When UK medical equipment manufacturer, Smith & Nephew’s Hull facility was engulfed by water following a tidal surge, the company faced damage to its factory, offices, plant and lab equipment, as well as significant volumes of raw materials and finished goods. But thanks to FM Global’s swift intervention, expertise in engineering loss prevention solutions and advanced loss payments, production was rapidly restored and robust flood defences implemented to prevent a recurrence.;
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“Devastation. The factory and offices were contaminated with filthy water. Everything smelt, there was sludge on the floor, production machines were coated in filth, walls and doors swelled, paint and plaster was falling off.”
Two years on, this was the recollection of David Stephenson, Senior Engineering Projects Manager at Smith & Nephew, on the flood damage that a tidal surge caused at the Hull facility back on the 5th of December 2013.
This kind of damage is even more significant when one considers Smith & Nephew is one of the most influential medical device providers in the world. Further, its site in Hull is one of its principal locations, supplying advanced wound management products used by doctors and nurses to improve the quality of life for patients.
The flood resulting from the tidal surge is very different in its nature from flooding caused by heavy rain; it involves huge amounts of water that cause water levels to rise extremely quickly.
The reality is that in today’s fast paced business world, flooding as a major risk is often overlooked. Earthquake and fire can be perceived as more dramatic, damaging events that pose a greater threat to businesses. FM Global’s data would suggest otherwise. In fact, from 2008 to 2013, the research shows that flooding (including heavy rain run-off and sewer back-up) was the most common form of disruption for UK businesses, accounting for 33% (one-third) of all losses to commercial property.
This devastating event at the Smith & Nephew plant in Hull was caused by the Humber Estuary overtopping the public defences controlled by the Environment Agency. As a result, the entire Smith & Nephew site was inundated with water. Factories and production equipment, offices, plant and IT/lab equipment were severely damaged, as well as significant quantities of raw materials and finished goods.
The initial response
Paul Andrews, Facilities Manager at Smith & Nephew at the time, highlighted that safety of all employees was the primary objective following the flood:
“I was at home when I got a call from the site that the flood was approaching. By the time I arrived in my car, it was engulfed with water, although I managed to wade in. We had no notice of the flooding – it was only 45 minutes before the entire site was under water. I remember that bewilderment and shock was the overriding feeling – this site has existed for 100 years, and nothing like this had ever happened before. The first step was to ensure people’s safety – i.e. – get them off-site. Then we had to make the site secure and close it as a matter of urgency, making all employees aware through our internal systems, as well as social media.”
The next step was the clean-up, and the speed at which Smith & Nephew got back to operations is a testament to the commitment and resilience of their organisation and employees. The flood took place on a Thursday night, and over the weekend senior executives, engineers, operators, office staff, secretaries and PAs all helped clean the entire site. The desire to keep the site going was immense – people put desks in the cleaned up corridors or worked from home immediately following the event.
Aside from the commitment of Smith & Nephew’s employees, the strong partnership between FM Global and Smith & Nephew was also hugely important in the quick recovery. In fact, for Smith & Nephew to be back on track from an operational standpoint in under two weeks was a phenomenal achievement.
David Stephenson described the immediate impact that FM Global made: “The minute FM Global was alerted, all sorts of things clicked into gear. The FM Global Loss Adjusters were on site within the hour, and put us in touch with a specialist cleaner to attend the site the very next morning. FM Global supported us with every necessary step, no matter what the cost, as they understood that operational downtime could prevent us from being able to supply to our customers. I have to say they were enormously supportive.”
Aside from the initial clean-up of water and flood debris, Smith & Nephew engaged a number of local construction contractors to start the major repairs and also build temporary walls inside some of the key manufacturing areas, creating an inner perimeter so that production could be restarted whilst construction repairs took place. This was key in getting crucial areas back to operation as quickly as possible.
For every second lost, sales can be damaged, and so financial support during this time was extremely important. FM Global made substantial advanced loss payments within days of the loss itself, and the complex business interruption claim was settled within 12 months.
Implementing a world class loss prevention programme
Following the flood, Smith & Nephew wanted to take control of its own destiny to prevent a reoccurrence.
David Stephenson encapsulated the mind set following the disruption: “The entire facility was covered in sludge. Smaller organisations may not have survived. Moving forwards, we wanted to create something that would ensure this damage would never occur again.”
David continued: “Prior to the flood, we’d implemented FM Global’s recommendations on one of the facilities on the site – known as The Montana Facility – and this area avoided damage. It served as a beacon of what you can do to prepare for events like this. Flooding is avoidable.”
What followed was a £3 million, two year investment, building comprehensive new flood defences. FM Global and Smith & Nephew worked together to ensure that the design consultants used the latest flood modelling software and that the right designs and standards were met. They also worked together to appoint a leading flood defence consultant to assist with the technical details. This involved the review of hundreds of construction drawings, scores of recommendations for improvement, including the strengthening of existing building walls, the inclusion of expansion joints in the flood walls and more stable foundations able to withstand the hydrostatic pressure.
The results are impressive.
David Stephenson commented on the importance of this partnership: “We worked as a team on the project, and would not have achieved the level of design excellence without the diligence of the FM Global team.
‘Premier league’ flood defences
Smith & Nephew in Hull provides vital products that healthcare professionals use to treat hard-to-heal wounds. The new flood defences that were completed in 2015 have helped to safeguard the supply of these products to patients in hospitals in the UK and worldwide.
The new flood wall around the site provides protection to the 1 in 500 year flood level. Significantly, Smith & Nephew’s flood defences will work regardless of whether the public defences cope with future tidal surges.
David Stephenson commented on the completed defences: “I like to describe our site as now having ‘Premier League’ flood defences.” Paul Andrews added: “We are very proud of what we have achieved and this allows us to sleep soundly at night! ”
From a management level at Smith & Nephew, there is now a deep desire to minimise all exposures and reduce the areas where they could be vulnerable at the Hull site. David Stephenson had wise words for other companies out there that could be exposed to a major flood loss: “Take very, very seriously the effects that a potential flood loss could have on your business. I could never have comprehended the devastation that water could cause to a site. The costs to business can be enormous.”
The perils of flood water
Flood can be one of the most damaging and expensive natural catastrophes.
Flood waters are never clean and can have a severe impact on businesses by damaging essential production machinery and stock. A company can expend a lot of effort cleaning, repairing and replacing damaged items. This effort comes at a cost that can run into hundreds of thousands of pounds. Impacts on the business can also damage credibility with customers, investors and other stakeholders.
Thankfully, Smith & Nephew’s commitment to building resilience combined with FM Global’s expertise in engineering loss prevention solutions, meant that Smith & Nephew was able to bounce back quickly and take measures to try to prevent this from happening again.
Dana Kamp, Director of Risk Management at Smith & Nephew, paid tribute to the strong relationship between the insurer and the insured: “FM Global has proved that it is more than an insurer – it is a key partner to Smith & Nephew and has been for many years. The Smith & Nephew team did an extraordinary job restoring the site and production, and I am certain that FM Global’s response was instrumental in significantly helping the recovery. Long term relationships based upon trust and transparency result in the strongest partnerships, and this collaborative partnership contributes to our joint success.”