There’s a light at the end of the tunnel. However, its color is subject to debate. Most assembly professionals are cautiously optimistic and view it as "green," while a handful of pessimists say the light is "red."
After a turbulent year of rollercoaster stock markets, accounting shenanigans, conservative consumer confidence and widespread layoffs, the U.S. economy remains somewhat shaky, but it’s beginning to show signs of a strong rebound. The 2002 ASSEMBLY State of the Profession survey, which was conducted in March, reflects some of this optimism, sprinkled with pockets of doubt and concern.
For instance, the number of respondents who claim they are "highly satisfied" with their job increased slightly from 39 percent in 2001 to 40 percent in 2002. And, the number of assemblers who said their company is "willing to be one of the early leaders in embracing new assembly technology" increased from 35 percent in 2001 to 37 percent in 2002.
However, the threat of budget cutbacks still looms on the horizon. In fact, more than two-thirds of respondents (67 percent) cite budget cutbacks as the biggest challenge they face on the job today--a 4 percent increase over 2001.
Assemblers also see their companies committing fewer resources toward improving assembly operations during the next 12 months. Last year, 71 percent predicted more resource allocation, while only 8 percent said there would be less. Today, only 60 percent foresee more resources, while 12 percent expect less allocation to assembly.
With corporate profits being squeezed, assemblers are under more pressure to implement successful cost reduction programs. Indeed, 55 percent of respondents claim their salary is tied to cost-cutting efforts.
Unfortunately, one easy way to trim costs is by reducing staff. More than half (52 percent) of respondents said they have decreased the size of their assembly operations during the past 12 months, compared to 33 percent in 2001 and 25 percent in 2000. At the same time, the number of assemblers increasing staff size dropped from 39 percent in 2001 to only 23 percent in 2002.
Encouraging SignsSeveral experts claim that the worst is over for the manufacturing community and indicate that conditions should improve during the next 6 months. Of course, unforeseen events, such as volatile oil prices and unrest in the Middle East, could dampen sentiments and erode confidence.
After several consecutive quarterly declines, the gradual recovery will pick up speed in the second half of the year, predicts Jerry Jasinowski, president of the National Association of Manufacturers (NAM, Washington, DC). "We see a modest growth rate of about 5 percent for the year," he points out, with "the strongest recovery by far to be in industrial equipment."
The National Association for Business Economics (NABE, Washington, DC) predicts similar optimism. "America’s longest expansion in history has been followed by one of the shortest, shallowest recessions on record," says Harvey Rosenblum, NABE president and senior vice president of the Federal Reserve Bank of Dallas.
"The resilient economy has weathered a series of shocks remarkably well," claims Rosenblum. "It should pick up steam by the second half of this year and maintain 3.5 percent to 4 percent growth throughout 2003." By next year, Rosenblum predicts there will be a 6.4 percent increase in fixed investment and a $41 billion addition to inventories, with consumption rising at a 3.3 percent rate--more than 50 percent faster than this year.
However, Rosenblum believes after-tax corporate profits will remain skimpy, creeping up a mere 2.2 percent this year. He says that’s likely to curb hiring in the near term, with total employment in 2002 down 0.3 percent vs. 2001. Rosenblum expects job growth to accelerate during the second half of this year and rise to nearly 2.5 percent in 2003. "That should trim the unemployment rate to 5.7 percent next year," he predicts.
A recent nationwide study conducted by Manpower Inc. (Milwaukee) claims that U.S. employers will increase their hiring activity in the third quarter of 2002. According to Jeffrey Joerres, CEO of the staffing company, 27 percent of companies plan to add employees in the third quarter, compared with only 21 percent in the second quarter.
"Overall, the hiring strength is at its most positive level in five quarters," claims Joerres. "Hiring intentions are consistent with those we have seen in past recovery periods, with manufacturing improving the most significantly. This will not put us back to normal employment levels, but the survey results suggest that companies across the country are becoming more positive about their prospects."
A recent study released by the Institute for Supply Management Inc. (ISM, Tempe, AZ) also indicates that economic growth will continue in the second half of 2002. Production capacity in manufacturing is expected to increase 3.8 percent this year. According to the ISM survey, the principal means of achieving increases in production capacity in 2002 are:
- Additional plants and equipment.
- Replace equipment with technically advanced equipment.
- More hours worked with existing personnel.
- More shifts worked with existing personnel.
- Fewer plant shutdowns.
Many of the production capacity trends highlighted in the ISM study are clearly evident in Midwest, where automakers are boosting production volumes and adding extra shifts. For instance, General Motors Corp. (Detroit) recently announced that it will be adding a third shift at its Pontiac, MI, truck plant, which builds full-sized pickups, and its Oshawa, ON, plant, which assembles sedans.
