The recession that started in December 2007 has had a major impact on the construction industry. The demand for new homes has collapsed together with the general housing market. Owners of commercial projects have put them on hold, either due to lack of financing, cash flow problems, or lack of demand for the space. Although surviving might seem like the top priority for contractors, a period of economic slowdown might be the perfect time to take steps that will plant the seeds for long-term profitability.
One step with an immediate payoff is using equipment more efficiently. Are employees making unnecessary trips up and down ladders to retrieve tools and materials? Consider using scaffolding or scissor lifts, which will allow the worker to bring all necessary materials in one trip while also keeping him safer than a ladder would.
Now might be an excellent time to review contracts with an eye toward inserting clauses to improve worksite safety. For example, you might want to require tools with safety enhancements, specific fall protection measures on scaffolding, footwear that meets a specific protection standard, or eye protection. Improved safety practices will reduce liability insurance claims and make the business more attractive to insurance companies, resulting in lower rates.
During a slow economy, you probably have downtime between projects. Use this time to think about how to improve safety on the next job. Meet with the general contractor to discuss ways to prevent accidents. Meet with the subcontractors who will bid on the work. Ask them about how they will prevent accidents from happening. Take their answers into consideration when you evaluate their bids.
Don’t forget training. A downturn affords you time you didn’t have before to train employees on safety, different types of projects (such as environmentally sensitive jobs), and more efficient work processes. When the recovery comes, you will be in a position to bid on more and different jobs and your safety practices will make you attractive to general contractors.
Together with training, consider replacing outside safety consultants with your own jobsite superintendents. Give the supers the training they need to manage worksite safety effectively. This will give you stronger supers, allow for immediate safety improvements on the job, and save money that would have been spent on consultant fees and higher insurance premiums.
Arrange meetings with the loss control professionals at your insurance company. Ask them to evaluate your worksites, provide training materials, or even to come in and discuss loss prevention with your workers.
If your safety record is already solid, talk to one of our insurance agents about changing to a loss-sensitive insurance rating plan. These plans, which normally apply to Workers Compensation insurance but can also apply to other coverages, adjust your premium based on your loss experience during the policy term. Very large contractors might want to consider a retrospective rating plan, which bases the final audit premium almost entirely on the contractor’s loss experience during the term. Contractors with sound safety practices stand to benefit enormously from this type of approach.
The economy will eventually rebound. When it does, the companies that were proactive during the slowdown will reap handsome rewards in the form of more contracts, higher revenue and greater profits. By investing in efficiency, safety and training, contractors will be poised for future growth. The economy is at a standstill; your business shouldn’t be.