As the wood industry continues to navigate growing threats from the supply chain, talent shortage and more, it may be easy for business owners to lose sight of more common risks that threaten their operations.
This summer, we saw several notable fires at businesses across the industry. In addition to other major risk exposures, fires can not only be financially debilitating, they can also lead to temporary business shutdowns. Now is an important time for business owners at sawmills, pallet companies and other wood processors to take a long look at their operations and make sure they have the right risk mitigation practices in place.
Know Your Risk
What are these risk exposures? Here a few major ones threatening the pallet businesses:
• Forklift safety: As businesses have gotten busier, forklift safety has been an area of training that hasn’t been focused on enough. Lack of attention to detail on forklift safety can lead to significant injuries, damaged inventory and broken machinery, putting your team and business at risk. Comprehensive forklift safety training is essential for pallet businesses.
• Electrical overload: From poor wiring to utilizing extension cords that increase fire risk, electric hazards are a common cause of staff injury. Business owners should limit the use of extension cords and regularly check wiring to ensure there aren’t any clear exposures.
• Fire safety: Not too long ago, I saw a business just a few miles from my residence catch fire overnight. Heavy dust stacked up into their conveyors, motors and other equipment and combusted, torching their factory. The business was forced to shut down for a year and wasn’t properly insured, so they had to bear the brunt of these losses. Fire risk can come from a number of areas, including dust accumulation, overheated equipment, poor pallet stacking, overloaded wires or a lack of suppression systems. These factors make thorough risk management essential.
These common risk exposures may be overlooked today as business owners and operators navigate other, newer threats. They can also be exacerbated by today’s supply chain challenges. For example, we had a customer whose chipper had failed. The customer learned it would take eight months to have a new one delivered, so they rented the equipment. The rental machine was poor quality and failed. It was down for a month while the business owner waited for new parts.
With the current supply chain delays, pallet business owners need to think about additional repair and rebuild times. Even with basic repairs, we’re seeing plants have to shut down as they wait for maintenance staff to have the time and inventory to help.
Risk Mitigation
What can business owners and operators do to mitigate these risks? Pallet business owners need a comprehensive safety program to stay protected. These plans should cover housekeeping, hot work safety and preventative maintenance. Proper programs for these three disciplines can go a long way toward mitigating risk and should cover a range of topics, including:
• Enforcing a system of accountability: Staff needs to know the source of potential risk exposures so they can be addressed quickly and comprehensively. If a manager walks through and sees an issue, they need to be able to react and hold the party responsible.
• Developing a housekeeping program: Staff should be following a housekeeping program covering critical areas including pallet storage and regular dust cleaning.
Often, we see factory operations that aren’t safely storing their pallets. Finished pallets should be kept no closer than 50 feet from the building – any closer and they risk igniting and catching the building on fire.
Dust can accumulate on any equipment, flooring, inventory and more. We encourage clients to regularly clean all parts of their business, enforcing a policy of no dust thicker than a paper clip or dime. With wood dust, any excess buildup can cause a chain of explosions that could shut down operations and injure staff.
• Checking electrical equipment: We recommend annual infrared scans of electrical equipment and their main components to see what’s hot and could be a fire risk. We’ve seen businesses that haven’t regularly scanned and found equipment running at more than 400 degrees, dangerously close to causing a fire. The scan will also help identify if dust has infiltrated their equipment or if there’s anything that needs to be repaired. Based on the results, staff may need to clean, tighten or replace the equipment.
• Designating smoking areas: Pallet businesses should enforce a no smoking policy in the building. They can maintain a specific area outside of the building for smokers to use to keep this fire hazard away from ignitable material.
• Implementing suppression systems: Mobile suppression systems can go a long way toward limiting damages. We had a customer with an equipment fire without a suppression system, and they suffered an $80,000 loss due to total loss of the equipment. If they had a mobile suppression system in place, it could have resulted in much less significant damages and a loss closer to $9,000.
• Identifying a hot work area: Any operation that makes a spark should be done in a designated maintenance area separate from other welding areas. These areas should have detailed hot work tags, so staff members are completely aware of the work being done in that area and regularly reminded to practice fire safety there.
• Creating standardized safety programs: Loading and unloading forklifts is dangerous, and one of the best ways to manage this threat is to have standardized site controls and safety initiatives in place. How should they unload and load equipment? Do they have a designated spot? Does the driver stay in the cab or does he go to office? Make sure staff is aware of proper practices for shifting loads across the operation and knows the protocol for locking out equipment.
How you close a plant should also be a part of this program. We had a $10 million loss recently where an employee didn’t properly shut down their plant. Their hydraulics churned overnight which led to a total loss of building. Management failed to train the staff member on the proper way to shut down hydraulics which led to the loss.
• Practice regular maintenance: All equipment should be checked for any fire risks or potential breaks to keep operations as safe as possible.
• Proper training: Industry turnover is high right now, so employees should be trained regularly on all hazards and the steps involved to properly clean the areas they work in to reduce potential exposures and standardized site controls.
Including these steps in a fire safety plan can significantly reduce safety exposures. Of course, even with the best safety programs in place, something can go wrong at a pallet operation. Securing the right insurance coverage can keep your business protected should the worst happen. We recommend business interruption coverage and extra expense coverage, which will cover lost profit you would have earned while your operation was down and the cost to get your business back up and running.
Business owners and operators in the pallet space are facing new risk exposures every day, but they cannot afford to lose sight of the safety basics. With a proper, comprehensive safety program in place, many of these risk exposures, including fire, can be avoided. Taking the time to build out a plan can keep your business protected and ready to conquer the challenges ahead.
Safety Quiz
1. (Choose One) How often should staff be cleaning your facility for dust?
____ Once a day ____ Once a week _____ Once a month
2. Should all hot work areas be located near each other or spaced out?
_____ Yes _____ No
3. (Choose One) What is a safe distance to store pallets away from the building?
_____ 50 feet _____ 100 feet _____ 250 feet _____ 500 feet.
4. (Choose One) At minimum, how often should your business conduct an infrared survey?
_____ 1 year _____ 5 years _____ 10 years
5. How thick can dust get before it’s time to clean? ____________________
Answers: 1.) Once a day; 2.) No/Spaced out; 3.) 50 feet; 4.) 1 year; 5.) No thicker than size of a dime/paper clip.
