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Auto Parts Manufacturing Corporation (A)1
In May 1994, David was hired as the Chief Operating Officer at Auto Parts Manufacturing Corporation (APM) in Lutesville, OH. When interviewing for the position, he was very excited about the opportunity, but then in his first week of work he was beginning to have some serious concerns.
APM manufactured motor vehicle exhaust system parts and manifolds to sell to original equipment manufacturers in the automotive industry. The president, Michael Sawyer, along with several other former managers bought the company from its founders in 1988, and the officers and directors owned 100% of the capital stock. Sales at the company had grown steadily from $11.5 million in 1988 to $23 million in 1992 to $100 million in 1994, and APM was projected to be the fourth largest privately owned company in the Lutesville area within two years. In addition to the Lutesville factory (110,000 square feet), they also had factories in Kentucky (120,000 square feet) and Saverton, OH (120,000 square feet).
While the company had been growing and prospering, some of these benefits had been achieved at the expense of the employees. In an effort to cut operating expenses and increase profits after the buy-out in 1988, the new owners fired the union employees, kept the front office staff, and started using temporary employees as the core of the workforce. At the Lutesville facility, there were about 425 employees, and 350 to 400 of these were temporary workers provided by Just-In-Time Labor. The union employees had required wages of $10-$11 per hour with insurance benefits. Temporary workers started at $5.50 per hour with no benefits but had piece-work incentive bonuses that could increase their pay level by 25 to 50%. Also, worker compensation premiums were the responsibility of the temp agencies (i.e., Just-In-Time Labor).
David was initially thrilled to join this fast growing, successful company. As he began his new job, however, he discovered that many of the temporary workers were being injured on the job (Exhibits 1-3), and one local temp service, Help When You Need It, stopped providing workers in 1990 because of the questionable safety environment.
In an attempt to determine the causes for so many injuries, David reviewed the company safety manual originally developed in November 1992 (excerpts provided in Exhibit 4). The safety program required machine guarding on all machines, including a requirement that supervisors conduct daily inspections of their production lines to ensure safety guards and devices were in place and working properly. It insisted on a detailed dress code to prevent any unnecessary exposure to hazards, and it provided for a progressive discipline program up to and including discharge for employees who violated the safety practices.
In questioning the supervisors at the site about the number of accidents, the general consensus was that the primary driver was the quality of the employees. For example, earlier in May, there was a major drug bust of employees dealing drugs primarily during the nightshift. There were many anecdotes where people would come to work in the morning and not come back in the afternoon, and several people that David talked to felt that the employees were staging accidents to collect worker compensation.
David tried to discuss this with Sawyer, the company president, but had not been able to schedule a meeting yet due to the president's busy calendar.
David contemplated what he should do next.
Exhibit 1 - Injuries by type for 1993
Exhibit 2 - Descriptions of some of the accidents in 1993
Exhibit 3 - OSHA Recordables for 1993
1993 Total # of APM/Just-In-Time Employees: 386
Rate = (LWDI x 200,000)/(386 x 2,000)
Rate = (Incident x 200,000)/(386 x 2,000)
Private Industry, 1992:
3.9 LWDI Incident Rate
8.9 OSHA Recordable Cases
All Manufacturing, 1992:
5.4 LWDI Incident Rate
12.5 OSHA Recordable Cases
Exhibit 4 - Excerpts from the APM Safety Manual
From the Introduction:
APM is fully committed to the safety of our personnel and the maintenance of a hazard free work place by controlling the potential hazards in our work areas. To achieve this goal, a safety system consisting of the Corporate Safety Officer, and an active safety committee working within each plant has been established. True safety is more than simple programs and guidelines; true safety is a philosophy, a value and above all, a type of work life behavior. At APM we are committed to "real" work life safety and full work life satisfaction.
From General Safety Practices:
2.0 DRESS CODE
To avoid unnecessary exposure to hazards, the following minimum dress standards apply to all facilities:
Working around the manufacturing operations at APM exposes you to potential abrasions, cuts, puncture wounds to the bottom of your foot or crushing injuries to your toes and upper foot. Durable, hard soled, solid toe work shoes are required because they offer the most protection. Athletic shoes are not acceptable.
In order to protect your shoulders and upper arms from cuts and abrasions or burns from manufacturing operations, it is necessary to wear shirts with sleeves. Personnel not involved with, or exposed to, any welding operation may wear short sleeve shirts or tee shirts. Personnel involved in any welding operation must wear long welding sleeves, a welding jacket, or leathers while working. A neck flap is encouraged to prevent burns to the neck and reflection burns to the face and eyes.
Tank tops, muscle shirts, mesh shirts, loose fitting tee shirts or shirts that expose the bare midriff will not be allowed while working at APM.
2.6 Disciplinary Actions
It is your individual responsibility to comply with all stated safety rules. Failure to follow these simple, commonsense rules will result in disciplinary actions up to and including dismissal in accordance with the rules outlined in paragraph 5 of this chapter.
