Sir Isaac Newton was not speaking about salaries when he uttered the oft-repeated phrase "what goes up must come down," but for 22% of respondents to the IndustryWeek 2010 Salary Survey, that's exactly what happened -- their base salaries dropped over the past year. And nearly half of respondents, or 49%, reported having their base salaries frozen over the past year. These numbers are particularly ugly when compared with results of the previous year's survey, when just 4% of respondents reported that their salaries had decreased, and 27% said their salaries had been frozen.
Clearly the economy has taken a toll. Indeed, asked to name the biggest challenge facing the manufacturing industry, one respondent's answer -- "pure and simple, it's the economy" -- echoed the sentiments of many. Garnering even greater attention was the impact of global competition. For example, said another respondent about manufacturing's greatest challenge: It's "how to maintain profitability on the world stage and still properly compensate the average worker so that [his] quality of life does not deteriorate." Still others cited government regulation, poor economic policy, material costs and finding qualified employees as among the leading challenges.
It is in this environment that IndustryWeek conducted its 2010 salary survey, which was completed by 1,259 U.S. manufacturing managers in December 2009 and January 2010. The survey data revealed that managers earned an average salary of $98,120 over the past 12 months. The median salary was significantly lower at $81,000.
Charts and Tables: The data behind the 2010 IndustryWeek Salary Survey
But despite a landscape of poor business conditions, a salary that for many did not advance, a continuing erosion of manufacturing jobs in the United States and overbearing government regulations (at least in some executives' views), the survey also showed by and large, most manufacturing managers were satisfied in their jobs. To illustrate, 25% of respondents reported they were "very satisfied" with their current job, with another 45% saying they were "satisfied" with their job. These percentages are down from the previous year's survey, but not by much given the significant change in the compensation landscape between those two years. In the 2009 survey 30% of respondents said they were "very satisfied" and 46% reported they were "satisfied" with their current job. Additionally, when asked, "How satisfied are you with manufacturing as a career path?" Eighty percent were either "satisfied" or "very satisfied," a percentage that remained even with the previous year's survey.
That skidding salaries failed to drive widespread dissatisfaction drew a ready response from Loree Griffith, a principal with the rewards consulting business of global consulting firm Mercer. (Mercer conducts an annual U.S. compensation survey.) "I think employers and employees might be focused more on the total value proposition," says Griffith. The total value proposition, which includes such components as benefits, career advancement opportunities and workplace flexibility, may help offset the sting of a pay freeze or cut, she suggests. Her suggestion is backed by comments from several respondents. For example, when asked "What matters most to you about your job?" a manufacturing manager in the food and beverage industry could not settle on a single choice among a list of options. Instead the respondent replied, "Salary, benefits, advancement opportunities, and job stability all about equal." Approximately 44% of respondents also received bonuses.
Griffith also offered a more prosaic explanation of the relatively high levels of job satisfaction despite a lack of salary increases: "Some may have felt lucky to have a job if [their company] had a layoff," she says.
There is reason to believe that base salaries will improve in 2010, at least for some. But before venturing down that line of thought, let's review some of the data collected in the latest IndustryWeek salary survey, along with responses from U.S. manufacturing managers.
