September 2003 AGGMAN Management

Creating a New Safety Culture

An Alabama producer finds that improving its risk management program yields better insurance rates.

By J. Samuel Denney

Sam Denney, risk manager for Blount Springs Materials Co., teaches a Part 46 training class.

Mining is a tough business. It’s hard manual labor with little automation of the various traditional labor positions. Finding the “right” person to decide to make it a life long career is difficult, if not down right impossible, to do. Finding someone to work eight- to 12-hour days in a mine during the month of August in Alabama is difficult at best.
But, the hardest part of any risk manager’s job is controlling work-related accidents and making sure the company is adequately protected against catastrophic loss as the result of any accident. However, with the ever changing legal climate, regulatory compliance with various agencies, and a difficult insurance market since 911, the role of the risk manager has changed from that of five years ago.
Risk managers must now be willing to think outside of the traditional box of risk financing options and develop new paradigms toward loss reduction and hazard control. At Blount Springs Materials, we have taken on the task of developing a new risk management paradigm to help us control rising insurance cost, medical cost, and accident severity and frequency. Have we been successful in our efforts to control these cost? We have made a good beginning!
Two and a half years ago, the management team at Blount Springs Materials Co. established a set of goals to reduce controllable operations costs, including the following:

Educate middle management about their individual roles in risk reduction;
Employ well qualified people to oversee each of our operational districts;
Create a workable safety plan and disseminate it to field services;
Convince our insurers of our commitment to risk reduction and claims cost control; and
Monitor our results quarterly.

Organizational changes
How did we implement these goals? At the beginning, there was a group of four middle managers responsible for our surface mining operations and one mine superintendent. During a meeting with them, executive management made it clear that if, as managers, we couldn’t control on-the-job accidents, the company would be unable to obtain insurance at a reasonable rate. This could quite possibly cause the elimination/reduction of some of our operations.
As an incentive for the supervisors, a $4,000 safety bonus was also instituted. It was monitored quarterly with a bonus penalty imposed if a supervisor’s mine site had accidents of any nature or didn’t maintain its assigned equipment in a safe working condition at all times. Almost immediately, supervisors began to control workplace hazards. Since we began the program, attrition has been the remedy for those supervisors who either didn’t want to change or who couldn’t change to keep up with the new paradigm.
As the company began to grow, qualified professionals were recruited for the positions of mine manager superintendent. This new management layer was well trained in terms of academic background and previous work experience. As an incentive, risk control was made a part of the mine superintendent’s annual performance evaluation.

Customized safety training
A written safety plan was created for the company. It is similar to any other safety and health plan developed under Part 46, but includes a few unique items designed to help us control accidents.
First, there is the safety bonus. Every field services employee is eligible for the “Worksafe Bonus” after 12 continuous accident-free months of employment with the company. This bonus is either an extra day of paid vacation or an extra day of pay in lieu of a vacation day. It accrues for up to five years. This means that if an employee works accident-free for five years, they are eligible for an extra five days of paid vacation per year in addition to their regular week.
A second item unique to our safety program is that all employees are tested on the content of the program to ensure every employee reads and understands the company’s various policies.
Additionally, we contract with occupational physicians located close to our mining operations. This allows us a degree of control over the all-important first medical following an accident. Our occupational physicians have been to our mine sites and received Part 46 training. Each of them understands the work and the need to return our miners back to a productive capacity as quickly as possible. This allows us to have a very aggressive return-to-work program. Light duty work is provided for any miner who is injured.