Safety is the number one concern at APM. Disregard for developed practices and procedures will result in specific disciplinary actions being taken against the offender. These disciplinary actions are as follows:
7.0 MACHINE GUARDING POLICY
To assure operator safety while operating any piece of equipment, all machines at APM will be protected with approved guards. Under no circumstance will any one operate, or cause to be operated, any unguarded machine.
General safety training will be provided to all personnel as a condition of employment. Refresher training will be provided during the monthly general safety meetings held in the break room. Schedule will be posted in break room. Training will consist of the following:
After further research, David determined that the level of training provided to the temporary workers was woefully inadequate. Supervisors that he interviewed admitted that they only showed employees how to run a few parts on a machine and then watched them for 15 to 20 minutes. Employee interviews established that most operators had either received no training or only received 15-20 minutes of "hands-on" training by a supervisor. Even Sawyer, APM's president, told the Lutesville Town Crier, that "We train like crazy for a time and then we get caught in a spurt of growth and we don't have time to train again." For reference, the Occupational Safety and Health Administration (OSHA) recommended 8 hours to 2 weeks of training for the metal-working industry, depending on the complexity of the equipment and the operator's experience. In addition, the turnover of employees at APM was a problem. Between August 1993 and June 1994, Just-In-Time Labor needed to provide the company with 1,500 temporary employees to maintain employment levels around 350 to 400.
Before David could do anything to remediate this situation, in June 1994, OSHA initiated a comprehensive safety inspection of the factory as a result of the high rate of injuries occurring at the establishment. In addition, a health inspection occurred based on a referral regarding noise in the plant and inadequate ventilation for welders. The investigation was the result of a referral that the Cincinnati area office of OSHA received on May 26, 1994 from a doctor at St. Luke's, the local hospital. The doctor was concerned about the number of injuries and stated that the hospital had been treating 2-6 people a day with injuries from APM.
On December 12, 1994, OSHA imposed four willful violations with $120,000 in proposed fines for inadequate injury and illness recordkeeping. In February 1995, OSHA imposed an additional $1.205 million in proposed fines for willful violations in which the company allegedly intentionally ignored OSHA regulations, and $52,500 in proposed fines for serious violations where a serious violation is defined as "a situation in which there is substantial probability that death or serious physical harm could result and the employer knew or should have known of the hazard."
The willful violations addressed the company's alleged failure to train employees on the safe operation of equipment, to provide fall protection and to adequately guard points of operation on numerous pieces of equipment. (In the case of fall protection, employees were trained by a foreman to crawl on top of storage boxes to check for inventory with no fall protection in use). The company was also accused of failing to provide a safe means of egress, an effective hearing conservation program, arm and hand protection, and personal protective equipment. Serious violations included permitting machines to operate without proper safety guards, storing unlabeled containers on site and failing to maintain electrical equipment. Exhibit 5 provides a list of the deficiencies found during the inspection.
Reviewing the historical injury data, APM represented 7 lost workday cases with 57 recordable injuries for 1993. Records verification by OSHA revealed at a minimum, 67 lost workday cases with 160 recordable injuries for 1993. For January-June 1994, APM represented 23 lost workday cases with 45 recordable injuries. Records verification revealed at a minimum, 211 lost workday cases with 290 recordable injuries through December 21, 1994. Thus, updated information for January 1993 to December 21, 1994 showed 450 injuries including 9 amputations, 54 smashed injuries, 16 broken bones, 73 lacerations, 37 back injuries, and 56 flash burns.
David was perplexed as to how the situation could have gotten so bad and was wondering what he should do next.
Exhibit 5 - Deficiencies found during the inspection
The OSHA investigation provided some opinions to causes of the situation. For example, the OSHA Area director notified APM in a written letter dated in February of 1994:
The outcome of the problem was that in October 1995, APM agreed to be acquired by a larger automotive supplier. The reason widely reported was "access to sorely needed capital." In a follow-up OSHA inspection in August 1996 to check the machine guarding, of the problem machines cited earlier, eleven machines had guards installed and twenty-two machines were removed from service. In 1997, under new management, the former APM factory had a total recordable rate of 9.79 and a lost work day injury and illness rate of 1.09 including a 12-month period with no lost time injuries.
While David is a fictional character, you may find it interesting to ask students how they would feel if they found themselves in a similar situation, i.e., should a well-intentioned manager go to work for a rogue company in order to improve conditions or refuse to do so?
You may want to discuss what kind of commitments David would need to receive from the president in order to stay.
Key issues to draw attention to:
1This case is based on publicly available information regarding the events that occurred up to 1996 at a company in Ohio. The names of all companies, individuals and locations have been changed, but background documentation supporting this case study is available for review at OSHA by request. This case was prepared as part of an Alliance between Georgetown University's Center for Business and Public Policy, OSHA, and Abbott. Participation in an Alliance does not constitute an endorsement of any specific party or any party's products or services. This case was prepared as the basis for class discussion in the "The Business Case for Safety." No one from any of the companies was contacted, and the decision maker and his associated thoughts and actions are fictionalized.
2LWDI rates have since been replaced by Days Away, Restricted, Transferred (DART). This change was made to improve the information collected about the incidence of occupational injuries and illnesses.
Page last updated: 02/18/2010