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The Challenge of Global Compliance

Fri, 09/01/2006 - 5:40am
Nancy Syverson, Managing Editor
New international standards like RoHS and WEEE add to manufacturers’ already complex compliance responsibilities.



The world of compliance just became more complicated. For U.S. manufacturers wishing to sell into the European Union, last month (July 1) marked the start date for the E.U.’s RoHS (restriction of hazardous substances) and WEEE (waste electrical and electronic equipment) standards. These requirements now take their place alongside the list of existing U.S. compliance requirements for industry from the EPA, OSHA, the FDA and other official sources. Whether you accept that the growing list of compliance requirements for manufacturers is an expected price to pay to ensure safe business practices or you see them as a major drag on business, one thing is certain: You can’t ignore them. As any plant manager would attest, compliance is easier said than done. The more than 90,000 warning letters sent out annually by OSHA hint at the problem: Compliance is an ever-expanding task that can be confusing, time-consuming and costly. But the alternative fines, federal inspections or loss of market share can be even more disruptive.

Since 1946, the Switzerland-based International Organization for Standardization (ISO) has developed standards for the benefit of international trade. Many companies in the U.S., although not required by law, choose to become ISO certified in order to be accepted on the world market. “International standards are also often ahead of the curve,” says Anthony Vilgiate, vice president of Infinilux, a California-based maker of solid-state lamps. “They’re a good indicator of the direction domestic regulating agencies are headed.”

For example, RoHS and WEEE, adopted in January 2003 by the European Parliament and the council of the European Union, have become the baseline for compliance in the area of hazardous substances. The RoHS standard requires the elimination of hazardous substances such as cadmium, lead and mercury in electrical and electronic equipment by July 1, 2006. The complementary WEEE standard, adopted at the same time, regulates the recycling of this equipment. Vilgiate calls these rules “the ante to get into the game,” adding that his operation “chose from day one to be a green company and we jumped in with both feet.”

Vilgiate says that coordinating international standards with U.S. standards is not that difficult. The two groups of standards are not in conflict, he says, especially if a company can create a template that takes the strictest components of both and makes that the baseline. This approach prepares the organization for the evolution of the standards, avoids non-compliance, and eliminates the need for reactionary measures. Products and processes should be designed or redesigned with compliance in mind, he says, rather than using new compliance rules as a basis for a retrofit process.

“The primary concern is creating new processes, re-equip production lines and re-train personnel,” says Vilgiate. This approach may take more upfront time, but Vilgiate believes it is more productive than trying to make key changes like these on the go. The fear of incurring added production costs or implementation snafus can be strong, however, and when it dissuades plants from compliance, “It’s the biggest mistake a manufacturer can make,” says former OSHA Secretary John Henshaw. Now heading his own consulting firm, John Henshaw and Associates, Inc., Sanibel, FL, Henshaw recognizes that while most employers want to comply and provide a safe work place for their employees, they can be intimidated by the details especially when the details continue to grow in number.

“The predominant attitude seems to be that plant personnel just don’t know,” says Henshaw. “They have not focused on the issues, and not always through any fault of their own. And if they have focused on compliance issues, they often don’t understand and/or have misinterpreted a standard.”

Another trainer says he often sees compliance confusion at the plant level. Ben Mangan, founder and president of American Safety Training, Inc., Davenport, IA, says at one facility he noticed old fire hoses that had not been maintained. When he suggested replacing them with fire extinguishers, the plant safety manager told him the hoses were needed in case of a large-scale structural fire. Mangan says that besides the fact that the hoses were in poor shape, the safety officer’s approach was flawed because management had not established a fire brigade, much less trained one. There was also no protective clothing or breathing apparatus available to prospective firefighters. He says that in this situation, the intention to provide a safe workplace was there, but the understanding of the standards regarding the fire hoses and the implementation of a fire-protection program were off base. Too often, says Henshaw, “It’s as if site managers are waiting for something to happen or for someone to get hurt or for a compliance officer to come in and tell them otherwise.”

