Plant managers are ready to break free from the recession's grip—but they need capital, people, and a little confidence from management.
Manufacturing leaders are ready to go—and ready to grow—in 2012. All they seem to be waiting for is a further investment in people and processes.
The 2011 Plant Engineering Salary Survey paints a picture of manufacturing straining to break free from the restraints of recession and the yoke of government policies. Plant floor leaders who participated in the 2011 survey also indicate that ahead of the economic issues, which they can’t directly control, they want management to give them the staff and training they need to grow their operation and improve efficiencies.
The annual Plant Engineering Salary Survey has taken the pulse of American manufacturing for more than two decades. This year, readers reported clearly what they had, and what they lack.
In fact, the word “lack” came up dozens of times among reader comments. Respondents say their facilities lack skilled workers, capital, direction from upper management, and funding for maintenance—and maintenance personnel in particular. “(There is) a lack of skilled maintenance techs and upper management’s lack of knowledge of what it takes to do maintenance correctly and safely,” said one reader.
In the 2010 Salary Survey, we asked which areas of your plant needed more attention. Overwhelmingly, the answer was maintenance. In 2011, the front office’s emphasis on maintenance has grown, but the plant managers believe there still needs to be more.
Maintenance is now the top concern in 37.3% of the organizations responding, with the attention to HR and training issues and automation systems almost evenly split at 25% each. As to what should get the most attention, 44.4% of plant managers said maintenance, with 28.8% electing for HR and training, and 20.8% choosing systems. Energy finished well back in both areas, but 82% of managers said that sustainability does play a role in their organization.
Salaries increase, overall compensation slips
For the first time in four years, bonuses decreased among Plant Engineering readers—and they decreased sharply. The average bonus for a plant manager in a bonus program was $7,580, down from $14,548 in 2010. Salaries almost made up for the decrease in bonuses. Salaries increased 5.9% in 2011 to $92,178. That brings total compensation on average to $99,753, a drop of 2.2%. The higher salaries continue to reflect the age, education, and experience of the workforce in manufacturing leadership. The data shows that 65% of the respondents are over age 50, and 17.6% over age 60. Just 9.3% of the respondents are under the age of 40.
The plant management remains among the best educated management workforce. More than 70% of respondents have at least a bachelor’s degree, with 15.3% earning master’s degrees and 3.8% with dual bachelor’s degrees. Another 20% either have an associate’s degree from a community college or have taken some college-level classes.
Valued of education remains strong
The relationship between college degrees and earning potential remains high. The gap shown this year between those with two-year associate degrees and four-year college programs widened. In 2010, there was a 15% difference between salaries earned by the community college graduates and by those with a bachelor’s degree; this year, that gap grew to just under 30%. The 2011 Salary Survey also showed one of the sharpest divisions between those with undergraduate degrees in plant management and those without such education.
Regional salary fluctuations are not unusual in the Salary Survey each year, and 2011’s survey was no exception. Reflecting the growth in manufacturing in the Mid-South and Southeast, salaries continued their rise in those regions. The most dramatic increase was in the Southwest, which includes the oil and gas refineries in Texas and Louisiana. Salaries in this region jumped from just under $90,000 in 2010 to over $116,000 in 2011. The Southeast, where auto manufacturing has found a new and rapidly growing home, also saw a sharp increase, from about $88,000 a year ago to $92,313 in 2012.
Salaries in most of the rest of the country stayed fundamentally flat, with the exception of the Northeast, which rose from $86,482 in 2010 to $91,015 in 2011.
Looking for security, stability
Manufacturers see the 2008-2009 recession firmly in the rear-view mirror. Just 28% see no end to their recession in sight, while 52.2% say the recession has ended and 18.4% see the recession ending soon for them.
That optimism is reflected in slightly improved numbers in the area of job security. In 2011, 68.9% of respondents say they consider manufacturing a secure career, up from 66% in 2010. They are just as bullish on their own careers and those of their staff, with 70.6% saying their own job is secure and 67.3% saying their employees’ jobs are secure. Both figures are down from 2010, but up from the 2009 levels at the height of the recession.
But plant managers expect that with the recession in the past, their organizations need to look to the future—both for short-term stability and for long-term growth.
“We've cut heads/overhead in order to stay profitable,” said one respondent, “but with growing orders we may not be ready for the increase in product demand. This may cause customers to seek alternate supplier(s) due to slow response.”
“We produce a commodity product, and competitive pressures on price continue to erode margin,” said another. “We need to gain efficiencies without spending much money to retain a competitive position and not lose market share.”
The Skills Gap still is wide
The top issue plant managers worry about—and the issue that is increasingly drawing attention from manufacturing executives and analysts (see sidebar below)—is the Skills Gap. For the sixth time in seven years, the lack of a skilled workforce is cited as the No. 1 concern among plant managers.
More than 30% of respondents cited the Skills Gap as their top concern, followed by ineffective management (23%), government interference (20.5%), and company downsizing (13.7%). The only year that workforce development was not the top issue was 2009, when the crumbling economy edged it out.
Respondents see the problem not just in finding workers to deal with the aging workforce (“The average age of my crew is 58,” said one) but in making sure they are well-trained. “(My concern is) the company growth and how it will affect understaffed departments,” said one manager. “(We need) proper training of employees.”
Others see the complexity of a global manufacturing environment that will be pulled by political and geopolitical issues in 2012. One respondent said his issues were “finding skilled production workers and an increase of production volume with no increase in engineering staff. Business will continue to be slow, and Congress will fail to enact measures to ease the strain on small business.”
Said another, “The lack of spending by large companies for buildings and equipment equals a lack of orders for us.”
Social media still a new concept
The use of social media sites such as LinkedIn, Twitter, and Facebook became a common practice in 2011. In 2010, just 43% of respondents said they used such sites; by 2011, it had grown to 94%. Still, its business application is still in its infancy, and more respondents see it more as a meeting tool than an information tool.
Business use of social media increased sharply, from 10% last year to 53% in 2011, and most of that increase is because plant managers are connecting with their peers. Networking was cited by 35% of plant managers as their primary use of social media, with just 15% using it for problem solving and only 10% for product reviews.
LinkedIn remains the dominant business social networking site for plant managers, with 59% of respondents using LinkedIn for business purposes. Training videos appear to be gaining some traction, as 15% said they use YouTube for business purposes. There is limited acceptance for Facebook and Twitter among plant managers. Overall acceptance of social media sites for personal use also is up, from 33% a year ago to 48% in 2011.
Vavra is the content manager for Plant Engineering. You can reach him at bvavra(at)cfemedia.com.
What’s in a name?
What all Plant Engineering readers have in common is a supervisory role in the operation of a manufacturing plant and the purchase of equipment for their area of responsibility. One of the hardest things to know, however, is the right job title.
We offered four job titles for consideration in the Salary Survey: foreman, plant engineer, plant manager, and vice president. Plant engineer, not surprisingly, was the largest group of those titles, with 35.6%. But 52% had some other title. Those other titles were generally cut across four areas: maintenance (about 20%), project management (9%), engineering (7.5%), and facilities (7%). In all, there were 108 different titles for respondents to the survey—not counting the one person who simply put “God.”