Protect Your Metalworking Business from Unnecessary Risk
Four tips to weather increasingly severe storms — and the growing cost of rebuilding. Weather events exceeding $1 billion in damages have more than doubled in the past three years.
Posted: May 18, 2023
If you own a metalworking business in the United States, it’s now imperative to embrace weather awareness as part of your overall safety plan. The flurry of tornadoes in the Midwest and across the South, violent storms and Category 3 and 4 hurricanes in the Southeast, and tragic wildfires in the West are all sobering reminders of the damage that can occur under the threat of increasingly severe weather events.
And, these events are worsening and happening more often. According to the National Oceanic and Atmospheric Administration (NOAA), events exceeding $1 billion in damages have more than doubled in the past three years. Further complicating matters, material inflation and supply chain delays are leading to longer recovery periods and even greater financial losses if a business sustains damage and isn’t prepared.
As severe weather events become more frequent and unpredictable and prices continue to rise, the risk to your business is far greater if you’re caught unprepared. Here are four tips to help reduce your risks associated with severe weather and inflation.
Make Protecting Your Employees a Priority
Given the labor market struggles many fabrication and metalworking businesses have faced in recent years, it’s more important than ever to retain your employees. It’s your responsibility as an employer to keep your greatest asset — your employees — safe during severe weather events. Identify which severe weather events could unfold in your location and create a comprehensive emergency response plan to meet your needs.
Address the following in your action plan:
- Severe weather drills. Clearly identify exits and conduct drills to ensure safe and orderly exits or sheltering during severe weather.
- An emergency operations center. Establish a safe space to manage your business remotely during severe weather. Ensure your vital data is backed up and secured off-site, with important paper records kept in a fire and flood-proof location.
- Emergency equipment and supplies. Determine the type, quantity, and placement of equipment like alarm systems, firefighting equipment, and first-aid supplies, as well as long-term needs like clean water and nonperishable food.
- Inspections. Assess each facility’s hazardous materials inventory and develop a plan to keep it secure and protected in the event of severe weather.
- Communications: Routinely share your emergency action plan with employees. An informed group is more likely to respond to an emergency calmly.
Get your employees engaged in creating your emergency action plan. They’ll know their areas best and will have useful insight to help collaborate on creating your plan. Additionally, ask your local medical and fire service departments to assess your drills when possible. They’ll be able to identify potential gaps in your emergency response.
Have Your Property Values Reassessed
As you are likely reminded daily, inflation and supply chain issues seem to be here to stay. An often-overlooked consequence of our current economic climate is that businesses could be underinsured due to the rising cost of materials. Just like inflation has caused the cost of the goods we buy to increase, the properties you own — and the equipment inside — could cost more to replace if severe weather causes damage.
Don’t get caught unaware. To avoid being underinsured, talk with your insurer and update your property valuation to cover possible gaps. You may also want to consider adding an inflation guard provision, which automatically increases the value of your insured property, at a percentage you set, to compensate for rising costs of materials throughout your policy term.
Create and Maintain a Business Continuity Plan
In the fabrication and metalworking industry, risks are continually evolving. As a result, it’s increasingly important to maintain and update a business continuity plan. If you don’t have a plan, it’s important to create one. This can help protect your employees’ livelihoods and aid in your business’ recovery in the event of a severe weather catastrophe, like a tornado, roof collapse from snow, flooding or even a wildfire.
Consider adding business income insurance as part of that plan if you don’t already have it. It can help you pay for overhead and employee wages while you rebuild. It can also help you recoup lost revenue and profits. If you suffer damage that leaves your business — and those you employ — vulnerable, business income insurance can act like a form of business disability insurance.
Supply chain and labor issues could mean it takes longer — six months to a year or more — to replace equipment and rebuild facilities. And, if a business is unable to cover months of expenses while they recover, those that sustain extensive property damage may never reopen. Historically, 25% of businesses don’t recover following a disaster, according to FEMA.
Flood insurance may also further protect your business. It’s important to speak to your insurer to see what’s available for your situation, based on your business’ location.
Protect Yourself Against Unnecessary Risk
As worldwide supply chain problems continue to plague the metalworking and fabricating industry, costs continue to grow due to inflation, and labor recruitment and retention continue to be a rocky endeavor, focus on what you can control to help protect your business. The tips shared here are just a brief overview of how you can help protect against severe weather damage in an inflationary environment.
Talk to your insurer and local experts to learn more about how to guard against catastrophic loss, as severe weather events become more frequent from coast to coast.
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