Houston-Area Officials Defend Decision Not To Evacuate Ahead Of Harvey: 'Nonsensical Thing To Do'

NY Daily News ^ | 08/28/17 | Dan Good, Adam Schrader and Graham Rayman

[Monorprise]

That is pretty ridiculous. There is production contracts and there is safety which has to come first by law.

How is it that the City allowed itself to be sued by a company for loss production? Was that part of some deal to get them to setup shop there?

I understand they need to meet production schedules but how is losing the factory to a natural disaster and all of its employees going to help?

If so that is a bit underhanded and corrupt as they don’t do that for most any other industry.

Maybe your state should consister passing a law that basically states after a disaster deceleration a company that doesn’t allow its worker to evacuation must pay them 30% more.

In any event I hope your situation will improve as manufacturing as more job competition starts to exist as more factories trie to move back to the USA after tarries on china.

[redgolum]

There are a couple of things.

First of all, most companies practice “Just in Time” inventory. That means the supplies come in right before they are to be consumed. Any disruption along the product chain has HUGE impact. So for a weather event, a manufacturing plant will put great pressure on the local authorities and their own plant personal to get to work no matter what.

The law suits happen when an evacuation is called, the plant shuts down, and then the even doesn’t happen. The customers will sue the supplier for breach of contract (or go somewhere else), the process may not be able to be started up quickly, and because of the Just In Time inventory there can be a massive industry wide disruption leading to potential plant closings.

The management of the companies will pursue legal action against cities and states who issue evacuation orders that don’t result in a real event. Their investors, suppliers, and customers will demand some sort of financial recourse, and insurance will not cover disruption caused by such non events. Many facilities do have “Loss of business” insurance IF the event happens. So the risk of the evac call being made and the event NOT happening is higher than if it DOES happen.

For the business to survive, the only action is to sue. The stockholders will demand it, and maybe demand that the plant and company management be fired because of the loss. For a large baseline chemical company, it could be the end of the business.

And as much as it sounds callous, many companies will view the potential of losing employees as less risky than the certainty of losing the contracts. Often they will pull the majority of the line guys, and staff with technical people like engineers and middle managers. That presents better optics if an event does happen. Engineers are viewed as “more responsible” for their own safety than a typical line worker, and we are forbidden to unionize.

I have been in the process game for my whole career, and several business cycles. The pressure now will be higher now at the peak than it was when the cycle was at its ebb, because there aren’t enough people to cover the expanded work. So you work your salary people harder (we don’t get overtime), and delay hiring as long as possible (because to get someone new in it will cost more). Many will also work behind the scenes with their competitors to cap wages and limit “poaching”.

This is why you can buy food cheaper than anytime in history. This is also why margins are so thin. While everyone loves cheap products, the cost is taken out of the people that make it. For those of us that process is in our blood, it is a decent exchange. For many Millennials, they would rather have more free time than the money. Which might be the better way of life.

[Monorprise]

En lighting story, it is a shame all the Government efforts to crack down on dishonest anti-competitive business practices that suppress the market barging power of employees have been so pitiful unsuccessful. Althou not terribly shocking given what we know about Government.

But it may also be with time, and technology, the natural mechanization of the assimbliy line will lead to more engineer and management jobs which will be more flexible.

You did point out that the insurance market is indeed part of the problem insurance for non-events mandated should be insurance for all events, or no events. This business oddity is obviously having negative effects upon the entire industry.
Businesses should not be in the business of calculating the odds that a disaster will strike, or that they will be ordered to evacuate, that is what insurance people are good at.