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 The manufacturing industry, like others, has experienced a series of very challenging developments in 2008 and 2009. The global recession, coupled with a drop in business and consumer spending, has caused a dramatic slowdown in demand for manufactured goods. In addition, manufacturers face a credit crisis and a spike in energy costs, which they may not be able to pass on to consumers. Adding to these challenges is the specter of increased environmental regulations as manufacturers already work to comply with a wide range of existing regulations that differ by country and even locality, adding to compliance costs.
Marsh's Manufacturing Practice coordinates the global resources of Marsh and its sister companies (including Kroll, Guy Carpenter, Mercer and the Oliver Wyman Group) in risk management consulting and insurance placement execution to help clients to reduce cost, identify exposures, quantify risk, and find ways to mitigate losses.
Marsh's Manufacturing Practice serves the following sectors:
Our professionals understand the key issues and trends affecting manufacturers, and bring an informed approach and creative solutions to help clients manage traditional and new risks. Several of the solutions Marsh and its sister companies provide to assist manufacturing companies in managing key risks and challenges are described below.
Workforce
Marsh's human capital experts provide a wide range of solutions to help clients to hire, deploy, and retain the right work force including effective benefits program design, background, job spec, and drug-screening services, as well as pre-loss risk mitigation consulting to help companies reduce absence and injuries.
Closing Casualty Claims To Reduce Associated Collateral Costs
Marsh's Claim Inventory Workout (CIW) program provides aggressive claim closure strategies designed to help clients reduce the backlog of open cases and in some cases reduce accrued liabilities, thereby improving their balance sheets, reducing claim reserves and the need for letters of credits — potentially freeing up capital for growth-oriented investments. CIW is one of several proven Marsh collateral cost reduction strategies.
Reducing Letters of Credit
During the current economic environment, manufacturing companies are finding obtaining actuarial valuations of retained liabilities critical. Such valuations are particularly important when several underwriters are competing for the business and the reserves show huge differences from one insurance company to another. In addition to providing a realistic estimate for the balance sheet, actuarial valuations can assist in companies' efforts to negotiate a reduction in security requirements.
Plant Closures
Marsh Risk Consulting's Claims, Property, and Human Capital practices can help clients manage the many risks that come with closing a plant. Our solutions focus on employee communications, containment of claims costs, which can spike prior to closing, environmental issues around plant closures, and preservation of physical plant assets.
Business Continuity
Business continuity planning (BCP) activities include prioritizing business operations, identifying tolerable downtimes, assessing financial effects, and outlining recovery strategies to eliminate or minimize the effect of a business interruption on operations. Our manufacturing experts can make site visits to supplier locations and assess existing BCP preparations, identify gaps in planning, and determine if overall plant conditions pose a threat to ongoing supplies.
Supplier Vulnerability
Although supplier resiliency is subject to greater scrutiny today, most companies rely primarily on their first-tier suppliers to monitor the health of their own suppliers — an often insufficient approach. Marsh's supply chain experts use risk modeling techniques and other quantitative indicators to assess the overall viability (including a current financial analysis and supply chain review) of suppliers to determine which may be vulnerable to various risks. As appropriate, Marsh can provide a more detailed review of specific suppliers.
Product Liability and Recall
In addition to Marsh Casualty placing general liability, including products, primary and umbrella coverages, in the event of a product liability suit, Marsh Risk Consulting provides a broad range of services to clients and their defense counsel, including historical insurance policy organization and analysis; collection, organization, and analysis of claim information; identification and organization of unallocated expenses; loss allocation modeling to support insurance recoveries; and design of settlement schemes and negotiation with insurers.
In addition, Marsh's Product Recall Practice can assist in quantifying potential exposures, analyzing resources available to respond to such risks, and ensuring that the proper solutions are in place to optimize insurance recoveries and limit the financial and reputational impact of a product recall.
Property Exposures and Losses
Marsh helps clients to obtain favorable market capacity, reduce risk transfer costs, and mitigate losses through earthquake and windstorm maximum foreseeable loss and probable maximum loss analysis; construction, occupancy, protection, and exposure data development; engineering/loss control analysis and recommendation tracking; physical protection consulting; disaster recovery planning and contracting; and terrorism vulnerability analysis.
Environmental Regulation & Costs
Marsh helps clients with liability identification and valuation (including FIN 47 valuation); remediation expense management, risk transfer; acquisition due diligence, and contractual indemnity consulting — among other services — to help them understand and address environmental exposures. And, Marsh Environmental SBS Discovery information can be used to help prioritize property asset sales to determine environmental liability risk transfer options that facilitate sales.
Accounts Receivable Protection
Today credit insurers are reviewing exposures and avoiding difficult industry sectors and countries. Marsh's Trade Credit Practice can assess and manage global clients' receivable risks and advise on working capital optimization steps, receivable risk management and trade credit insurance options.
Equipment Maintenance Expense
Equipment maintenance insurance can yield cost savings of 15% to 30% by aggregating maintenance contracts across a broad spectrum of equipment and providing an insurance benefit for repair and replacement of key components. By consolidating the contracts and providing a direct cost/benefit analysis of equipment maintenance spend, an equipment maintenance program provides a clear understanding of maintenance expenditures and it's elimination of unnecessary costs. Either original service providers or approved vendors can be used under the program.
Boiler and Machinery
Equipment Integrity & Reliability (EIR) is a broad service that extends beyond the focus of traditional boiler and machinery risk issues. Marsh provides feasible solutions, aligned with clients' business objectives that improve profitability through reduced risk, improved operational and maintenance performance, and the identification of cost reduction opportunities.
Asset Sale Optimization
As some manufacturers shed assets, Marsh's Private Equity Mergers & Acquisitions (PEMA) Practice's asset sale risk due diligence services can help them to manage a wide range of risks associated with divestiture. PEMA works closely with the client's team to identify and address deal-related issues, consults on the insurance and risk management implications of the proposed divestiture, evaluates historical liabilities, and advises on whether new or additional coverages or alternative retentions should be considered.
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