tomorrow’s manufacturing jobs. Manufacturing in the U.S. means advanced technology. Now, vocational high schools are popping up across the country with high-tech programs that cater to advanced manufacturing concepts. That means a “better educated workforce, which optimistically could mean fewer workers’ compensation losses.

Along with a better educated workforce, one area of the workers’ compensation system experiencing a surge during the past 30 years appears to be the change in workplace safety.

What are the challenges ahead for the workers’ comp line?

Manufacturing of all types will need to perform a cost-benefit analysis on whether to implement or not to implement workplace safety programs. Some very straightforward questions will need to be addressed:

  • What impact will new machinery have on production and will it affect my ultimate cost in the long term?
  • Will a new incentive program outweigh a day care program?
  • Will my insurance company realize my commitment to change and will my renewal premium contemplate the expected reduction in future losses; will they reward me?
  • Should I implement Comp-As-You-Go, (a payroll-based payment method) online billing or both?

 

 

Sources:

  • Boston Consulting Group
  • U.S. Bureau of Labor Statistics, U.S Department of Labor
  • The MEMIC Group includes MEMIC Indemnity Company, MEMIC Casualty Company, and parent company Maine Employers’ Mutual Insurance Company; all rated “A” (Excellent) by A.M. Best.

One Response to Workers’ Compensation for Manufacturing – Changes on the Horizon

  1. Stu Fyne says:

    Great information and nice article

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