Salary StabilityDespite widespread economic turmoil, assembly salaries have remained fairly stable. The typical 2002 State of the Profession survey respondent is 43 years old, has an average of 17 years experience, works 46 hours a week and earns $69,551. However, there are exceptions at both the high and low ends of the scale. For instance, 20 percent of respondents earn less than $50,000 per year, while 31 percent take home more than $75,000.
Respondents claim to have received an average salary increase of 3.2 percent over the previous year. However, 30 percent said they did not receive a raise--a whopping 19 percent increase over 2001. Last year, assemblers received an average salary increase of 6 percent vs. a mere 2 percent increase in 2000.
The 3.2 percent average salary increase is slightly below average, according to Ken Abosch, a senior consultant at Hewitt Associates (Lincolnshire, IL). He says salary levels of white collar workers in all U.S. industries and professions will increase an average of 4 percent this year.
Fewer assemblers expect to receive a salary increase at their next review. Only 70 percent of respondents expect an increase this year, compared with 85 percent in 2001 and more than 90 percent in 2000.
Assemblers in the instruments and related products industry feel most confident about receiving a salary increase at their next review. Indeed, 81 percent of respondents said they expect a raise. Other industry segments that expect more money include fabricated metal products (74 percent of respondents) and consumer goods (72 percent). Assemblers who work for nonelectrical machinery manufacturers are less optimistic: Only 62 percent expect to receive a raise.
A sizable gender gap exists in the assembly profession. The average salary of female assemblers (5 percent of respondents) is $53,451. Their compensation lags behind male assemblers by 24 percent. Three-quarters of the women surveyed earn less than $65,000, while half of the men earn more than $65,000.
One factor that accounts for some of this discrepancy is the fact that the women respondents were younger than the men. Indeed, the typical female respondent was 41 years old, while the typical male respondent was 45 years old. Also, female respondents had an average of 15 years experience in the assembly field, while men averaged 18 years of experience.
In addition to gender, many different factors determine average pay rates, such as age, education, experience, location and type of industry.
Industry experience is the biggest factor that determines compensation. Individuals with less than 5 years of experience in the assembly field (13 percent of respondents) earn an average salary of $67,200. On the other hand, industry veterans with more than 15 years of experience (54 percent of respondents) are rewarded with salaries that average $73,491.
Assembly professionals tend to be very loyal employees who stay with the same company for long periods of time. In fact, 41 percent of respondents have worked at the same firm for more than 10 years, while 15 percent have been with their present employer for less than 2 years.
Geographic DisparityAssembly salaries vary according to address. The Pacific region (California, Oregon and Washington) boasts the highest average salary ($79,989), according to this year’s State of the Profession survey. That’s 13 percent more than the national average of $69,551.
On the other end of the spectrum, assembly professionals in the West North Central region (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) earn the lowest average salary: $63,434, which is 21 percent less than the Pacific region and 9 percent less than the national average.
Geographic differences in salary are common in all industries and professions, according to Darrell Cira, a senior compensation consultant at William M. Mercer Inc. (New York). For instance, salaries in Los Angeles are 10.3 percent higher than the national average, while salaries in Des Moines, IA, are 4.3 percent lower. According to Cira, an engineer earning $69,600 in San Jose, CA, would earn $55,860 in Omaha, NE.
In the ASSEMBLY survey, the East North Central region (Illinois, Indiana, Michigan, Ohio and Wisconsin) most closely parallels the national average, with an average salary of $67,747 and an average work week of 46 hours.
Assembly professionals in the East South Central region (Alabama, Kentucky, Mississippi and Tennessee) earn less money than the national average ($67,319 vs. $69,551) and work more hours (48 vs. 46 hours). Assemblers in the South Atlantic region (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) are also below and above the national averages, with an average salary of $67,208 and an average work week of 47 hours.
However, assemblers in the South Atlantic region feel most confident about receiving a salary increase at their next review. Indeed, 77 percent of respondents said they expect a raise. People in the Mountain region (Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming) are much less optimistic, with only 57 percent expecting to receive more compensation.
But, more money and shorter work days don’t necessarily bring happiness. For instance, the West South Central region (Arkansas, Louisiana, Oklahoma and Texas) boasts the third highest salary level in the country (an average of $73,080), but the highest job dissatisfaction level (9 percent of respondents are not satisfied with their jobs, compared with only 2 percent of assemblers in the Mountain region, which ranks 5 percent below the national salary level).
The Mountain region ranks highest in overall job satisfaction (98 percent), followed closely by the Middle Atlantic (New Jersey, New York and Pennsylvania) and New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont) regions at 97 percent.