Improved insurance rates
In the early stages of this risk management program, our insurance company was skeptical that we could make such dramatic changes in the overall culture. At renewal, however, one of the country’s largest commercial property and casualty insurance companies liked what they heard from us. Prior to accepting coverage, we initiated a team meeting between the executive management of Blount Springs Materials, the insurance broker and its claims department, and the insurance company’s underwriter and claims representative. The purpose of this meeting was to make everyone aware of our commitment to risk management and what our expectations were of our insurance carrier. It was understood that the company would be extremely pro-active in our overall approach to risk management and claims controls.
Since that initial meeting we have monitored our progress. The results speak for themselves. After 911, when the insurance industry went into a tailspin and the market hardened, we were able to renew our overall primary package with only a 9.5-percent increase compared to others in our industry experiencing 50 percent or more in premium increases. Our overall claims frequency and severity for all insurance coverage lines has dramatically decreased as the result of our efforts. Workplace safety has improved with our operations experiencing more than 800 days without a lost-time, work-related injury.
The company’s relationship with the Mine Safety and Health Administration (MSHA) also has improved. Over the last two years, our number and severity of MSHA citations has dramatically decreased as well as the amount of civil penalties assessed for each citation. We now welcome MSHA inspection visits and encourage MSHA representatives to participate in our miner and vendor training programs.
Our approach to risk management is now beyond the scope of simple risk financing. It involves a new business culture. A culture that actively seeks out workplace hazards and corrects those hazards as they are found.

Miner Donald Nelson participates in task training new safety associate Mark Dickie.

J. Samuel Denney is risk manager for Blount Springs Materials Co., Cullman, Ala.

News Across the Nation

Compiled by Angie Moehlman

Aggregate issues

Aurora, Colo.—According to The Denver Post, the city of Aurora approved a plan to pay up to $30 million to buy gravel pits along the South Platte River that could store up to 10,000 acre-feet of water. Aurora will pay $3,000 per acre-foot of storage capacity for Aggregate Industries to excavate and line the pits. Under a contract, Aggregate Industries will develop one pit that can hold 2,250 acre-feet of water, with a completion date scheduled in 2009. The second pit is scheduled to be completed in 2014, and will have a storage capacity of 1,800 acre-feet.

Santa Fe, N.M.—According to the Santa Fe New Mexican, San Miguel County commissioners recently approved new administrative fees for sand and gravel mining operations. Anyone who wants to open a sand and gravel mining operation in San Miguel County will pay a minimum of $7,842 in order to make it through the permit process. The fees are considered an amendment to the county’s existing sand and gravel mining ordinance.

Springfield, Ill.—According to the Associated Press, the Illinois Association of Aggregate Producers sued the state of Illinois over new NPDES fees. Annual permits for each mine site now cost $5,000 to pump groundwater and $500 to discharge stormwater. The owners of quarries and gravel pits have to get the permits in order to pump rainwater and groundwater out of their aggregate mines, and they feel that they will have to pay exorbitant amounts in annual fees for each of their many locations. The group states the fees are “an unreasonable and excessive tax” that violates parts of the Illinois Constitution. The lawsuit names the state Environmental Protection Agency and the state treasurer. Aggregate producers paid the fees under protest; however, the money is being held in escrow until the legal dispute is resolved.

Permitting Scoreboard

Tabernacle, N.J.—According to the Courier-Post, Superior Court Assignment Judge John Sweeney ordered the Tabernacle Land Development Board to approve a permit and site plan for Lake Sand and Gravel Co.

Cromwell, Conn.—According to the Hartford Courant, members of the planning and zoning commission recently amended Cromwell’s zoning regulations to prohibit sand and gravel mining operations in residential areas of town. The commission approved the amendment with a vote of 6 to 3. Millane Nurseries applied for a sand and gravel operation on a portion of the company’s 54-acre tract. Millane is suing Cromwell’s planning and zoning and inland wetlands commissions, appealing those agencies’ rejection of Millane’s application for the mining operation. Millane may also appeal the zoning amendment banning sand and gravel mining.

Martinsville, Ind.—According to The Indianapolis Star, Rockmakers, Lebanon, Ind., is proposing a sand and gravel mine on 352 acres. The site is about a mile south of Martinsville but is within the city’s buffer zone for planning. Martinsville’s Plan Commission earlier voted in favor of the operation, but objections to the operation are coming in the form of a petition signed by 60 of the 70 homeowners of the Legendary Hills subdivision. The Martinsville Board of Zoning Appeals voted 4-0 in July to reject Rockmakers’ request for zoning exceptions to operate the mine in an area zoned for agriculture. Rockmakers officials plan to appeal in court the Martinsville’s Board of Zoning Appeals’ decision.

Olympia, Wash.—According to The Olympian, Thurston County commissioners will consider an appeal made by the Black Hills Audubon Society of a recent decision by the county hearings examiner to approve the Quality Rock Products project. Quality Rock wishes to expand its gravel mine from 26 acres to 151 acres, build an asphalt plant, and reopen a concrete plant. The project has been studied in depth to determine the plant’s effect on the ecosystem, including wetlands, wildlife, groundwater, and traffic and air quality. The project was twice approved by the county hearings examiner, but the Audubon Society appealed the decision to the Thurston County Board of Commissioners, citing concerns about the project’s impact on the nearby Black Hills National Wildlife Refuge.

State Funding Status
Phoenix—According to The Bond Buyer, Maricopa County recently approved a 20-year, $16 billion plan to build and expand freeways while moving ahead with a $1 billion light-rail project.

Madison, Wis.—According to the Associated Press, Governor Jim Doyle borrowed heavily from the state’s transportation fund to cover the cost of his budget vetoes. The fiscal changes Doyle made to the Legislature’s budget include taking $100 million from the transportation fund that Republican legislators wanted to use for highway projects and putting it into the general fund, and also using $37.6 million from the transportation fund, rather than the general fund, to pay off interest payments on bonds used for highway projects.

Riverside, Calif.—According to the Press Enterprise, rebuilding the interchange at Interstate 215 and Highways 60 and 91 may require Riverside County to come up with more money for the project to commence. In May, the Riverside County Transportation Commission proposed a financing plan for the interchange project that includes $35 million contributed by the state as a partial match for federal aid. A month later, the commission agreed to cover $7.5 million of the project, with the state responsible for the rest. Now, with the state’s road-improvement fund depleted, the county may have to come up with the entire $35 million in order to keep the interchange project on schedule.

September 2003 Management Creating a New Safety Culture News Across the Nation State Contract Activity				Creating a New Safety Culture An Alabama producer finds that improving its risk management program yields better insurance rates. By J. Samuel Denney Sam Denney, risk manager for Blount Springs Materials Co., teaches a Part 46 training class. Mining is a tough business. It’s hard manual labor with little automation of the various traditional labor positions. Finding the “right” person to decide to make it a life long career is difficult, if not down right impossible, to do. Finding someone to work eight- to 12-hour days in a mine during the month of August in Alabama is difficult at best. But, the hardest part of any risk manager’s job is controlling work-related accidents and making sure the company is adequately protected against catastrophic loss as the result of any accident. However, with the ever changing legal climate, regulatory compliance with various agencies, and a difficult insurance market since 911, the role of the risk manager has changed from that of five years ago. Risk managers must now be willing to think outside of the traditional box of risk financing options and develop new paradigms toward loss reduction and hazard control. At Blount Springs Materials, we have taken on the task of developing a new risk management paradigm to help us control rising insurance cost, medical cost, and accident severity and frequency. Have we been successful in our efforts to control these cost? We have made a good beginning! Two and a half years ago, the management team at Blount Springs Materials Co. established a set of goals to reduce controllable operations costs, including the following: Educate middle management about their individual roles in risk reduction; Employ well qualified people to oversee each of our operational districts; Create a workable safety plan and disseminate it to field services; Convince our insurers of our commitment to risk reduction and claims cost control; and Monitor our results quarterly. Organizational changes How did we implement these goals? At the beginning, there was a group of four middle managers responsible for our surface mining operations and one mine superintendent. During a meeting with them, executive management made it clear that if, as managers, we couldn’t control on-the-job accidents, the company would be unable to obtain insurance at a reasonable rate. This could quite possibly cause the elimination/reduction of some of our operations. As an incentive for the supervisors, a $4,000 safety bonus was also instituted. It was monitored quarterly with a bonus penalty imposed if a supervisor’s mine site had accidents of any nature or didn’t maintain its assigned equipment in a safe working condition at all times. Almost immediately, supervisors began to control workplace hazards. Since we began the program, attrition has been the remedy for those supervisors who either didn’t want to change or who couldn’t change to keep up with the new paradigm. As the company began to grow, qualified professionals were recruited for the positions of mine manager superintendent. This new management layer was well trained in terms of academic background and previous work experience. As an incentive, risk control was made a part of the mine superintendent’s annual performance evaluation. Customized safety training A written safety plan was created for the company. It is similar to any other safety and health plan developed under Part 46, but includes a few unique items designed to help us control accidents. First, there is the safety bonus. Every field services employee is eligible for the “Worksafe Bonus” after 12 continuous accident-free months of employment with the company. This bonus is either an extra day of paid vacation or an extra day of pay in lieu of a vacation day. It accrues for up to five years. This means that if an employee works accident-free for five years, they are eligible for an extra five days of paid vacation per year in addition to their regular week. A second item unique to our safety program is that all employees are tested on the content of the program to ensure every employee reads and understands the company’s various policies. Additionally, we contract with occupational physicians located close to our mining operations. This allows us a degree of control over the all-important first medical following an accident. Our occupational physicians have been to our mine sites and received Part 46 training. Each of them understands the work and the need to return our miners back to a productive capacity as quickly as possible. This allows us to have a very aggressive return-to-work program. Light duty work is provided for any miner who is injured. Improved insurance rates In the early stages of this risk management program, our insurance company was skeptical that we could make such dramatic changes in the overall culture. At renewal, however, one of the country’s largest commercial property and casualty insurance companies liked what they heard from us. Prior to accepting coverage, we initiated a team meeting between the executive management of Blount Springs Materials, the insurance broker and its claims department, and the insurance company’s underwriter and claims representative. The purpose of this meeting was to make everyone aware of our commitment to risk management and what our expectations were of our insurance carrier. It was understood that the company would be extremely pro-active in our overall approach to risk management and claims controls. Since that initial meeting we have monitored our progress. The results speak for themselves. After 911, when the insurance industry went into a tailspin and the market hardened, we were able to renew our overall primary package with only a 9.5-percent increase compared to others in our industry experiencing 50 percent or more in premium increases. Our overall claims frequency and severity for all insurance coverage lines has dramatically decreased as the result of our efforts. Workplace safety has improved with our operations experiencing more than 800 days without a lost-time, work-related injury. The company’s relationship with the Mine Safety and Health Administration (MSHA) also has improved. Over the last two years, our number and severity of MSHA citations has dramatically decreased as well as the amount of civil penalties assessed for each citation. We now welcome MSHA inspection visits and encourage MSHA representatives to participate in our miner and vendor training programs. Our approach to risk management is now beyond the scope of simple risk financing. It involves a new business culture. A culture that actively seeks out workplace hazards and corrects those hazards as they are found. Miner Donald Nelson participates in task training new safety associate Mark Dickie. J. Samuel Denney is risk manager for Blount Springs Materials Co., Cullman, Ala. News Across the Nation Compiled by Angie Moehlman Aggregate issues Aurora, Colo.