2015 Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There’s also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Despite the relative strength of the U.S. manufacturing market, the monthly PMI Index put out by the Institute for Supply Management declined for seven straight months and fell into contraction for the first time in three years in November.
These are nervous days.
That’s why it is not surprising that for the first time in a decade, the primary concern of plant managers is the economy, according to the 2015 Plant Engineering Salary Survey. In past years, the top issue was the lack of a skilled workforce, and that checks in as managers’ second-largest issue, but the economy was clearly a bigger concern at the end of 2015.
Manufacturing is still seen as a secure career by more than two-thirds of respondents; and 65% of all respondents are over the age of 50, indicating experience still is a key factor in manufacturing management.
That experience is being rewarded. Average base salaries climbed to more than $100,000 for the first time in the Salary Survey, and 46% of respondents said their base salary was higher than that $100,00 threshold. There also is optimism around salaries for 2016, as 69% saw pay increasing this year.
Some respondents cited global unrest as a concern for manufacturing. Others are anxious to see government regulations relaxed, both on their operation and in heath care. Some still see barriers to growth within their own plants; thus, within their own control. Everyone, it seems, is worried about something.
In 2015, the year began with confidence and optimism. In 2016, the year begins with uncertainty. The issues that face manufacturing in the short-term are complex and outside of the control of most individual plants. That makes it even more important to focus on those areas of your facility you can control—safety and productivity, training and employee development. If we dare to look back at 2008 and what followed, we can be reminded of those qualities that led U.S. manufacturing forward and brought the overall economy from recession to prosperity.
WHO WE ARE: Click here to link to the digital survey:
While the average age of respondents to the Plant Engineering Salary Survey dipped in 2015 to 52 years of age, the experience level of plant management remains very high. Of those responding, 58% have worked for their current employer for at least 10 years, and 30% have been with their current company for more than 20 years.
There was still some mobility in those jobs in 2015, however. More than one-quarter (26%) had been with their current employer less than 5 years, the same total as in 2014, and 5% had been in manufacturing less than 5 years. That’s still lower than the 20% of managers who have been in the job at least 35 years and the 8% of managers over the age of 65, indicating that the concern over who will take over management of plants in the next few years still is an issue.
The number of advanced degrees in manufacturing was up sharply in 2015, with 23% on respondents holding a master’s degree. Overall, 48% own at least a bachelor’s degree, and 71% own a 4-year college degree.
These managers also have significant management responsibilities. They manage staff, and 92% manage at least 20 employees. They manage energy, as 60% are responsible for energy use and reduction. And they manage time, as 94% work up to 45 hours a week and 59% work between 45 and 60 hours a week.
The Salary Survey respondents reflect the wide array of manufacturing in the U.S., both in terms of industries served and in terms of plant location. Their primary job, though, is largely the same: managing the plant’s operational, maintenance, and engineering functions.
WHAT WE EARN: Click here to link to the digital survey:
Plant management salaries climbed sharply in 2015, according to the Plant Engineering Salary Survey. Base salaries were up 8% to an average of $100,740, and bonus compensation increased 7.6% to an average $12,599. It’s the first time base salaries have finished above the $100,000 threshold, and the second straight year of bonus increases.Both were primarily impacted by the plant’s performance and the manager’s ability to improve productivity. More than three-quarters of bonuses (76%) were based on company profitability, and 58% were based on employee performance. At least one-third of all bonuses are affected by safety metrics (39%), plant productivity (34%), and reducing costs (33%).
Whether those compensation gains are sustainable will depend on how long the current manufacturing slowdown continues and how manufacturers choose to respond to a longer slowdown. One hint from the past: Bonus compensation skyrocketed in the years immediately after the 2008 recession, as manufacturers understood the need to drive greater productivity out of their plants even given a reduction in staff. It was those productivity gains that helped fuel the strong manufacturing recovery that helped pull the U.S. economy out of recession.
For their part, plant managers are slightly more pessimistic in 2016 about salary increases. While they don’t expect a decrease in salary, they are not expecting a big increase, either. Of the survey respondents, 54% saw a salary increase of between 1% and 3% in the coming year, while 30% expected to stay the same. A year ago, 63% of respondents expected an increase of between 1% and 3%, and 23% saw no increase.
WHAT WE THINK: Click here to link to the digital survey:
It’s the economy. The challenge of operating a manufacturing businesses in a global economy means that when the global economy slumps, plant management has to navigate through the slump.
With oil policy, currency policy, regulatory policy, and health care policy all weighing on their minds, the Salary Survey respondents put the economy at the top of their list of concerns for the first time in the 11 years Plant Engineering has asked the question. While most of those big issues are outside of their control, it doesn’t mean they don’t have them at the top of mind.
It was two areas they can control that took the next two spots. The continuing lack of skilled workers and challenges from their competition both garnered a significant part of the concern. Government interference, burdensome regulations and inadequate company management held down the next three spots in the survey.
Comments from survey participants reflected frustration with all of these areas:
On the economy: "How the stock market is going to affect the industry. We ship all of our manufacturing offshore and are not bringing much back to take its place. (The) money people (are) devaluing the need for maintenance on the factory floor."
On workforce development: "My biggest concern is getting lots of high-quality professional development so that I can add as much value to my organization as possible. I am still a pretty new engineer, and there is so much I need to know that they didn’t have time to teach in school. I have heard it takes 10 years to make a good engineer, but I want to be able to add a lot of value all the way along in my career." Another respondent expressed concern that "Engineering manpower will be reduced arbitrarily to increase short-term profits."
On competition: "(There is a) lack of organic growth prospects and lack of transformative new products for the product lines we manufacture at this site."
On government and regulation: One respondent said there was a "lack of common-sense application of industry rules and regulations leading to overregulation." Another expressed concern about the "survival of smaller food companies with the advent of new FDA programs and Global Food Safety initiative."
On management: "Poor management (is) continuing to push older, more experienced people out in lieu of a younger person with lower pay and no real experience in the job."
Bits of optimism: Yes, there were some of those as well. One manager wrote, "We are cramped for space and looking at plant expansion options." And another added, "This is a new plant. Getting it started and making quality product is the biggest concern."