2017 Salary Survey: It’s the (lack of) workers

Skilled workforce needed—and technology isn’t seen as the answer.
By Bob Vavra, CFE Media January 29, 2018

Photo by Alex Kotliarskyi on UnsplashAfter two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It’s the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

More than one-quarter of all plant managers cite the lack of skilled workers as the biggest threat to manufacturing today. While the issue of workforce development always is an issue for Plant Engineering readers, the 26% figure in 2017 is the highest level in four years and supplants economic concerns this year. In fact, the economy comes in third this year behind competition. Additionally, concerns over every area in our survey except skilled workers and competition fell sharply from the past two years.

One reader wrote that the industry needs “better compensation for retirement savings, and hiring skilled labor. Never in 40 years [have I] seen such a weak hiring market.”

Another responded the challenge is “finding enough options of competent persons and contractors to be able to effectively and economically address issues.”

And a third reader said the issue was the lack of skilled labor “from training to comprehension of process controls.”

Not embracing technology

Even given the concerns over skilled workers, a majority of plant managers aren’t ready to implement two of the significant technology solutions to the issue—the Industrial Internet of Things (IIoT) and robotics. While 33% of managers believe robotics will provide labor to overcome the worker shortage, only 16% of manufacturers plan to add more robotics in 2018, and 43% have no plans to add robotics at all.

IIoT continues to evolve as a manufacturing strategy, with more global suppliers and major technology providers investing in IIoT solutions. Still, just 9% of manufacturers will implement IIoT this year and 20% still are unsure about how IIoT will help their operations. There is an equal split between those manufacturers who are continuing to study IIoT’s value, and those who have no plans to implement the strategy.

Embracing security

Even with the concerns, plant managers feel secure about their careers, and about their compensation as 2018 begins. For the fifth straight year, at least 70% of respondents consider manufacturing a secure career, and the 78% figure in 2017 represents the highest level since 2014.

The biggest gap among plant managers is the wide disparity in age: 71% of respondents are 50 years or older, and 34% are 60 years or older.

Given their age, their job experience—69% have been in the industry more than 20 years—and education—67% have a bachelor’s degree or a master’s degree—the experience plant managers still provide them with both technical and financial satisfaction, although at slightly lower levels than the past two years. Seventy-two percent of plant managers expect an increase in base compensation in 2018, with 58% expecting a raise of between 1% and 3%. On the bonus compensation, 34% expect an increase, and just 12% expect a decrease. That’s down from 19% who expected a decrease one year ago.

Compensation fell in 2017

Overall bonus compensation stayed below the $10,000 average for the second straight year. It had been as high as $15,000 in 2012, but has declined in four of the last five years.

That also is reflected in the bonus compensation criteria: While bonuses went up 8% on average in 2017 (from $9,098 in 2016 to $9,842 in 2017), every area that affects bonus compensation declined in this year’s survey. Perhaps the most troubling: just 25% of managers have safety as a factor in their non-salary compensation. Almost as troubling: just 42% list personal performance as a factor.

The overall drop in average base salary—from $103,980 in 2016 to $93,784 in 2017—reverses a consistent trend of pay increases in this decade. The salary level was $87,039 in 2010 and $93,130 in 2014, then spiked over $100,000 the next two years. This year’s reversal isn’t easily explained, although there was a drop in the number of workers over 60 years of age who participated in the survey this year. There also was a significant decline in the pay levels for plant managers in the wood, paper, and printing industries.

But pay issues rank further down on the list of concerns for plant managers. As they look around, they need more workers, better workers, and workers ready to address the needs of a changing manufacturing plant. Or as one reader put it, “Approaching retirement, [there is] no method to pass on tribal knowledge.”

Bob Vavra is Content Manager for Plant Engineering at CFE Media.

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