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Tight market threatens industry’s safety

Sean Ryan

Safety is taking a back seat to price in 2009 as contractors cut costs to stay alive in a market often ruled by low bids.

“That poses probably one of the biggest challenges we have,” said Gert Grohmann, education director for the Associated General Contractors of Greater Milwaukee, “because the tighter things get economically and the tighter the bidding becomes, the tighter it is to spend time on safety.”

The trend threatens to reverse positive strides in the national construction industry, which last year slashed the number of worker fatalities on private projects. In 2008, 969 construction workers died on private projects in the U.S., a 20 percent drop from the 1,204 deaths in 2007, according to a U.S. Bureau of Labor Statistics report (PDF) released Thursday.

The improvement, Grohmann said, stemmed from fewer projects in 2008 and construction company safety programs that focused on common causes of fatal injuries. Private owners over the years also placed more safety requirements on contracts, he said.

But safety programs could feel the pinch as low bids replace negotiated contracts on private work, he said.
Some contractors, though, resist the temptation.

“That’s where some contractors will cut corners on safety,” said Kevin Sandkuhler, safety director for Hunzinger Construction Co., Brookfield.

Hunzinger worked only on negotiated contracts about five years ago, but now about 40 percent of the company’s private-sector work is competitive, low-bid projects, he said. So Sandkuhler teaches Hunzinger’s job superintendents to do safety inspections on projects to eliminate the bidding cost of a full-time safety manager.

If the company’s safety program would remove the company from competition for a project, Hunzinger simply avoids bidding on the project, he said.

Safety gets short shrift when owners consider only price when awarding contracts, Grohmann said. Good safety programs prevent extra expenses after a project begins but do not lower bidding prices, he said.

But some owners still set safety requirements when seeking low bids for contracts, and in those cases, it works against builders with meager safety programs, said Bruce Goranson, safety director for VJS Construction Services Inc., Pewaukee.

“I think the contractors that have a high priority of safety are able to bid lower because they know how to do it,” he said.

VJS uses the same policies regardless of whether owners have safety rules on contracts, and the contractor only hires subcontractors that satisfy thresholds for workers’ compensation experience modification rates and Occupational Safety and Health Administration history.

“We always want to work with an owner that has safety as a high priority,” Goranson said. “That just makes the process better.

“But, because of the economy, we have to go after everything. We’re not going to negotiate safety out.”

Grohmann said it is difficult forecast 2009’s fatality rates, but the final tally could reflect the cuts some businesses make in a competitive market.

“I think,” he said, “that you will continue to see the tension between the investment in safety and really tight bottom lines.”

One comment

  1. To use a couple of familiar quotes to show the problems that can arise when safety is cut back: “Pay me now or pay me later,” and “Penny wise and pound foolish.” Safety is not a cost. Safety is a cost control.

    In a tight money market, failure to control the costs of accidents and injuries will greatly exceed the cost of an effective safety program managed by competent safety management.

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