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A Year of Opportunity for U.S. Manufacturers

2018 will present both challenges and opportunities for U.S. manufacturers.
By: | February 1, 2018 • 5 min read

2018 is shaping up to be a year of historic shift for U.S. manufacturing. Tax reform, favorable regulatory changes, advances in industrial technology, and an improving economy and unemployment rate all present opportunities for organic growth.

“Many manufacturers expect to increase sales in 2018, both domestically and abroad,” said Stacie Graham, Senior Vice President and General Manager, National Insurance, Central Division, for Liberty Mutual Insurance. “Recent tax and regulatory changes in particular present opportunities to increase exports to international markets.”

But there are persistent operational challenges that could block manufacturers from seizing these opportunities. An industry-wide talent shortage and skills gap hinder growth potential for U.S manufacturers. To overcome them, apprenticeships and efficiency tools like co-bots could be the way forward.

Talent and Skills Shortfall

According to a 2017 report by Deloitte and The Manufacturing Institute, the U.S. manufacturing industry could be short by about two million workers over the 2015–2025 period.

“The labor participation rate will continue to drop through 2026 according to the Bureau of Labor Statistics. This shift is largely driven by aging workers who are retiring—and there isn’t enough new talent in the pipeline to replace them,” Graham said.

The manufacturing sector — like many others– needs to invest more in attracting and training talent. Some of the difficulty could stem from what Graham called an “image problem.”

“There’s a perception that manufacturing is not a viable career path, because automation is taking over, or because it’s dangerous, or simply because many jobs on the factory floor seem repetitive,” she said. Less than five in 10 Americans surveyed by Deloitte believe manufacturing jobs are interesting, rewarding, clean, safe, stable, or secure.

The increasingly technical nature of manufacturing work may also present challenges, as potential job candidates may not have the right skills.

Manufacturers are feeling the pinch. In a recent survey by the National Association of Manufacturers, companies indicated that attracting and maintaining a quality workforce is a top challenge.

Now is the time for manufacturers to address these operational challenges so they can be successful in the long term.

Bridging the Gap

When it comes to training new skills, earlier is better for both employees and businesses. Manufacturers that invest in apprenticeship programs targeting younger applicants can help to teach the necessary skills to a pool of talent early in their career journeys.

For example, Germany adopted an apprenticeship model in the mid-2000s, which helped decrease the youth unemployment rate from a high of 15.9 percent in 2005 to 6.6 percent in 2017. In the U.S., the youth unemployment rate reached 10.1 percent in 2017.

“There is a big opportunity to tap into that pool,” Graham said. “And if apprentices have good experiences, they’ll spread the word among their peers, helping to cultivate a continuing pipeline of talent.”

Talent development and training may not completely bridge the gap created by a mass exodus of retirees, and that’s where collaborative robots —or co-bots — come into play.

Co-bots: 5 Key Areas to Address

As the name suggests, co-bots work alongside human workers, not replace them entirely.

By performing tasks that pose ergonomic or other safety risks to employees, co-bots can free up employees for higher-level thinking tasks like quality control or the actual programming of co-bots.

“Co-bots boost worker efficiency and can reduce the total number of employees on the floor,” Graham said, but they don’t come without their own challenges.

Brokers can play a key role in helping their clients take advantage of the efficiency gains promised by co-bots while mitigating the risks.  Here are five areas brokers should address with their clients to help them effectively implement co-bot technology:

  1. Safety: Have you conducted a risk assessment to make sure employees know how to safely operate and work side-by-side with co-bots? Using co-bots correctly should reduce workers’ exposures to more dangerous tasks, but misuse could place employees in harm’s way.
  2. Product Liability: Are co-bots producing materials of consistent quality? If programmed incorrectly, co-bots could produce faulty work that increases product liability exposure.
  3. Contract Language: Have you consulted with legal counsel to put contracts in place among the co-bot manufacturer, programmer, and end user to assign liability appropriately should machinery fail?
  4. Contingency Planning: Is there a backup plan if the factory loses power? Are you able to quickly repair or procure co-bot machinery if needed?
  5. Insurance Coverage: Do you have appropriate coverage limits on property, equipment breakdown, business interruption, and operational replacement costs to account for changes to your operation?

The Right Risk Partner

The right insurer can help brokers address these areas and help their clients take advantage of the business opportunities ahead.

Liberty Mutual’s team of risk control consultants can help create company-specific safety checklists to help ensure that co-bots don’t present a bigger threat than opportunity.

“Members of our risk control team specialize in manufacturing. They sit on health and safety committees and take part in discussions about standards for industrial robots and co-bots,” Graham said. “They help ensure we’re keeping up with industry changes so we can provide the right guidance.”

Industry-specific expertise is complemented by broad range of coverages, from standard to E&S lines, offered by Liberty Mutual and Ironshore, now a Liberty Mutual company.

“We have such a wide breadth of products available for manufacturers, from small and mid-size to very large. Whether it’s a guaranteed cost policy or a loss responsive policy, we can build a program that makes the most sense for that company,” Graham said.

Liberty Mutual also offers specific endorsements for industrial equipment, metal, plastics, and food manufacturers, including commercial general liability enhancements and E&O coverage claims-made and defense within limits.

“Our job is to make it easy for brokers to find the right mix of coverage and services their clients need to be successful. “We’re able to do that with our risk control resources and flexibility in building program structures that work.”

To learn more, visit https://business.libertymutualgroup.com/business-insurance/industries/manufacturers-insurance-coverage.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.




Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty and workers compensation.

More from Risk & Insurance

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4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]