How Missing SDSs Cost a Manufacturer $847,000 · Risk Management Made Simple

How Missing SDSs Cost a Manufacturer $847,000

This is a real story from a mid-sized Houston manufacturer. What happened to them is happening to businesses across the nation right now.

OSHA showed up unannounced after an employee complaint about chemical exposure. The inspector asked three things:

1️⃣Written Hazard Communication program

2️⃣Safety Data Sheets (SDS) for all chemicals on-site

3️⃣Training records

The plant manager walked the inspector to the maintenance office. A three-ring binder labeled "MSDS." Inside: 47 Safety Data Sheets. The facility used 118 different chemicals...

That's a 40% compliance rate.

🔎What OSHA Found

1️⃣Missing SDSs: 71 chemicals had no SDS on file. When asked, the manager said, "The suppliers send them when we first order. We probably have them somewhere." OSHA doesn't accept "probably".

Outdated records: Of the 47 SDSs, 23 were more than five years old. One was dated 2011. Chemical formulations change. Hazard classifications change.

2️⃣No version control: Multiple versions of the same SDS stored in different locations. Employees followed conflicting procedures.

Inaccessible during shifts: The binder was locked in an office. Second and third shift employees couldn't access it without finding a supervisor with a key.

3️⃣No written program: No chemical inventory. No labeling procedures. No training records.

Inadequate training: When the inspector interviewed production workers, they couldn't explain where to find the SDS for chemicals they used daily. No training documentation existed.

So, what happened after all of this came to light?

OSHA issued citations for each missing or outdated SDS as a separate violation. At $16,550 per violation, the initial package totaled $1,174,050. After negotiation and legal fees: $847,000.

But that was just fines.

OSHA halted operations in chemical areas for six days until SDSs were obtained and made accessible—$340,000 in lost production.

Workers' compensation premiums increased 34% at renewal—$127,000 annually for three years.

Two major clients—Fortune 500 manufacturers—audited the company after learning about violations. One put them on probationary status. The other moved business to a competitor.

Three employees filed claims alleging respiratory issues from chemical exposure. Two still in litigation.

Root Cause

No one was assigned responsibility for SDS management. Purchasing assumed maintenance handled it. Maintenance assumed supervisors handled it. SDSs arrived electronically but had no system for organizing or updating them. PDFs saved randomly. New versions via email never replaced old ones in the binder. The plant manager viewed SDS management as "paperwork" rather than a critical operational system.

🩹The Fix

After citations, they implemented: