Safety comes no cheaper overseas
Volume 23, No. 3
U.S. companies relocate their plants overseas for many reasons. They can hire workers at very low wages, such as 30 cents an hour in China. Companies don't have to pay any employee benefits. They don't have to pay foreign taxes when they export their products back to us. And, most wicked of all, they don't have to comply with safety and environmental regulations.
To an injured worker or a grieving family, the only acceptable industrial casualty figure is zero. Absolutes are rarely achieved in any human endeavor, but that is no excuse not to try. The problem is that some countries do not try as hard as others, and it is reflected in the prices we pay for goods.
According to Standard & Poor, China is in a position to overtake Japan as the largest economy in the Asia-Pacific region and become the second-largest global economy within the next five years. Yet, in 2005, about 127,000 people in China died in workplace accidents with at least 17 incidents with death tolls exceeding 30. As the country has racked up more than two decades of near double-digit annual economic growth, the number of accidents in factories and mines has also multiplied.
Some consider the Chinese injury and fatality numbers to be a low ball estimate at best. Plant managers, fearing government fines and possible closure, often pay the families of dead workers not to report deaths. Of course, a poor industrial safety record and lack of openness in reporting casualties is much harder to hide with the advent of the Internet and cell phones.
China is not alone in sacrificing safety for profit. A Finnish study states that India has an annual industrial fatality rate of 11.4 people per 100,000 workers. Overall, Asian nations excluding China and India have an average industrial accident fatality rate of 21.5 per 100,000. The study credits the U.S. with a fatality rate of 5.2 people per 100,000.
Think of American industry in terms of the immense quantities of materials processed, much of which is, in raw form, toxic, corrosive, flammable and even explosive. As prominent industrial emergency responder Dwight Williams is fond of observing, these folks "aren't making cake batter." Yet, given the enormous scale and inherent risks, the incidence of death and injury is remarkably low. U.S. Department of Labor statistics state that out of 5,702 work-related fatalities reported in 2005, only nine percent were from exposure to harmful substances and environment. Three percent were from fires and explosions. More people died at work as the result of assaults and violent acts such as homicides. Now take into consideration that of those 5,702 fatalities, only 393 were directly engaged in manufacturing. The construction business alone killed 1,186 people in 2005.
In an ordinary month, the Industrial Fire World website might list as many as 200 industrial emergencies worldwide of sufficient interest to gain press notoriety. Only 20 or so of these incidents involve fatalities. No doubt this unscientific sampling under represents the true casualty figure, but it gives us some basis for comparison.
So is the U.S. too cheap or too expensive when it comes to protecting workers? After any major industrial incident, OSHA, the Chemical Safety Board or the NTSB produces a scathing report demanding that, for example, any refinery with Type X pressure vessel be inspected and extensive revisions be made. That is their job, to look at the safety and ignore the dollars. But at some point some corporate bean counter will work the numbers and determine that making said revisions is simply too costly. The decision is made to shut down the facility and move the operation to the Third World. Goodbye jobs, hello cheaper goods.
I personally have spent much of the last two years visiting many foreign countries. Most of them are very modernized in the way that an American or any First World visitor might consider comfortable. But, at the same time, I can assure you these countries do not observe anything approaching OSHA or EPA standards, or the standards enforced by any European regulatory agency.
With regard to safety, the playing field is anything but level. That is not likely to change anytime soon. Still, with the global village continuing the shrink, it will become increasingly hard to hide the human cost behind the consumer savings. At some point, the unsafe practices of our trading competitors will catch up with them. Bad PR is not fatal in the same way as flash fires and toxic vapor, but it can significantly hurt the bottom line where most companies live.