Feeling the pinch
The 2008 Plant Engineering Salary Survey once again paints a vivid picture. The numbers are one story, but that story is not just about compensation. Manufacturing in America faces change coming in many forms %%MDASSML%% from a new federal administration to new challenges to grow in a tough economy.
Plant Engineering readers remain optimistic about their future and the future for their employees, though not at quite the levels of a year ago.
The salary figures from 2008 show a trend similar to a year ago. Almost 18% of a plant manager’s average compensation is from bonuses and profit sharing programs tied to issues such as productivity gains and cost savings.
Once again, plant leaders were incented with additional compensation, and once again they were rewarded for their efforts.
There were continuing fluctuations in pay based on the region or on the industry. The North Central region, which includes most of the Plains states, had the lowest average salary at just over $90,000. The Southwest, which includes most of the oil and petrochemical industry, continued to show sharp increases in wages. The average salary there jumped from $108,699 in 2007 to $122,309 in 2008. That region’s salary has climbed 20% in the last two years.
The Southeast, which has seen the fastest rise in salaries in recent years due to the influx of non-Detroit automakers, leveled off a bit in 2008. Compensation was at $103,564, about the name as the national average and down just slightly from 2007.
Not surprisingly, oil and gas plant manager salaries are the highest in the industry, averaging more than $142,000. Salaries in the beverage and tobacco industries also are high at more than $125,000, followed by the chemical industries. All three of these “consumable manufacturing” segments continue to experience some growth even in the recession.
Still, few industries showed a drop in 2008. Textiles, wood products, printing and metals are all industries under significant international pressures, yet all showed solid salary increases in 2008.
However, many high-cost industries such as machinery, appliances and furniture felt the pressures of foreign competition and high domestic layoffs. All three industries fell sharply, with furniture salaries dropping 24% and appliances slipping 18.6%.
In our Manufacturing Pulse section of the survey, most plant managers see compensation staying much the same in 2009. While only 13% predict salaries will rise more than 4%, just 4% predict a decrease and 58% see an increase of between 1% and 3%. They also see a relatively stable workforce, though more predict a decrease (24%) than an increase (19%). The other 58% see staffing levels remaining the same in 2009. Only 40% see new lines or products added in 2009 as plants try to weather the storm of the recession.
Perhaps one of the ironies of the recession is that plant managers who might have considered retirement in the next couple of years may have to forestall that decision in the face of weakening personal finance performance in 401K and pension plans. The impact of this will be an important trend to watch in 2009.
With more responsibility (plant size, employees supervised, maintenance budget) comes more compensation, but perhaps the biggest indicators of a plant manager’s salary are experience and education.
Plant managers with more than 20 years experience earn more than 25% more than their counterparts with less than five years experience. Those plant managers with a master’s degree (and about 18% of all survey respondents have one) earn almost 50% more money than managers with a high school diploma, and almost 24% more than those with a bachelor’s degree.
Energy issues were a major concern in June when gasoline prices topped $4 a gallon in parts of the nation and oil threatened to shoot past $150 a barrel. Those prices have subsided in the midst of the global recession, and survey respondents see energy prices as having little impact on their operations. Only 19% of respondents said prices forced a cut in production, staff or both.
Sustainability, on the other hand, continues to rise as a prominent issue on the plant floor, with 85% saying sustainability is a factor in the company’s operational decisions.
So amid all these challenges, what continues to drive plant managers to achieve? The same things that got them into manufacturing in the first place. A feeling of accomplishment was cited by 52% of respondents, followed by the technical challenges of manufacturing and then the salary. Their job security, the on-the-job benefits and their relationship with others in manufacturing were also cited by at least 20% of respondents.
The skill needed to run a modern manufacturing plant extends beyond the technical knowledge. Plant managers say project management, computer, communication and team-building skills are the keys to a successful plant today, ahead of finance, language or marketing expertise.