2014 Salary Survey: Confidence rises amid the challenges

Bob Vavra, Plant Engineering

After almost a decade of uncertainty, the confidence of plant floor managers is soaring. Even with a number of challenges and while implementing new technologies, there is a renewed sense of optimism among plant managers about their business and their future.

The respondents to the 2014 Plant Engineering Salary Survey come from throughout the U.S. and serve a variety of industries, but they are uniform in their optimism about manufacturing. This year’s survey found 79% consider manufacturing a secure career. That’s up from 75% in 2013 and significantly higher than the 63% figure when Plant Engineering first started asking that question a decade ago.

Since 2005, there’s been a devastating recession and now a robust recovery led by the manufacturing sector. The fundamental issues of workforce development, staff management, technology upgrades, and challenges from global competitors and governmental policies remain to be dealt with. Yet manufacturing enters 2015 with a full head of steam and confidence that manufacturing will build from its current position of strength.

The skilled worker shortage is, for the tenth straight year, the top issue facing manufacturing, according to respondents. The top five concerns were:

  1. Lack of skilled workers: 24%, down from 35% in 2013
  2. Regulation and codes: 13%, down from 16% in 2013
  3. Government/political interference: 12%
  4. Outsourcing and offshoring: 10%, up from 9% in 2013
  5. Inadequate management: 8%, down from 15% in 2013.

On the issue of outsourcing, more than 60% of plant managers say they outsource at least one plant function, with maintenance at 26% being the top outsourced function within the plant. Other areas being outsourced include system integration (21%), logistics and procurement (11%), human resources (10%), and system management (9%).

There are three primary reasons cited for outsourcing job functions: cost management (43%), a better focus on staff core competencies (39%), and a lack of skilled staff to handle those functions (37%).

A new question for respondents in 2014 was to assess the state of their programs for maintenance, management, and safety. By a wide margin, safety is the most visible program in the plant, as 58% of respondents described their safety program on the plant floor as "mature" and another 27% described it as "developing," while just 4% called their program "non-existent."

By comparison, 43% of respondents described their plant maintenance program as “mature” and just 40% described their plant management program in the same way.

What we earn

As confidence in manufacturing grows, so does the expectation of workers that their compensation will reflect the growth in the industry. More than three-quarters of all respondents to the 2014 Plant Engineering Salary Survey expect a raise in 2015, and 13% expect that raise to be 4% or more. Another 63% see a more modest raise of between 1% and 3%.

Another key area is bonus compensation. Bonuses in manufacturing rose sharply after the 2008 recession as plant management created incentives for increased productivity and lower costs during the downturn. While bonuses aren’t dropping to pre-recession levels, they have fallen from the 2012 high of more than $15,000. The average bonus in 2014 was $11,705, up $27 from 2013 and down from $15,162 in 2012.

Survey respondents also are not as optimistic about bonus compensation increases as they are about base salary. While just 1% of respondents expected a drop in salary, 12% see their bonus compensation falling in the new year. On the other hand, 17% expect a bonus increase of between 1% and 3%, and 12% see a bonus of 4% or more, and both of those totals are higher than either of the last two years.

Source: Plant Engineering

Safety continues to be a significant metric in respondents’ bonuses; in 2014, safety was the criterion for a bonus for one-third of respondents. Company profitability, productivity, quality, and uptime remain significant criteria for bonuses, while energy management, which took a big jump in significance in 2013, remains at the same level for 2014 at 15%.

Source: Plant Engineering

Overall compensation for all survey respondents slipped slightly from $107,104 in 2013 to $104,835 in 2014. Taken with the average age of the plant manager falling to 52 from 57 a year ago, it could indicate a small change between the retiring plant manager and a newer hire within the organization.

One area where salaries continue to surge is the oil and gas market. Both in terms of base salary and bonus, oil and gas plant workers earn the highest wages in the industry: an average of $141,653. Pharmaceuticals and mineral production manager were next, and utility plant workers earned more than $100,000 in base salary.