Who We Are, Where We Are
I lost my job in Kentucky in March 2009. I took a significant pay cut and relocated to Texas just to get back in the job force. -- supply chain and logistics manager in the chemicals industry with 21 to 25 years of experience, living in the South Central region and earning $75,000
I have been surprised by the compensation offered to professionals in continuous improvement. Other professions like HR or accounting are typically compensated better, although CI has more impact on the success of the organization. -- lean/continuous improvement manager in the automotive/transportation vehicles and equipment industry with 26-plus years of experience, living in the Middle Atlantic region and earning $88,000
Salaried raise freeze did not go over well this past year, but a secure job with potential advancement in the near future allows for a positive outlook. -- quality manager in the electronics/high-tech/telecom industry with one to two years of experience, living in the Middle Atlantic region and earning $58,000
I feel I am not paid in accordance with my efforts. Engineers are expected to do many different functions and are not compensated for that. If something goes wrong, blame the engineer! -- engineering manager in the automotive/transportation vehicles and equipment industry with 26-plus years of experience, living in the North Central region and earning $60,480
I feel that in my industry, finding employees that are willing to work a physically demanding job are becoming almost obsolete. -- vice president of manufacturing/production in the construction/building equipment industry with 21 to 25 years of experience, living in the South Central region and earning $67,500
We have used nothing but U.S.A. steel, employ U.S.A. people and try to compete with the world. Need an even playing field, before it's too late. -- safety manager in the metals industry with 26-plus years of experience, living in the North Central region and earning $100,000
Manufacturing is a broad term that includes, at least for the purposes of this survey, 18 separate verticals. Three industry verticals -- industrial machinery, automotive/transportation vehicles and equipment, and metals -- comprised the greatest percentage of survey respondents at 13%, 11% and 13%, respectively. They likely are the industry sectors most closely associated with "traditional" manufacturing, as well. Among these three sectors, managers in industrial machinery earned the most, with an average salary of $99,378, although none of these three sectors appeared in the top third of industry sectors by average salary.
The chemicals industry, which comprises 6% of the survey population, topped the chart of average salaries by sector, coming in at $133,077. As a further note, the top three industries by average salary could best be described as process industries. The rubber and plastics products industry, representing another 6% of the population, claimed the lowest average salary at $88,352.
Continuing along the "traditional" theme, U.S. manufacturing continues to be concentrated in the North Central region, which encompasses the Midwest states. However, the 44% of U.S. manufacturers located in the North Central region also earned the lowest average salary in the past year, at $92,202, while managers in the Pacific region earned the highest at $126,110.
And manufacturing, at least at the management level, continues to be male-dominated and Caucasian, with enormous pay disparities by gender. Males, who comprised 92% of salary survey respondents, earned an average salary of $100,134 compared with women, who earned an average salary of $68,826. By ethnicity, Asians and Pacific Islanders earned the highest average salary, at $139,534, although they comprise only 2% of the survey population. Hispanics and Latinos also are largely absent from the ranks of U.S. manufacturing managers at 2% of the survey population. This ethnic group also earned the lowest average wage at $80,684.
Age, Experience Matter
Salary and self-satisfaction are below true potential. We have resisted job opportunities that involve relocation until our youngest child completes high school in approximately 1.5 years. -- director of manufacturing/production in the food and beverage industry with 26-plus years of experience, living in the Middle Atlantic region and earning $110,000
The insecurity facing the manufacturing sector is very disconcerting, and the current administrations seems to either not know what to do about it or has no desire to do anything about it. -- corporate/executive manager in the aerospace and defense industry with 26-plus years of experience, living in the Pacific region and earning $160,000
Never say never and be prepared to do what you thought you couldn't. -- engineering manager in the automotive/transportation vehicles and equipment industry with 26-plus years of experience, living in the New England region and earning $93,000
[I'm] paid fairly for what I do, have some flexibility in schedule and a lot of paid time off accrual. -- human resources manager in the food and beverage industry with 26-plus years of experience, living in South Atlantic region and earning $75,000
This is not a recession; it is a depression, period. I had to let go of 130 employees. Some had over 15 years with me. -- corporate executive in the automotive/transportation vehicles and equipment industry with 26-plus years of experience, living in the North Central region and earning $75,000
When it comes to U.S. manufacturing management, age and experience clearly matter. Older, more experienced managers earned higher salaries, plain and simply. For example, managers under age 30 earned an average salary of $52,433, which is somewhat less than half the average salary of managers age 60 or more. The oldest managers earned an average of $107,505. Further, managers with two years of experience or less earned an average salary of $46,321, which is approximately 43% of the salary earned by managers with 26-plus years of experience, who earned $108,934. At 48%, managers with 26-plus years of experience also made up the largest proportion of the IW salary survey population.
The data also indicate that education pays, and a four-year degree appears almost a requirement to be employed in manufacturing management. Just 6% of the survey population have a high-school degree only; they also earned the lowest salary at $72,392. Managers with doctorates, who comprise 2% of the population, earned the highest salary at $128,240.
