The Economics of Ergonomic Disorders at Ford Motor Company

Susan T. Pastula, MPH and Gordon R. Reeve, Ph.D

Ford Motor Company
402 World Headquarters
Dearborn, MI 48121

INTRODUCTION

In assessing the economics of ergonomic issues in industry, there are two sides to the equation. One is the costs of medical treatments and associated costs of ergonomic disorders. The other is the costs associated with preventing ergonomic disorders. Regulatory policy and actions must consider both sides. The purpose of this study is to present one side of this equation: the cost of ergonomic disorders. More specifically, we examined these costs at a large auto manufacturing company.

This study was possible because the Ford Motor Company maintains a Health Data Analysis (HDA) system to access occupational injury/illness data that include 55 of its U.S. production facilities. The foundation of the HDA system is the Company's computerized medical record and OSHA recordkeeping (OHS) system. There is logic imbedded in the OHS system to generate OSHA logs, determine recordability, and calculate days away from work due to injury. This OSHA-recordkeeping logic ensures the medical data in the HDA system is consistent across all plant locations. This data was validated by OSHA court-ordered audits for compliance with OSHA recordkeeping regulations.

The OHS medical data is linked electronically to several other data systems within the Company. First is the linkage of every visit to the payroll system, to allow analysis by department and job, as well as collecting hours worked to calculate injury rates. The second linkage is with Workers' Compensation data. As an employee begins accumulating payments for their case, that information is captured for analysis, as well as an estimate of the total cost of the case. A cost per case can then be generated from the HDA system.

The following is a descriptive analysis of the magnitude of the financial impact of ergonomic disorders to Ford Motor Company. The data includes 55 U.S. production facilities and warehouses, in which approximately 100,000 people are employed as hourly workers. These plants span 16 states, each with different Worker's Compensation laws. However, over half of the facilities are in Michigan and Ohio.

METHODS and RESULTS

The analysis is limited to 1995 occupational injury/illness data of hourly employees from the Company's HDA System. More current data was available for analysis, but 1995 was chosen for the completeness of the related Workers' Compensation data. A previous in-house analysis of claims payments showed the runoff time for a Workers' Compensation claim to be fully paid. Applying the results to the available HDA data, only 20-30% of total claim payments for 1995 injuries and illnesses were paid by the company in 1995 . By 1996, 50-80% of payments were made for these 1995 injuries. It takes approximately 4-5 years for a claim to be at least 90% paid.

In 1995, there were a total of 112,723 occupational injuries/illnesses in the 55 U.S. Ford locations. After going through the OSHA logic in OHS to determine recordability, the system also determines if an injury is ergonomically-related by OSHA standards. We used the same criteria in HDA for this analysis, and found approximately 27% of these injuries were ergonomically-related (Table 1).

Workers' Compensation payments were used as the tangible measure of the economic impact of ergonomic disorders. Of all the occupational injuries in 1995, 12% were compensable, and have accumulated $ 37 M as of April 1997. These claims are estimated to be between 50-80% complete as of the time of analysis. Ergonomic disorders made up 30% of all compensable injuries occurring in 1995, and about $ 15 M, or 41% of all claims. Ergonomic disorders are a significant group of injuries, both economically and in numbers of cases (Table 1).

The second measure of the economic burden of ergonomic disorders used is the number of days away from work, or days on medical leaves due to occupational injuries. Days away from work is an crude indicator of the severity of injuries. The total number of days away from work for the company was 200,403 days in 1995. Ergonomic disorders accounted for 56% of those days (Table 1). Ergonomic disorders are either more severe than other types of injuries in the company, or the nature of this type of injury forces the employees to stay home on a medical leave rather than be placed on an alternate job until the injury heals. An algorithm can be used to estimate the direct cost for that employee to be off work based on their hourly wages and benefits. None of the reported costs take into account any indirect costs of the injuries, namely the wages paid to a replacement worker for the time the injured employee was off on a medical leave, or the costs absorbed by the worker.

With ergonomics being such a large portion of injuries and cost, it is too large a task to take on as a whole. This group of disorders must be further broken down into more specific groups to prioritize and tackle. The prioritization used is important in deciding where limited resources will go to fix hazardous jobs in the plants. This is key, because otherwise the job with the most complaints will get fixed first, whether it is the more hazardous job or not. An analysis was done on compensable ergonomic cases by the part of the body injured (Table 2). Arm/Shoulder disorders are the most costly and most frequent type of ergonomic disorder, accumulating 1,793 cases and $ 7.2 M in compensation costs. These injuries are not as severe as Lower Back/Hip ergonomic disorders, which have the highest number of days away from work, 21,727 days (15.2 days per case). The ratio of cost per case shows that neck/head injuries are the most expensive, even though there are fewer cases. There were only 110 of this type of injury compensated in the company, but they are approximately $ 4744 apiece. This group in general has longer medical leaves than the other groups, which total about 4 work weeks (20.6 days) per case. This adds to the direct as well as indirect costs of these disorders.

CONCLUSIONS

The economic issues involved in ergonomics at Ford Motor Company are significant. For a single year, these issues comprised 27% of all injuries, and resulted in $ 15 M of Workers' Compensation costs. These numbers have produced incentive to focus on the underlying causes of these expensive disorders. Ford and the UAW have dedicated resources to address such a significant health and safety issue. In the late 1980s, the process was begun to set up a Local Ergonomics Committee at each location made up of hourly and salaried health and safety professionals working at that location. Their function is to take this large task of reducing ergonomic disorders and cost and divide it up into tasks to prioritize, get funding, and implement changes. As the data has shown, there is much left to be accomplished to reduce ergonomic disorders at Ford. Because of the data available to analyze in Ford's HDA System at the plant level committees as well as the corporate level, corrective actions can be justified by demonstrating the magnitude of the problem toward which these actions and funds are directed.

Table 1. Comparison of total injuries and Workers' Compensation costs of all occupational injuries to ergonomic disorders only for hourly employees in 1995.

Table 2. Statistics for compensable ergonomic disorders for hourly employees in 1995 stratified by body part group.