—According to The Denver Post, the city of Aurora approved a plan to pay up to $30 million to buy gravel pits along the South Platte River that could store up to 10,000 acre-feet of water. Aurora will pay $3,000 per acre-foot of storage capacity for Aggregate Industries to excavate and line the pits. Under a contract, Aggregate Industries will develop one pit that can hold 2,250 acre-feet of water, with a completion date scheduled in 2009. The second pit is scheduled to be completed in 2014, and will have a storage capacity of 1,800 acre-feet. Santa Fe, N.M.—According to the Santa Fe New Mexican, San Miguel County commissioners recently approved new administrative fees for sand and gravel mining operations. Anyone who wants to open a sand and gravel mining operation in San Miguel County will pay a minimum of $7,842 in order to make it through the permit process. The fees are considered an amendment to the county’s existing sand and gravel mining ordinance. Springfield, Ill.—According to the Associated Press, the Illinois Association of Aggregate Producers sued the state of Illinois over new NPDES fees. Annual permits for each mine site now cost $5,000 to pump groundwater and $500 to discharge stormwater. The owners of quarries and gravel pits have to get the permits in order to pump rainwater and groundwater out of their aggregate mines, and they feel that they will have to pay exorbitant amounts in annual fees for each of their many locations. The group states the fees are “an unreasonable and excessive tax” that violates parts of the Illinois Constitution. The lawsuit names the state Environmental Protection Agency and the state treasurer. Aggregate producers paid the fees under protest; however, the money is being held in escrow until the legal dispute is resolved. Permitting Scoreboard Tabernacle, N.J.—According to the Courier-Post, Superior Court Assignment Judge John Sweeney ordered the Tabernacle Land Development Board to approve a permit and site plan for Lake Sand and Gravel Co. Cromwell, Conn.—According to the Hartford Courant, members of the planning and zoning commission recently amended Cromwell’s zoning regulations to prohibit sand and gravel mining operations in residential areas of town. The commission approved the amendment with a vote of 6 to 3. Millane Nurseries applied for a sand and gravel operation on a portion of the company’s 54-acre tract. Millane is suing Cromwell’s planning and zoning and inland wetlands commissions, appealing those agencies’ rejection of Millane’s application for the mining operation. Millane may also appeal the zoning amendment banning sand and gravel mining. Martinsville, Ind.—According to The Indianapolis Star, Rockmakers, Lebanon, Ind., is proposing a sand and gravel mine on 352 acres. The site is about a mile south of Martinsville but is within the city’s buffer zone for planning. Martinsville’s Plan Commission earlier voted in favor of the operation, but objections to the operation are coming in the form of a petition signed by 60 of the 70 homeowners of the Legendary Hills subdivision. The Martinsville Board of Zoning Appeals voted 4-0 in July to reject Rockmakers’ request for zoning exceptions to operate the mine in an area zoned for agriculture. Rockmakers officials plan to appeal in court the Martinsville’s Board of Zoning Appeals’ decision. Olympia, Wash.—According to The Olympian, Thurston County commissioners will consider an appeal made by the Black Hills Audubon Society of a recent decision by the county hearings examiner to approve the Quality Rock Products project. Quality Rock wishes to expand its gravel mine from 26 acres to 151 acres, build an asphalt plant, and reopen a concrete plant. The project has been studied in depth to determine the plant’s effect on the ecosystem, including wetlands, wildlife, groundwater, and traffic and air quality. The project was twice approved by the county hearings examiner, but the Audubon Society appealed the decision to the Thurston County Board of Commissioners, citing concerns about the project’s impact on the nearby Black Hills National Wildlife Refuge. State Funding Status Phoenix—According to The Bond Buyer, Maricopa County recently approved a 20-year, $16 billion plan to build and expand freeways while moving ahead with a $1 billion light-rail project. Madison, Wis.—According to the Associated Press, Governor Jim Doyle borrowed heavily from the state’s transportation fund to cover the cost of his budget vetoes. The fiscal changes Doyle made to the Legislature’s budget include taking $100 million from the transportation fund that Republican legislators wanted to use for highway projects and putting it into the general fund, and also using $37.6 million from the transportation fund, rather than the general fund, to pay off interest payments on bonds used for highway projects. Riverside, Calif.—According to the Press Enterprise, rebuilding the interchange at Interstate 215 and Highways 60 and 91 may require Riverside County to come up with more money for the project to commence. In May, the Riverside County Transportation Commission proposed a financing plan for the interchange project that includes $35 million contributed by the state as a partial match for federal aid. A month later, the commission agreed to cover $7.5 million of the project, with the state responsible for the rest. Now, with the state’s road-improvement fund depleted, the county may have to come up with the entire $35 million in order to keep the interchange project on schedule.