Our company did not have pay raises for anyone this year. Some senior executives took a pay cut and reduced the opportunity for a bonus. -- safety manager in the plastics and rubber products industry with 26-plus years of experience, living in the North Central region and earning $150,000
Bonuses, about 70% of my income, were eliminated in 2009. -- supply chain and logistics manager in the metals industry with six to 10 years of experience, living in the South Central region and earning $65,000
Talented young people do not want to get into the field because it seems like a dying area. The U.S. is still the world's largest manufacturer. We need to treat it as such. -- engineering manager in the paper/printing/publishing industry with 11 to 15 years of experience, living in the South Central region and earning $98,000
Salary increased due to assuming responsibility for an additional plant. -- plant/facilities manager in consumer products/durables with 16 to 20 years of experience, living in the South Central region and earning $125,000
It is hard to find quality people to hire. It seems too many people who look for work have an attitude that the world owes them something. -- plant/facilities manager in the paper/printing/publishing industry with 16 to 20 years of experience, living in the North Central region and earning $60,923
Corporate owners are too focused on the short-term bottom line and not long-term objectives. It's about the money and not building the company name/brand into a leadership position. Technical/skilled wages have leveled off in 2002 due to the recession. -- engineering manager in the automotive/transportation vehicles and equipment industry with 26-plus years of experience, living in the North Central region and earning $64,500
In the eyes of many, the U.S. economy remains teetering on the brink -- and so too does manufacturing and the managers' jobs it supports. Survey respondents' concerns about the continuing existence of their livelihoods are reflected in their responses to the survey question "What matters most to you about your job?" Thirty-one percent, or nearly one-third of managers who responded to the question, answered "job stability." The second most popular response was "base salary," which drew a response rate of 18%. The percentage of respondents identifying "job stability" as their primary concern has increased slowly but steadily in each of the last three IndustryWeek salary surveys.
So what does 2010 hold in store in terms of salaries? Companies intend to remain conservative when it comes to restoring or increasing pay, several studies show. For example, a recent update to WorldatWork's 2009-2010 budget salary survey showed that slightly more than one-half of respondents who froze pay in 2009 plan to restore normal pay actions in 2010, and 29% of organizations that cut pay in 2009 planned to restore pay in full. (Respondents to this survey by WorldatWork, a nonprofit professional association, were its members employed in human resources, primarily working at large U.S. companies.)
Data from Mercer also indicate that salaries may be on the rise, if only slightly. Of firms granting pay increases in 2010, the average increase is expected to be 2.7%, the consulting firm's updated survey data show. The data were collected in November 2009 and are slightly less optimistic than employers' projections provided in April of last year.
"There's probably a little bit less optimism," among manufacturers, Mercer's Griffith states, noting that a greater proportion of manufacturers froze wages in 2009 than employers as a whole. "Still, of those that are giving increases, the increases are aligned with other industries." For example, Mercer's projected pay increase for the consumer-goods industry in 2010 is 3% and for durable goods, it's 2.8%. On the other hand, 20% of durable-goods makers in Mercer's survey project salary freezes in 2010.
Companies also continue to use bonuses to round out pay programs, Griffith notes, although they vary significantly by employee group and performance level. "Bonuses are a way to pay for performance based on individual performance and still manage the budget," Griffith says. "The thinking is that incentives need to be re-earned and are not automatic."
Ultimately, companies remain focused on engaging and retaining top talent, Griffith says. She notes some firms that were laying off people still were hiring in certain pockets and for specific positions. "The market for top talent remains competitive," she says. "Companies want to maintain and enhance the talent pipeline, and still manage costs."
The IndustryWeek 2010 Salary Survey was conducted online via e-mailed invitations to subscribers. The survey took place in December 2009-January 2010. A total of 1,333 people responded to the survey. After the data were cleaned (removing non-U.S. manufacturers or largely incomplete surveys, for example) 1,259 people turned in completed responses from the 2010 survey. Respondents were not compensated but were offered the chance to provide candid comments regarding their salaries, occupations and employers. The candid comments may have been lightly edited, primarily for spelling. All responses were anonymous.
- Charts and Tables: The data behind the 2010 IndustryWeek Salary Survey
- IndustryWeek's 2010 Salary Survey Comments: Manufacturing Challenges in 2010