Return to Virginia Business - May 2001

News and Features
It's still a tight market out there
Good workers are hard to find and that heightens insurance risks

Luck Stone Corp., an aggregates producer serving central Virginia, was rolling into its busiest season last year. Like many companies, Luck had been having trouble finding experienced workers because the then-booming economy kept labor forces lean. Luck ended up paying a big price for this predicament. An employee with only three-months experience had just emptied a load of rock into a quarry’s jaw crusher. He forgot to lower the dump body of a 50-ton truck, so it rammed into the quarry’s critically important conveyor belt, knocking it out. The result: $200,000 worth of damage not covered by insurance. Luck ate the expense because it badly needed the conveyor back in action. "You’re not only talking about the cost of replacement, you’re talking about the cost of lost production," says Jay Coffman, Luck’s vice president of risk management.

The bridge span of the Pocahontas Parkway project outside Richmond towers 130 feet above the road. Photo courtesy Richmond Times-Dispatch

Plenty of Virginia companies can relate to Coffman’s plight. They are struggling to cope with a pool of workers that’s still small despite the now-cooling economy. In especially short supply are skilled laborers who are knowledgeable in tools and heavy machinery. Over the last two years, unemployment rates have reached historic lows. Last year, Virginia’s rate averaged 2.2 percent and it’s inching only slightly upwards today.

Hence, risk management is in vogue as it never has been. To get by with tight labor, employers are forced to beef up training programs, hire additional supervisors and closely monitor less skilled workers who pose a safety concern on the job site and a liability concern in the corporate suite. "Companies are putting a lot more emphasis on risk management and loss control," points out Bill Moore, vice president of BB&T Insurance Services in Petersburg, whose clients include several large contractors.

Generally, contractors and construction companies have their own standards for hires. These are usually based on driving records and machinery experience. "Unfortunately, " Moore says, "during the last two to three years, because the market’s been so tight, they’ve had to hire people they wouldn’t otherwise have hired." To offset that, Moore says clients are increasing training and supervision. "They are enhancing safety programs ... and keeping a closer watch."

Supervisors are in great demand because more and more inexperienced workers are on job sites and need to be carefully overseen to avoid accidents. That’s evident to FDMK, a general contractor overseeing construction of the $328 million Route 895 bridge and roadway project just outside Richmond. FDMK’s Project Director, Herb Morgan, says his contractors are using more supervisors to ensure work gets done safely and correctly.

Not only are many workers new to the job, but a major influx of Hispanic workers means that some speak little or no English. From 1990 to 1998, Virginia’s population of Spanish-speaking residents grew from about 55,000 to more than 200,000. While many Hispanics are regarded as dedicated and hard working, "now you’re fighting a language barrier," Moore says. Language misunderstandings can be fatal on construction jobs. Workers may dangle from safety harnesses 100 or more feet up in the air as they work on bridge decking for spans that cross rivers or other impediments. They need instructions that are clear and in a language they can understand. "So you need more supervisors. But there aren’t as many supervisors available either, so it’s kind of a death spiral," Morgan says. Consequently, contractors are holding more training sessions both for workers and supervisors. "We’re running heavy safety- awareness training," Morgan says. Still, on-the-job accidents do occur. "We’re seeing a lot of hand injuries on this job," possibly because people doing the work aren’t as proficient with the tools as more seasoned employees.

Of all the jobs troubled by inexperienced labor, the ones that have it toughest are seasonal. It’s difficult for these companies to get good workers, even in a slow economy, because the work is sweat-filled and the job security short-lived. The season for a lot of construction-type jobs lasts from early spring to late fall, then the winter months offer little or no work. Again, the key to survival is training, says Bob Williams, general manager at Mega Contractors in Richmond. "We go in-depth because people don’t have the experience they once did. Most of these people have never done this kind of work before." The heavy-duty asphalt paving company hires about 100 to run its crews from early spring to late fall. With low unemployment squeezing the pool of available workers, Williams is worried about finding 100 people this spring.

The thought of spending long, hot, summer days spreading asphalt doesn’t appeal to people who can find a job elsewhere, says Ron Robson, personnel and safety director at heavy-duty paving company Adams Construction in Roanoke. "These folks can go to Burger King or another fast-food place and make essentially the same thing," Robson says. The advantage to his company is that the firm requires longer hours in the summer so workers are paid more per day than in other entry-level jobs. Adams Construction employs 250 to 300 people in season, and it pays partial unemployment during the winter months under an arrangement with the Virginia Employment Commission that helps the company retain help. During the off-season, Adams runs training sessions. For new hires, that includes an orientation and on-the-job teaching. "If we can get people, we can train them," Robson says.

Luck Stone used to draw many workers from contractor-type jobs that didn’t offer the same breadth of benefits and year-round job security. Now, with companies competing fiercely for help, simply dangling a benefits package in front of a potential hire isn’t enough, especially when wages might be higher elsewhere. "A 25-year-old is going to look at the wages before the retirement program," says Luck Stone’s Coffman. Rather than dwell on the shortage of experienced workers, Luck Stone has expanded training programs to help compensate for it. New-hire safety programs are conducted twice a month in Northern Virginia, but less frequently in other areas such as western Virginia where turnover among workers isn’t as high.

Apparently, the increased emphasis on safety-training is paying off, because the companies interviewed by Virginia Business reported no significant increases in accidents over the past couple of years. Yet there are signs that lower skill levels translate into bigger risks. Last year, 59 people died on the job in Virginia, 14 more than in 1999, according to the Virginia Department of Labor and Industry’s occupational safety and health division. In 1998, the division recorded 40 fatalities. The division tracks on-the-job deaths, not including traffic accidents.

There’s no clear-cut reason for the sharp increase in fatalities last year, says Nancy Jakubec, the department’s director of cooperative programs. She notes, however, that some accidents resulted in multiple deaths. One accident killed three people at New River Foundry, a Radford car-parts foundry that had a history of high employee turnover because of intense production demands. This resulted in the largest fines ever by the state for safety violations. The majority of the deaths last year, however, happened on construction job sites. The state department investigates fatalities in an effort to generate more effective training programs. "We try to look at where this is occurring so we can put more emphasis on that," Jakubec says.

Individual companies also use accident and incident reports to improve training. At Luck Stone, "We don’t see accidents as much as incidents," says Coffman. However, he adds, "We have seen, there’s no question, where incidents have increased." Coffman describes an incident as an unplanned event that may result in injury to people or property, like the damage to the conveyor last year.

Coffman estimates that training costs for Luck are at least 30 percent higher than they were a few years ago. So, to help manage less-skilled workers, the company expanded its risk management group this year by putting health and safety directors in each of its four geographical divisions. Previously, one health and safety manager ran training programs from the headquarters in Goochland County. The cost of adding the extra positions is about $250,000 annually, says Coffman, just a little more than one $200,000 mistake.

One industry that isn’t hurting for workers at the moment is trucking. Late last year, a number of small and owner-operated trucking companies went out of business, leaving a pool of experienced drivers in search of work. "That has helped the remaining companies in their search for good drivers," says Dale Bennett, executive vice president of the Virginia Trucking Association.

Coffman would love to be in that position. In the past, many of the company’s hires came from a farming background and had a fair amount of mechanical expertise. "Now as one of our supervisors said recently, we’re hiring people who haven’t even mowed their own grass." These days, the grass is greener if you’re lucky enough to be an employer who can find and keep good help.

Return to Virginia Business - May 2001