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Automation Brings Rise to New Risks, HR Concerns for Manufacturers

November 19, 2019
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Manager Technician Industrial Engineer working and control robotics with monitoring system software and icon industry network connection on tablet. AI, Artificial Intelligence, Automation robot arm machine in smart factory on blue digital background, Innovative and futuristic technology.

It’s no secret automation continues to disrupt manufacturers across every segment.

Hard and soft costs can be significant, cyber threats and liabilities escalate, and the challenge to attract, hire, and retain a skilled workforce require new methodologies. The management of sophisticated and evolving risks within the new era of automation, connectivity and advanced technology is not an endeavor that manufacturers have to take on alone. Professional risk advisors who can see a manufacturing operation from the inside-out, help maintain focus on mitigating risk (in partnership with transferring risk through insurance) and offer innovative solutions to address the changing impacts of automation.

From an insurance and safety perspective, automation and emerging technology can be a double-edged sword. According to Josh Fragoso, Director, Oswald Companies, “Automation could potentially reduce risk in lines like workers compensation as well as product liability due to better quality control and less elements of human error. However, as sophisticated technology advances, the risk profile changes, and with it comes complexities in insurance coverages, and a host of additional challenges for employers.”

Cyber Risk and Security Threats

Automation in manufacturing gains efficiency however also opens greater opportunities for security and cyber-attacks. These previously unknown inroads to data and processes can disrupt supply chains, expose industrial secrets, increase the risk of confidential information leaks and damage organizational reputations. Having protection in place is more than an anti-virus program.

Fragoso says, “Automation could have a larger impact on cyber premiums as leveraging the internet of things in automation can increase exposure to cyber losses. It is imperative clients work with a broker who understands these rapidly changing shifts in risk. The right broker partner will showcase the manufacturer’s understanding of and action around these risks to maximize the carrier’s comfort during negotiation.”

Attracting, Hiring and Retaining the Right Talent

Recruiting, hiring, training and retaining workers in a heavily automated facility challenge manufacturers faced with a shortage of workers to install, operate and maintain the equipment and processes. Successful manufacturers meet these human
resources challenges by:

  • Reaching the workforce in new ways and presenting the manufacturer as an employer of choice to recruit the right talent.
  • Structuring benefits packages to leverage competitive wages and enhanced offerings that resonate with workers to hire in a competitive market and deliver attractive retirement plan options.
  • Exhibiting management support, engaging workers and measuring employee satisfaction to increase employee retention.

Creating and promoting a safe and healthy workplace

As shared by Fragoso, this new higher paid technical worker may be more benefits savvy and require more choice and place importance on their total compensation. It will be critical manufacturers work with a broker that proactively brings forth new ideas for cost containment and cutting-edge strategies on offering benefits that employees value. At the same time, displacement or retraining current  workers for new roles can shift the experienced worker to new skill sets as automation replaces manual tasks within factories, shops and general manufacturing facilities. Successfully navigating the people side of automation is a balancing act between old and new and a study in effective change management across manufacturers.

Josh Fragoso offers insight to other possible outcomes employers may not see coming, “Manufacturers need to rapidly adapt to refocusing their talent attraction efforts to bringing on more skilled workers with technical training that can operate these machines as well as trouble shoot. Automation, without formally understanding the implications this causes in staffing needs, can be a distraction that affects the ability to concentrate on growth.”

Conclusion

The complexities of automation are intricate and interrelated. The strongest manufacturers understand the risks and look to experienced partners to help prepare for and manage the inherent risks in this evolution of process, people and technology. When done well, budget will be optimized, risk will be mitigated, and employee satisfaction will positively impact the bottom line. Oswald specializes in strategic risk management for manufacturing companies, serving as your definitive source for total workplace health, safety and financial protection.

Our advisors work closely with you to identify the key exposures in every corner of your business. We then design, implement and service your risk management strategies, including comprehensive insurance plans and policies, and a full range of financial services. We are your partners working behind the scenes to keep your operations running and your business moving forward.

For more information visit our Manufacturing page or contact us here.

 

Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy