I heard an ad yesterday on a local Washington, DC, radio station. I forget the company, but at one point in the ad a spokesman for the company proudly proclaimed "Safety is always our first concern."
Of course, we know what this claim is supposed to mean. But let's, for purposes of this blog post, be annoyingly pedantic and take the claim literally — to mean that this firm is always trying to improve safety rather than spending its resources on other fronts. If taken literally, basic post-1871 economics tells us that this firm's current level of safety is inadequate. Why? (Assume that the firm seeks to maximize its profits.)
Use the comments section to write your answer to this pop quiz.
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There is always a trade-off between safety and production. The only way to be 100% free of possible harm from an activity is to not engage in that activity.
The more absolute the concern for "safety," which I take to mean reduction of probability of harm, the higher of the cost of production. At some point, the small marginal gain in safety comes at a comparatively large marginal loss in production, and past some equilibrium, becomes completely ridiculous.
Because that's when Carl Menger taught us about marginal utility.
In this context, "always" is as meaningful as "forever".
Will they sleep?
Will they drive to work?
I could accept: "Safety is always a concern."
It's place on the list of priorities could then move up and down as appropriate, but how could a business operate if every other priority is always subsumed under safety?
It could not.
Also. If safety has been dealt with appropriately, then it should no longer be the top concern.
The equal marginal benefit principle would be that they should not have spent money on the radio ad you were listening to. On the margin, the each dollar should have gone towards safety improvement instead of advertisement in order to max profits.
If the firm were profit maximizing the firm would only then be allocating its
resource(s) to the most efficient use, which includes safety. Therefore, a firm focused upon safety, and as Justin suggests, signaling its safety focus, is being inefficent and not maximizing its use of resources, likely at the cost of its objective.
Vis-a-vis the companies products, it would mean that the precautinary principle was in effect there and no product could be sold as no one can guarantee that any product will cause no harm, anytime, anywhere, or to anyone.
Therefore, they could have no profits, only expenses.
Justin Ross and Jason O are correct.
Ok, if a firm always sacrificed costs to achieve safety and therefore charged a higher price for its product then their customer base would always be lower than it otherwise would be.
Given that, while its smaller customer base is safer, the rest of society which was priced out of the safe market and into poor alternatives which may be death traps, then it is possible for society on average to be less safe than if the company in question cared sacrificed safety a little in the name of lower prices and wider distribution.
It is the same argument about car safety regulations. It is the case that new cars are safer than old cars, so safety regulations that make new cars more expensive will keep old cars on the road longer, costing lives.
The question was why, if taken literally, the statement signaled the firm's inadequate level of precaution.
Without reading the rest of the comments, here goes…
The business with the most efficient balance of safety, cost, function, etc. is the one that is going to stay in business. If this company is still in business, they must be skimping on safety.
Since we're discussing a marketing slogan like some kind of scientific assertion …
I get the marginal utility point, but "always safety first" is not equivalent to "safety only". "Safety first" could indicate some weighted calculation in a cost/benefit analysis with "safety" weighted more highly than any other single factor. "Always" then indicates only that this weighting always applies, not that safety always trumps every other consideration.
Whether this particular weighting of "safety" maximizes profit depends on how much the market values "safety".
If a marketer of women's shoes emphasizes "style first" rather than "durability first", it's making a similar bet on market preferences. I see nothing particularly remarkable about "safety first" as a strategy.
To throw in a monkey wrench, what if this was a home security firm? In that case, if safety wasn't the first concern, that would reduce profits since the goal of the business is to produce "safety" as a service.
I'm with Zach. We don't have enough information to know whether "always safety first" makes utilitarian sense in this context.
The firm's first concern is not always safety, because they are diverting money away from their safety programs to spend on the advertisement that the potential customer is viewing.
i bet they're in cahoots with that nasty PLAINTIFFS BAR!
Safety is always our first concern is the question. If you're talking about the CEO's fat compensation plan and expense account then of course safety is priority #1.
Are they talking about handing out condoms with the company's logo on it? All condoms that I'm aware of have a known failure rate. A condom with a 100% guaranty of preventing fertilization or std's is probably an undesirable, frustrating product. I heard a story once about a husband who cut a hole in the condom to get his wife pregnant against her wishes. This led to a failed marriage and an unwanted child. Is the scissor company in any way responsible for this unhappy outcome?
What hazardous product are they selling? Lawnmowers is the classic example, I believe. I hate lawnmovers, blowers and the inconsiderate people that use them. The mowers are noisy and the blowers produce air pollution and are all-around disgusting. I hope they lose a limb, or choke in the process of using them. Let's factor gardeners out of the safety equation for good. They don't count for much.
Are they talking about worker or consumer safety. Less worker safety is common in 3rd world countries as are the poor working conditions. Some jobs are hazardous by their very nature such as being a soldier in Iraq. One would think that the risks of the job would entail higher pay, but that frequently is not the case. Take for example people who work in a convenience store for low wages during the graveyard shift. They are sometimes shot during a robbery. The are expendable and easily replaceable in this country. So forget them; they are irrelevant, and are excluded from the safty equation.