It’s not all up to the plant manager or even to plant management. Compliance assistance is available, and comes in many forms. Depending on the plant and its needs, a manager can choose to use an outside consultant (for comprehensive structuring), software programs (for maintaining compliance standards and information on file), free OSHA services (for understanding safety and health requirements as well as for on-site feedback), and a combination of all of these. A non-exhaustive list of compliance-assistance options includes:

OSHA
Henshaw recommends that any plant manager unsure of his plant’s safety and health status or obligation first take advantage of the free services that OSHA provides through its OSHA Compliance Assistance effort. The program was established to give plants free assistance so they can learn what it means to be in compliance and how to do it in a cost-effective way. (See www.osha.gov). He especially encourages small businesses to request an OSHA survey before injuries occur and before inspections occur. Consultants will conduct an on-site plant assessment to help the employer identify where the risks areas are, as well as offer simple, affordable solutions.

Henshaw stresses that unless a plant exhibits an imminent danger that the employer chooses not to correct, OSHA’s assessment will never result in a referral to the agency’s enforcement side. “In my tenure at OSHA, we watched this very closely,” he says. “If there is a connection or if there is believed to be a connection, then our credibility would be shot and no one will contact the consultation services.”

Software
Compliance software comes in many varieties. Generally, any program will provide a fundamental sketch of the specifics of a standard, steps required to comply, and provide a program that helps workers maintain compliance. Do research and comparative shopping before purchasing. Make sure that the provider is reputable and has good references. Find out who has used them before. Use OSHA’s online services to review government requirements, which will help you ensure that any software you’re considering does what you need it to.

Outside Consultant
The private consultant is often called upon to establish or redirect plant-compliance programs. Henshaw says the value of a good outside consultant is the opportunity for extended, in-depth contact, during which much can be learned about best practices, what works and what doesn’t. Outside experts can also help write programs and integrate compliance issues within a plant’s operations and culture in a cost-effective way.
Internal Resources
“An internal person can often best identify areas of potential exposure and weakness, and understand the compliance strategy of the organization,” says Vilgiate. “That person should also have the responsibility for passing down that ethos of compliance and internal integrity to subordinates.” One caution: Understanding compliance and creating a comprehensive compliance program is a time-intensive project. If internal personnel are tapped for the job, they should be temporarily relieved of other duties. In best-case scenarios, plants establish full-time positions for this role.
RoHS, WEEE, and ISO
Any and all of the above forms of assistance are applicable to the international RoHS, WEEE and ISO (http://www.iso.org) standards. Those looking for the RoHS and WEEE basics should visit www.rohs.gov.uk, hosted by the United Kingdom’s National Weights & Measure Laboratory. The U.S. OSHA Web site features a link to the European Agency for Safety and Health at Work) site (http://agency.osha.eu.int/OSHA), which provides information and updates on EU legislation. And at http://www.buyusa.gov/europeanunion/weee_rohs_services.html, the U.S. Department of Commerce provides contact information for various WEEE/RoHS consultants.

Although experts vary in their approaches on how to comply, most agree on key components. These include the company-wide awareness and understanding of relevant standards. Another is employee ownership. “Creating a culture of responsibility within your organization is crucial,” says Vilgiate. “Express at all levels why a certain standard exists, what global benefits are derived from the standard, and how compliance is the responsible thing to do. There are many grumblers out there who do not understand how the standards benefit them, and their children, and their children’s children.”

One of the most difficult tasks a plant manager faces is how to engage employees to become involved in developing the compliance process, owning it, and practicing it day in and day out. OSHA’s Voluntary Protection Program (VPP) can help guide a plant toward this end. The nearly 30-year-old program sets performance-based criteria for an effective health and safety program. And while fostering positive safety-focused relationships among OSHA and plant management, it also requires active employee ownership in the compliance effort. Acceptance into the VPP recognizes a plant for meeting OSHA standards and providing a safe and healthy work environment.

Regardless of how a plant quantifies or defines its compliance program, leadership must offer continuous support and guidance because “the current environment can be intimidating,” says Vilgiate. “But if a manager enthusiastically supports the program, that will be contagious. If a manager grumbles and gripes, puts a half-hearted effort at compliance, subordinates will take note and feel that the program lacks utility.”

Henshaw, who left OSHA in 2004, adds that he now spends much of his time trying to convince manufacturing leadership of the value proposition of workplace safety and health. He observes that good cultures are those that focus on all elements that drive business performance, including the very critical one of worker safety and health that preserves the human assets that drive the business. The bottom line, he says, is that safety and health values improve all business objectives. “There is an investment [for safety], but there is a return in both direct and indirect costs,” says Henshaw. “This includes improved morale, productivity and quality. If you can get workers to understand what they need to do, how they need to behave and how they need to respond to issues,” he says, “you’ve won.”
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