Boost Your Bottom Line In Labor
Our Operation of the Year finalists share how they are addressing health care costs and managing labor.
October 12, 2011
One area growers and business owners in general feel powerless to control is rising health care costs. As providers of this employee benefit, growers often feel they are at the mercy of the insurance providers each year when it comes time to renew the coverage plan. And new federal regulations that are just beginning to be phased in have created a cloud of uncertainty.
We shared what growers are doing to address this problem during a panel discussion we presented at the OFA Short Course this summer called “Boost Your Bottom Line.” The panelists were from our four Operation of the Year finalists: Bobby Barnitz (Bob’s Market and Greenhouses), Ken James (James Greenhouses), Marc Clark (Rocket Farms) and Al Mueller (Emerald Coast Growers).
Barnitz and his human resources director have been working closely with their health care provider to explore ways to reduce costs and even had an evening meeting with the 50 affected employees to get input on working toward solutions. “We provided food for everyone so they didn’t feel they had to go home and come back,” Barnitz says. “The topic of the conversation was what we could all do together to control the cost so we aren’t hit with a significant increase in insurance each year.”
One suggestion was to purchase prescriptions at large retailers like Walmart and Kroger, which provide them for $4 instead of paying 30 percent or the $10 charge through the plan. Simple things like that can make a difference in lowering premiums.
“We were fortunate in that we ended up with a 4 percent increase on our health insurance coverage this year,” Barnitz says. “Insurance is all built on statistics and if the companies are paying out more in coverage than they’re drawing in in premiums, your rates will go up.”
Mueller says health reimbursement accounts have been an effective strategy for Emerald Coast Growers. “Every program has a deductible. What we’ve chosen to do in Florida and Pennsylvania is share the deductible risk with the employee by covering a certain portion of it and then the health insurance company will pay the top part of it,” he explains. “It drove the premiums down. Unfortunately, it doesn’t stop it from going up in the future, but it does give you a reprieve for a while. It also causes you to work together to try to find ways to live healthier and eat healthier.”
Barnitz says Bob’s also went to health reimbursement accounts two years ago. Emerald Coast also had explored health saving accounts but determined it wasn’t the type of program most of its employees would use. “We looked for a broad-based program that everybody could benefit from and it has worked out pretty well,“ he says.
Lean But Not Mean
In addition to looking at costs, our growers have been looking at ways to drive productivity. James has seen great results from incorporating lean manufacturing practices taught by industry consulting firm Flow Vision. “This is a really smart way to approach what we do in our business collectively,” James says. “This is manufacturing after all. We’re creating a product.”
With James Greenhouses being a young plant specialist, there are some weeks when workers need to stick 100,000 cuttings a week and others as many as 600,000 cuttings a week. “We’re a fairly small company and can’t ramp labor up and down like that. It just doesn’t work for us,” he explains. “So those peak weeks in the fall and spring are just killers.”
James had also reached the point where he didn’t want to expand his facilities but kept hitting production impasses. With Flow Vision, James was able to take a chaotic production scenario and break each task down to bare essentials, timing each step. For instance, it could be placing a flat on the flat filler, the time it goes through the flat filler, followed by the time it goes through the water tunnel and the time it takes to move to the next position.
“It sounds pretty tedious, and it is, but you break down every single job, every single activity to its bare essentials,” he says. “You assign a time to the activities and piece them back together.”
Documenting every task from start to finish gave James’ managers a valuable training tool. “You can take a brand new employee and make them a first-day cutting sticker and have them up to speed in 30 minutes,” he says. “They don’t have to know everything else, but they know that. By lunchtime, they’re meeting our minimums easily.”
Production efficiency increased significantly. “Lean practices allowed us to produce 24 percent more on a given day with the same number of people, or better yet, allowed us to have fewer people producing the current levels of output,” James says.
Lean processes also relieve stress during the most intense production times. “Before, when you’d walk into the production facility, you could feel the vibrations of everyone’s stress,” he says. “That all just went away. It’s not magic and it’s a lot of work, but now everyone knows what’s expected of them, what the output requirement is and what they’re capable of producing. So there is no anxiety of not measuring up.”
And there’s real-time feedback. Each work area has a whiteboard that spells out what the crew will be producing and what the goal is. Employees can also jot down notes about what didn’t go well that particular day. “It just reduces everyone’s stress level. People get through the day easier,” he says. “The intensity is gone but the output is still the same.”