Safety as a product feature is important in airplanes and cars, for example. But ponder the effectiveness of seatbelts on a 747 when it crashes in an accident. Admit it, the seatbelt is worse than useless. I never buckle it. If I know I'm going to die, I want to get out of my seat and confront the pilot. I want to give him a piece of my mind, both literally and figuratively.
taking all of it literally: if the firm seeks to maximize its profits, then by proclaiming that "safety is always our first concern" the firm is telling us that the surest way to improve profitability is to improve safety – that is to say, medical costs, lost workhours and lawsuits are costing it a bundle, an indication that safety surely isn't what it should be. (or maybe the firm manufactures safety equipment!:-)
I'm going to try a simple answer without actually knowing what firm and what type of business. I think tis is true with all firms.I'll use the example of a firm that is involved in investment, Safety and Risk are mutually exclusive. One must balance the acceptable amount of risk with the desire to be safe. If you were only concerned with safety you would not allow risk and that is necessary to gain profits!
Safety is simply a measure of acceptable risk. This is related to the potential severity of a hazard, the exposure to the hazard, and the probability that an incident relating to the hazard will occur. No action is risk free (including inaction).
If this company uses this meaning of "safety" (the modern "correct" meaning), then the appropriateness of decisions on it's proper use of resources would depend on what it considers acceptable risk (i.e., "safe").
A firm maximizes profits when marginal cost equals marginal revenue (MC = MR). If this firm is willing to spend more on safety it must mean MC < MR. In other words, this firm feels it has not yet reached an optimal level of spending on safety. If it did they would they would not spend anymore on safety because then MC > MR and they would not maximize profits.
Not an economist, long time since an academic class.
I am a loving father and using an analogy: "Safety is always my first concern" with my children.
That does NOT mean I lock them in a room to keep them safe.
It does mean we are involved in a lot of activities, where some involve the risk of getting hurt (exp. soccer)
Advertising the safety of ones product compared to other products (perhaps less safe) qualifies as part of a “safety program”.
Based on the studious answers above, I smell a poor grade with my response.
Your question had me stumped, but I think I found just the right answer with the first comment, by Michael Kolczynski.
Thank you, Michael, but will you please change your name,
The fact that they are advertising means they are using resources that could be used to produce additional safety. Thus, they are not maximizing safety at the expense of everything else.
Safety may be their second concern, but their first concern is pleasing the customer, else their enterprise would be doomed to fail. Safety isn't even the customer's primary concern much of the time.
They frittered away their dough on ads, depleting their safety funds.
Idiots. Serves 'em right.
Freenet mit Gewinnrückgang
Büdelsdorf.
Von Raivo Pommer
Beim Telekomanbieter Freenet hat es 2008 nach der Übernahme des Konkurrenten Debitel einen Umsatzsprung gegeben. Nach vorläufigen Zahlen betrug der Konzernumsatz fast 2,9 Milliarden Euro nach knapp 1,7 Milliarden Euro im Vorjahr. Gleichzeitig ging das Ergebnis vor Zinsen, Steuern und Abschreibungen, EBITDA) von 213,7 Millionen Euro auf 207,1 Millionen Euro zurück, teilte das schleswig-holsteinische Unternehmen am Donnerstag in Büdelsdorf mit. Das Unternehmen befindet sich gegenwärtig in einer tiefgreifenden Umbauphase.
B/C there is nothing else that they could spend a dollar on that would add to their profits than spending a dollar on safety. If this is not true of their competitiors, their competitors have safer products, services, etc. The marginal dollar gets put toward its best use.
Safety isn't their first priority. It's their first concern.
In other words, they worry about safety before they worry about anything else. And as the domain experts on the safety of their operation, there is probably a very good reason.
I seem to remember seeing this slogan (or something close to it) on some Metro-operated buses here in D.C. And since operating a vehicle is inherently unsafe to some degree, I would always think: "well if that were true, the Metrobus service wouldn't exist in the first place."
Von Raivo Pommer
Tiefster Stand seit mehr als sechs Jahren
Der Dow-Jones-Index für 30 führende Industriewerte hat am Donnerstag mit dem niedrigsten Stand seit Herbst 2002 geschlossen. Er sank auf 7.465 Zähler.
Sorgen über eine Ausweitung der Wirtschaftskrise und Spekulationen über die Verstaatlichung von US-Banken haben den Leitindex Dow Jones an der New Yorker Börse auf den tiefsten Stand seit Oktober 2002 gedrückt. Der weltweit meistbeachtete Aktienindex verlor am Donnerstag 1,2 Prozent auf 7465 Zähler und sackte damit auch auf den tiefsten Stand seit Beginn der Finanz- und Kreditmarktkrise im Jahr 2008.
Aktuelle Zahlen zum Arbeitsmarkt und zur Wirtschaftsaktivität hatten im Tagesverlauf auf eine weitere Verschlechterung der Lage hingedeutet. Da half es nichts, dass nach der jüngsten Talfahrt Schnäppchenjäger zum Teil wieder von einem günstigen Zeitpunkt für den Kauf bestimmter Papiere sprachen. Der Ölpreis stieg nach einem überraschenden Rückgang der US-Lagerbestände um 12,2 Prozent auf 38,85 Dollar je Fass.
The world is a dangeeeerous place.
By the statement, the company meant/claimed that whatever they do, they strive to make it as safe as possible. Different industries take it differently. For an airline, it means they use the best technology (reliable/proven/effective) in the market. For them, if being 100% safe was a criteria, then better not fly, because there is ALWAYS a danger of mishap. Another interpretation can be derived a different industry. For example, take the case of a boiler manufacturer. It is very easy to make the boilers safe: increase wall thickness. But then there is no end to this madness. So an acceptable design would be when a catastrophic failure would by rarer than once every 10,000 years. For an airbag manufacturer, it is ensuring failure-on-demand of the airbag is less than once every million opportunities. As I do not know the industry you are talking about, I can't comment specifically of what the guy meant.