When considering the ROI of automating manufacturing processes such as welding, the conversation often focuses on factors such as minimized downtime, addressing workforce shortages, reducing labor costs, increasing throughput, delivering higher consistency and quality, and improving worker safety, to name just a few. Each of these can be difficult to quantify in financial terms and worker safety is no exception.
The fact is that worker safety is a real bottom-line item for every shop running manual processes like welding. Understanding the impact of risk on operational costs is important when trying to estimate the potential savings of automating these processes. This article explores the primary sources of costs related to worker safety, how automation changes risk profiles and scale, the hidden or masked costs of liability, and how to demonstrate real-world results to secure lower workers’ compensation insurance premiums.
Reducing risk
Automated workstations are designed with many safety features in place to enable workers to be in close proximity. Conventional high-speed industrial robots enforce safety through the use of cages or barriers that prevent humans from entering the robot’s work zone.
Today, modern welding cobots like the Cobot Welder from Hirebotics have built-in human detection and collaborative safety features that allow operation of cobots alongside workers without cages or barriers. For example, force- and motion-limited behaviors enable cobots to stop or react quickly when unexpected contact occurs, significantly reducing the risk of severe injuries compared to conventional high-speed industrial robots.
Through the use of the Beacon control platform, the Cobot Welder can be taught a weld path by an operator hand-guiding the weld torch. The cobot is then able to learn the weld and repeat it faster with more precision and consistency. From a safety perspective, the cobot removes workers from the most hazardous portions of the welding process, enabling them to stand back and supervise the process.
This reduces the risk and exposure to injury. Workers no longer need to perform tedious, repetitive motions while working with an active torch, nor do they need to assume awkward welding positions that increase risk of injury.
It is important to note that automation does not completely eliminate risk of physical injury to workers. Ultraviolet arc flash and infrared radiation produced by a weld arc, whether controlled by a human or cobot, can cause permanent eye and skin damage to humans in close vicinity. Even when a cobot stops movement in the presence of a human, the weld torch and protruding wire remain hot enough to burn skin if the human is not aware of the safety hazard and not wearing appropriate PPE. Welding also produces harmful gaseous emissions that require active extraction.
Operators still need to be attentive and wear appropriate PPE for the task at hand. However, fewer hours “under the hood” generally means less cumulative exposure to fumes and UV radiation, lower fatigue and fewer opportunities for welding-related injuries to occur.
Estimating costs and savings
So how is a manufacturer to estimate the potential worker safety savings of, for example, shifting 50 percent of arc time from manual processes to cobot automation? The first step is to understand the actual costs of worker safety before automation.
Typically, the most significant liability costs are injury claims and workers’ compensation. Injury costs are a combination of direct and indirect costs. For example, burn incidents tend to be low-frequency but high-severity injuries. They have direct costs that include medical expenses and disability pay and indirect costs that include, but are not limited to, lost productivity and downtime. There may be OSHA compliance costs to consider as well, such as modifying the work environment and educating operators.
Workers’ compensation insurance premiums are typically calculated as: Premium = (payroll/100) X class code rate X experience modification rate (EMR).
Class code rate depends upon the type of work performed and varies from state to state. Welding class codes generally carry rates in the $4 to $7 range per $100 of payroll.
EMR is based on a manufacturer’s specific history of workplace injuries compared to industry peers. This means that claims history plays a critical role in determining premium costs: The more claims a shop has the higher the premium for equivalent coverage.
The following is a rough framework that can be useful in estimating ballpark figures to understand just how much of an impact automation can have on insurance and liability costs. Note that there are two kinds of savings to consider: immediate savings and delayed or hidden savings. Immediate savings include avoided claim costs and lower workers’ compensation insurance premiums.
Each injury incident carries direct claim costs. For example, the cost of a single, moderate welding injury like a flash burn typically runs between $8,000 to $25,000, dependent upon the circumstances. Reducing injuries through automation reduces corresponding claim costs.
However, there are indirect savings to consider as well. Reducing injuries reduces downtime costs. A shop also avoids the difficulties associated with finding qualified temporary workers to fill the gap until the injured operator can return.
Another immediate savings may be a direct premium reduction due to class code reclassification. The risk profile changes substantially when shifting from manual welding to operating and monitoring a welding cobot. Many states and insurance carriers support a class code reclassification from welder to a lighter category such as machine operator or light manufacturing. Such a reclassification, for example, could drop rates by 50 percent, from $4 to $7 per $100 down to $2 to $3 per $100.
Scale comes into play as well. Automation does more than just reduce the risk of injury. Instead of performing welds for a single workstation, automation may be able to enable an operator to manage multiple automated workstations. Ultimately, this reduces the ratio of operators to workstations that need to be covered by workers’ compensation, thus lowering premium costs per workstation.
Assessing “hidden” savings
As might be expected, there are additional automation savings that require a bit more care in assessing. For example, one challenge presented by injury claims is how to account for costs as certain types of injury claims may be difficult to track in real time. Consider how fume inhalation often leads to long-tail liabilities. The associated claims can spill across years before they are finalized.
If the costs of past incidents are not specifically broken out, they will skew the assessment of current injury costs. In other words, even though the number of injuries may go down, the safety-related costs can appear to stay the same as previous long-term injuries continue to be paid out.
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A similar issue arises with workers’ compensation. EMR reflects three years of claim history relative to other manufacturers in the same industry. This means that a manufacturer will likely not see immediate bottom-line benefits from reduced injury incidents as it takes multiple years for a reduction of injury incidents to be reflected in premium costs. Such a delay in savings can be easy to overlook.
However, while EMR-related savings are slower to materialize, they can often be even more significant in terms of dollars than class code reclassifications because an improvement in EMR does not just reduce workers’ compensation premiums for a shop’s welding processes. This last point is worth emphasizing: Automating manufacturing processes such as welding can lead to substantial savings company-wide by reducing total injuries, lowering EMR and dropping the insurance premium cost for every worker in the shop.
Demonstrating improved safety
Securing lower premiums may require direct negotiation with an insurance carrier to explain how cobots reduce risk. However, simply describing the safety features of automation equipment may not be enough to secure the appropriate premium reduction.
Be prepared with actuarial data that proves – not just explains how – risk is mitigated. Initially, this data may need to come from the cobot manufacturer or industry reports. Over time, manufacturers will be able to demonstrate that cobot deployment has resulted in fewer actual claims post-deployment. This can be done by presenting a pre-deployment and post-deployment profile tracking injury frequency and severity broken out by task type and department.
It can also be useful to show how, for example, welding cobot deployment (lower risk) has resulted in a reduction of manual welding hours (higher risk) by a specific percentage. An offer of a site visit to an insurance carrier to show them the increased safety of the cobot operation firsthand may be just what is needed to allow the carrier to validate the process and reduce premiums.
Worker safety is an important consideration when evaluating whether to automate manufacturing processes like welding. The safety of workers is a top priority and automated equipment reduces exposure to risk. Worker safety also translates to savings in liability and workers’ compensation. Through automation, manufacturers can reduce worker exposure to risk and injury. This reduces injury claims and EMR and allows class code reclassification of workers to less risky jobs.
By associating injury costs to the actual incidents, shops can assess current safety-related savings without skewing them based on past incidents. And by reducing injuries, manufacturers can secure lower insurance premiums for all workers in their shops, even those not using automated equipment.
Productivity is about more than just machinery – it also includes safety. Read more in our archives.