Source: Plant Engineering

Additional charts: Year-over-year average compensationAverage base annual salary by region; Average compensation by primary job function

What we think

It’s been 10 years since Plant Engineering began asking plant managers a simple question: Do you consider manufacturing a secure career?

In those 10 years, the answer to that question has closely paralleled the rise and fall and rise again of American manufacturing. In 2005, 63% of plant managers considered manufacturing a secure career. That number fell to 61% in 2008 and hovered in the low 60s for much of the next three years. By 2010, as the manufacturing resurgence hit, that confidence topped 70%. Even so, the rise in confidence in 2014 is the most encouraging sign to date of the value of the manufacturing sector to the economy.

Among this year’s respondents, 79% said they considered manufacturing a secure career, the highest confidence rating in the 10 years since we started asking the question.

Source: Plant Engineering

That optimism overshadowed the continuing skills gap facing plant managers. For the 10th straight year, the lack of a skilled workforce is the biggest issue plant managers say they face—ahead of regulatory interference, government uncertainty, or global competition. Again this year, it’s the top issue by a 2:1 margin, although governmental issues—regulation and political—are a combined 25%. Still, the overwhelming consistency of workforce shortage continues to be the one thorn in an otherwise rosy picture.

Source: Plant Engineering

We did ask a few new questions in 2014. One was about outsourcing job functions. Maintenance and systems integration are by far the two leading areas where functions are outsourced, but 36% of plant managers say they don’t outsource at all. For those who do outsource functions, cost management, the ability to better focus on staff core competencies, and the lack of skilled staff to perform the functions were the three reasons most often cited.

Source: Plant Engineering

We also asked about asset management programs, one of the emerging topics in 2014, and something certainly on the radar for our readers. A total of 47% already have an asset management system in place, 9% said they will implement such a program in 2015, and another 9% said they would be studying such an asset management program this coming year. Only 4% said they didn’t know how an asset management program could help their operation.

Source: Plant Engineering

Programs for maintenance, management, and safety are well along in development in most plants. Safety was particularly far along, as 85% of respondents described their safety program as either "mature" or "developing." In management programs, 40% are mature and 35% are developing, while maintenance programs were called "mature" by 43% of respondents.

Source: Plant Engineering

Additional chart: Biggest threat to manufacturing industry

Who we are

Manufacturing plant leaders have a variety of titles, but their underlying skill as engineers is common to almost all of those titles, and to their job function. While the titles vary, 39% of Salary Survey respondents said their primary job is to engineer, maintain, or supervise plant operations, while another 22% are responsible for process or production engineering. About 13% of respondents have supervisory responsibilities over more than one plant.

Source: Plant Engineering

Another common threat is the education background of the plant manager. More than 70% of all respondents have at least a bachelor’s degree, and nearly 20% have either a master’s degree or a doctorate. 

Source: Plant Engineering

And while the average age of the Salary Survey respondents dropped from a year ago, it’s still safe to say we’re not really getting any younger. More than 40% of all respondents are between the ages of 50 and 59, and another 18% are between 60 and 64. Overall, two-thirds of all plant managers are over the age of 50, bringing again into clear focus the dual issues of a lack of skilled workers ready to follow this generation of manufacturing professionals as they begin to retire, and the native plant floor knowledge that will follow those retirees out the door.

Source: Plant Engineering

These issues are significant because while 35% of respondents have been working in manufacturing for at least 30 years, just 8% have worked in manufacturing for five years or less.

Source: Plant Engineering

Perhaps it is a sign of the overall improvement in the economy and the strength of the manufacturing sector, but there is just as much job mobility in the market as in 2013. More than one-quarter of all plant managers have been with their operations less than five years, which is about the same as last year. On the other hand, more than a quarter of respondents have been with their current employer for at least 25 years.

Additional charts: Location; Average hours worked per week; Facility size; Number of employees managed/supervised