.. eaper than other companies, which keeps its inventories a little lower, and its manufacturing costs a fraction tighter. Another trick is to buy refineries at knock down prices. They bought Bayway at $175 million and BPs two refineries together at $75 million. These prices are not much compared to the several billions needed to build a refinery.
This reflects the bargaining skills of Toscos boss Thomas O Malley who believes, “Greed is good.” One of their biggest deals was in 1996, when Tosco acquired the Avon Refinery near Martinez, CA. Tosco began growing rapidly. Quickly purchasing one refinery after another. Their hastiness resulted in deadly results. They had no guidelines to follow.
Each refinery was operating under its own policies and procedures. During an interview conducted with John Van Sluyters, Chairman of the Product Quality Committee, he states that, ” Uniformity in standard operating procedures have not been established.” The Avon explosion clearly demonstrates the problems they encountered without a uniform strategy. In 1997, there was a fire that broke lose at the Avon Refinery. Tosco still did not implement any changes in their operating procedures. San Francisco Examiners states, “Tosco Corporations Management was unwilling to shut down production to ensure the safety of workers.” It was not until the recent explosion on February 23, 1999, where they finally realized that change was inevitable. Four workers were killed and another critically injured when a fireball engulfed them while they attempted to repair a leak in a pipe.
According to the CA Occupational Safety and Health Administration and contra Costa County, “Since 1983, seven workers have been killed in the 86- year old refinery.” It was imperative to implement a standard operating procedure immediately. These tragedies, finally made Tosco realize that they needed to adopt a universal standard operating procedure. They decided to implement the Dupont Standards. Safety Standards and Quality Control by Dupont Tosco models their safety standards and regulations after Dupont Corporation. Duponts commitment to safety is the best in the oil industry; their goal is zero injuries, illnesses and incidents.
Dupont states, We believe that all injuries and occupational illnesses, as well as safety and environmental incidents, are preventable, and our goal for all of them is zero. Dupont pledges to their safety standards and firmly believes that good safety practices are instrumental to productivity and quality. Tosco has developed a strategy for safety. Most of which are contained in their Hazardous Material Management Plans (HMMPs) and the Risk Management Plans (RMPs). Both of which are mandatory by government agencies and indicate certain guidelines for the containment of hazardous materials. The first stage in the development of their strategy is to assess every safety code and violation possible.
For instance, if an employee of the plant notices water on the floor in the restroom facilities. This is an unsafe condition, which could cause someone to slip and fall. Once the problem is identified a plan is designed to ensure that nobody is hurt. In the case of the restrooms, signs can be posted that say, caution wet floor, or the facility can be closed until the floor is dried. Although this is a simplified case, it is nevertheless one common in many industries.
Action plans are more than security against mishaps. The action plan calls for employee participation. Through training and education, Tosco is trying to instill safety sensitivity in its employees. Each individual should feels as though they have another persons life in their hands. It is vital that safety action plans are thorough.
In an emergency situation, one may forget how to react. Tosco employees practice safety procedures through repetition of training sessions or signs. The assessment stage includes incident investigation. If a worker is injured or a regulation has been violated, proper procedures must be taken. Tosco learned this valuable lesson at the expense of employees lives. In February of 1999 Tosco ignored warning signs that there was a serious problem with the Avon refinery near Martinez, California. As a result, a deadly fireball killed four plant workers and severely burned a fifth of the company (San Francisco Chronicle).
Tosco lost more than their creditability, reputation, and profits; they lost the lives of four of their employees. In addition to the government standards, Tosco has incorporated their own regulations that mimic Duponts. Employees are forced comply with these regulations. Compliance issues help motivate employees for perfect safety records. Tosco has an annual training and testing of physical skills, thinking skills, and behavior.
Failure to be in compliance results in administrative action, probation and/or disciplinary action. Dupont has identified alternative ways to comply with safety, such as positive recognition and rewards. They offer financial gains and company perks. Employees have been essentials to Duponts national recognition for safety and Dupont has returned the favor. Recognition and rewards is the best way to motivate workers for safety.
It gives the employee something that is tangible for his/her efforts. Plus, it gives personal satisfaction that the employee is doing good for themselves and the company. Dupont maintains their safety record lead among competitors because their process is under constant scrutiny. Assessments and action plans are reviewed, sometimes on a daily basis. In dangerous occupations, many companies have safety departments that perform these specific duties. Dupont has a safety element of it human resource department. Eventually, Tosco will have a safety department.
This will relieve some of the responsibility from management, who can then focus on productivity. Dupont takes extra steps towards safety stability by adding outside consultants to their process. Consultants offer continuous support and advice from an unbiased view. They bring fresh and innovative ideas to the company. Consultants and/or management can perform safety audits, which eliminate unsafe conditions and at-risk behavior. Audits consist of randomly walking into a work environment where goggles must be worn and watching for violators.
Complicated audits can include reviewing incident reports and interviewing employees. Performing audits give companies a proactive approach towards safety because the government can come in at any time to investigate oil refinery facilities. Violations of government regulations can lead to fines or temporary closure of the plant. Toscos approach to safety is not uncommon. In the service industry companies such as Dupont and Chevron share strategies to regulate safety.
Most companies have found that sharing safety information is in the their best interest both financially and ethically. If Tosco had watched its plant in 1999, those four men would be alive today. And the industry would have been spared of public embarrassment. Dupont’s safety practices model consists of assessment, safety action plans, continual training, independent consultants, audits and incident investigation. But, the underlying reason of Duponts success stems from the employee commitment to the goals and objectives of the program.
Tosco is going to have to develop employee trust before safety standards are taken seriously. Duponts safety motto is: you will achieve the level of Safety excellence that you demonstrate you want to achieve.” Needless to say, if Tosco has the desire to be a safety guru, they will achieve that goal. Bibliography Bibliography The Energy Information Administration, April 17, 2000 San Francisco Examiner, September 16, 1999 Jane Kay (Examiner Environmental Writer) CNN Interactive, January 27, 1997 Web poted at 8:15 a.m. EST Bay Area Air Quality Management Dist. (Compliance and Enforcement Division) Incident Reports for Plant #13 and #16.
U.S. Department of Energy (Annual Refinery Report), Plant #13 Interview with John Van Sluyters, (Chairman of the Product Quality Division, Tosco) April 17, 2000 by David M. Polanco Interview with Paul Thorvaldson, (Dupont) April 19, 2000 by David M. Polanco Interview with Joe Stratton, (Operations, Santa Maria Refinery) April 22, 2000 by David M. Polanco Ground Water Monitor, July 1999, v15 i17, “California Standard MTBE too low” United Press International, December 7, 1999, p1008340u4909, “Tosco to end MTBE use in Calif. Gas.” Tosco Corp., February 15, 1999, Hazardous Material Management Plan, 256231 Sight copy.