Some manufacturers unprepared for Y2K
By Staff -- Industrial Distribution, 8/1/1998
Newton, Mass.--Manufacturers who see the start of the new millennium as being 17 months away are only looking at part of the picture.The Year 2000 has already arrived -- at least, the infamous computer problem associated with the turn of the century is here. Unfortunately, a number of manufacturers aren't hearing that message.
Fifteen percent of companies responding to a recent survey by the American Supply and Machinery Manufacturers' Assn. said that they had not appointed anyone in their company to address the Y2K problem. And nearly 25 percent of the respondents had not yet developed a plan to address the problem. (In case you're one of those folks, Y2K refers to the glitch that arises when computer systems can't read dates beyond 1999 which, come midnight on Dec. 31, 1999, could bring your business to a grinding halt.)
The ASMMA survey results parallel a poll conducted by Industrial Distribution in February which revealed that 18 percent of responding distributors had not yet addressed the Y2K issue.
"I think [the response of ASMMA members] is probably typical of American industry," says Chuck Stockinger, ASMMA executive director. "The alarming thing is that it tells us that there are a lot of folks who have not really engaged the problem and it's very nearly too late to get it conveniently resolved and dealt with."
Small companies with revenues under $5 million are much more likely not to have addressed the Y2K problem, according to the survey.
"To have not looked at the issue is the unpardonable sin," Stockinger says. "The survey is meant to be a bit of a wake-up call I guess. You see [from the survey] that the larger companies have pretty much not only engaged the problem but have probably already dealt with it. In some cases small companies don't have the level of sensitivity to what the problem consists of. Unless you get all of your people together and try to identify all of the areas that could be a problem, you probably aren't aware that you have a problem."
"Everyone started out looking at this issue as a computer software/hardware problem," says J. Stephen VanHeyde, an attorney with Baker & Hostetler in Columbus, Ohio, and legal counsel for ASMMA. "And I'm pretty confident that people will have software/hardware that is Y2K compliant in time. But what people are slowly beginning to realize is that, in manufacturing for instance, there are all kinds of machines out there on their floor that have embedded technology in them."
There is one problem that manufacturers across the board haven't addressed: the issue of liability. Eighty-one percent of the respondents said they had not reviewed their insurance coverage as it relates to the Y2K problem. Companies need answers to questions like: what are we liable for if our computer system goes down? What's my coverage if my system causes a problem with my trading partner's system? Will my business interruption insurance cover any losses related to Y2K?
"Insurance companies are doing everything possible to limit their responsibility for Y2K problems," says VanHeyde. "Businesses better correct the problem, because the insurance companies are not going to pay for it. It's too great a risk."
In addition, a majority of the ASMMA respondents had not surveyed their key suppliers and key service providers about their Y2K compliance status -- thus leaving themselves open to a host of problems that won't be resolved easily.
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