Big vs. SmallThe size of an employer usually influences salary and job satisfaction levels. For instance, assembly professionals who work in companies with more than 1,000 employees tend to earn the highest average salary: $75,535. On the other hand, small manufacturers with less than 100 employees pay an average salary of $69,216. The lowest compensation ($65,034 average) is paid by midsized companies with 250 to 499 employees.
But, bigger isn’t necessarily better. Assembly professionals who work in smaller companies are generally much happier than those who work for larger firms. Indeed, 47 percent of respondents who work in companies with less than 100 employees claim they are "highly satisfied" with their jobs. However, that figure drops to 37 percent for respondents who work in companies with 250 to 499 employees. At companies with 1,000 or more employees, 38 percent of respondents report being highly satisfied.
Assemblers who work for nonelectrical machinery companies earn the highest salaries: an average of $70,802. Their salaries are 2 percent more than the national average of $69,551. However, those individuals also tend to put in the longest days: an average of 47 hours, compared with the national average of 46 hours.
The consumer products industry, which includes manufacturers of sporting equipment, musical instruments, pens and pencils, most closely parallels the national average, with a salary of $70,053 and an average work week of 46 hours.
On the other hand, salaries in the furniture and fixtures industry are 15 percent lower than the national average. But, 76 percent of assemblers in that industry expect to receive an increase in salary some time during the next 12 months, compared with only 62 percent of assemblers employed at nonelectrical machinery manufacturers.
A Well-Earned TitleManufacturing engineers (47 percent of respondents) edge out design engineers (17 percent of respondents) in this year’s salary derby. They earn an average of $504 more than their design peers. But, when it comes to manufacturing process managers vs. product design managers, the designers are on top: They earn an average of $5,568, or 7 percent, more.
Manufacturing engineers and managers tend to work one more hour per week than their design counterparts. And, 35 percent of manufacturing engineers said they expect the hours they spend at work to increase during the next 12 months, compared with only 28 percent of design engineers.
Age is another key factor that affects compensation. Assembly professionals who are more than 50 years old earn the highest salaries. For example, individuals who are 50 to 59 years old earn 15 percent more than their peers who are in their 30s, and 33 percent more than 20-year-olds. The average salary for assemblers in their 50s is $75,126, compared with an average of $50,000 for respondents in their 20s.
Salaries also fluctuate dramatically based on type and level of education. For instance, assembly professionals with just a bachelor’s degree (56 percent of respondents) earn an average of $68,362. However, assemblers with advanced degrees (18 percent of respondents) earn an average of $14,633 (an 18 percent difference) more than individuals who only have 4-year college degrees.
One way to guarantee a high salary is by obtaining a master’s in business administration (MBA). The ASSEMBLY State of the Profession survey discovered that MBAs (10 percent of respondents) make an average of 25 percent more than non-MBAs. In fact, 75 percent of the MBAs earn more than $70,000. However, MBAs work an average of 3 hours per week longer than non-MBAs.
Another way to obtain a higher-than-average salary is to become certified. Assemblers who hold a professional engineer (P.E.) or certified manufacturing engineer (CMfgE) designation earn an average salary 9 percent higher than noncertified engineers. Individuals with P.E.s (6 percent of respondents) earn an average of $80,765, while CMfgEs (2 percent of respondents) make $71,979.
Time Marches OnAssembly professionals continue to work long hours. Indeed, one-third of respondents claim the time they spend at work has increased during the last 12 months. Specifically, 89 percent of respondents currently work more than 40 hours a week. Most of those individuals work 41 to 50 hours a week. But, 17 percent claim to put in more than 50 hours.
Assemblers in the nonelectrical machinery industry put in the longest days, with a weekly average of 47 hours. And, respondents in the East South Central region (Alabama, Kentucky, Mississippi and Tennessee) tend to work more than their counterparts elsewhere: an average of 48 hours per week, compared with the national average of 46 hours.
Not surprisingly, corporate managers claim to have the longest work weeks: an average of 51 hours. By comparison, manufacturing process managers average 49 hours, followed by product design managers (48 hours), manufacturing engineers (45 hours) and design engineers (44 hours).
Two-thirds of respondents expect the hours they spend at work each week will remain the same during the next 12 months. However, 32 percent of assemblers believe their hours will be increasing. More than one-third (37 percent) of respondents who work in the consumer goods industry expect to put in more hours in the months ahead, compared with only 24 percent of assemblers in the furniture and fixtures industry.
Assemblers in New England expect to work more than their peers in other parts of the country. For instance, 41 percent of respondents in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont believe the hours they spend at work each week will increase during the year ahead. By comparison, only 26 percent of assemblers in the South Atlantic region (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia) expect to work longer hours.
All Benefits Aren’t EqualWhen examining compensation levels, one often-overlooked factor is benefits. Health care alone (a benefit 96 percent of respondents claim to receive) is a perk that’s worth thousands of dollars. For instance, Kent Gregory, a William M. Mercer Inc. benefits consultant, says the average cost of health care benefits for active employees rose 11.2 percent in 2001, from $4,400 per employee to $4,900. An even higher increase of 12.7 percent is expected for 2002.
Other popular benefits include annual vacation (94 percent of respondents) and pension or 401(k) plans (92 percent). Only 75 percent of respondents are eligible for tuition reimbursement, while even fewer assemblers get to participate in profit sharing (44 percent) or flexible hours (38 percent).
Very few individuals receive nontraditional benefits, such as child care (6 percent) and elder care (4 percent). However, these benefits should become more common in the future. A recent study conducted by Aon Consulting (Chicago) discovered that workers lose an average of 6 days a year to a variety of family circumstances, such as caring for a sick child or parent.
"When workers feel burned out by their jobs, when they don’t have the time and energy for their families, these feelings spill back into the workplace, reducing job performance," says Ellen Galinsky, president of the Families and Work Institute (New York). "The more support employees receive on the job, the higher their productivity, the more willing they are to go the extra mile, and the more likely they are to stay with their current employers."
Company size often determines what type of benefits are offered. For example, 95 percent of assemblers who work for a large company (1,000 or more employees) receive dental insurance, compared with only 70 percent of assemblers who work for small manufacturers (100 or less employees).
Large manufacturers are also more likely to offer perks such as life insurance (93 percent vs. 73 percent), tuition reimbursement (92 percent vs. 49 percent) and on-the job training (64 percent vs. 30 percent).
There are also regional variations in quality-of-life benefits. For instance, 55 percent of assemblers in the Mountain region (Arizona, Colorado, Idaho, Montana, New Mexico, Nevada, Utah and Wyoming) have flexible hours, compared with 28 percent of individuals in the East South Central region (Alabama, Kentucky, Mississippi and Tennessee).
Child care is more common in the western half of the United States than other parts of the country. For example, 12 percent of assemblers in that region are eligible for that benefit, compared with 8 percent of assemblers in the Atlantic states.
The transportation equipment industry, which includes automakers, offers the most generous benefit packages. In fact, companies in that segment offer more benefits than other manufacturers. It also leads in nontraditional benefits, such as child care and elder care.
Working in conjunction with the United Auto Workers (UAW), Ford Motor Co. (Dearborn, MI) recently established a network of Family Service and Learning Centers. The state-of-the-art facilities provide 24-hour child care. Two centers opened earlier this year in Kansas City, MO, and Louisville, KY, joining existing centers in Cleveland, Detroit and other cities with large concentrations of Ford and Visteon assembly plants.
More facilities are scheduled to open during the next 12 months. Eventually, the effort will bring services and programs to more than 30 locations around the United States. Each 32,000-square-foot center will handle more than 200 children.
Ford, GM and other automakers are also putting more emphasis on elder care programs. Today, more than 14 million U.S. workers are estimated to be caring for older family members, and the number is expected to increase in the near future.
Ford offers its workers free house calls by geriatric-care managers who assess the health of elderly relatives and develop plans for their care. The UAW-GM Elder Care Program provides a 24-hour response line to support workers who are caregivers.
Collaborative ManufacturingCollaborative engineering is becoming more and more common in manufacturing, especially as staff size is cut back. Widespread use of computer tools, such as simulation software and intranets, is also allowing engineers to exchange more data and share more ideas than ever before.
For instance, there’s a continuing trend toward online seminars and Webcasts. In fact, 17 percent of the ASSEMBLY survey respondents claim they have participated in online seminars during the past year, which is a 2 percent increase over 2001 and an 8 percent increase over 2000.
Web-based vehicle engineering efforts are expected to slash billions of dollars from manufacturing costs during the next few years. For instance, a collaborative, global approach will allow automakers to cut up to $300 million out of the typical new development project.
The ultimate goal of collaborative manufacturing efforts is to design and build better products and deliver them faster. More team involvement upstream in the product development cycle typically means fewer problems downstream when the product is being assembled. It also helps eliminate finger pointing in the event of a problem. Web-based vehicle engineering efforts are expected to slash billions of dollars from manufacturing costs during the next few years. For instance, a collaborative, global approach will allow automakers to cut up to $300 million out of the typical new development project.
More and more assemblers are working in teams. For example, 91 percent of respondents claim to be a member of a team or committee that sets assembly goals for productivity (a 23 percent increase over 2001). More than two-thirds (86 percent) of assemblers are members of a team that sets goals for new product development (a 17 percent increase over 2001).
In addition, 80 percent of respondents claim to be a member of a team that sets assembly goals for new processes (a 12 percent increase over 2001). More than two-thirds (79 percent) of assemblers are members of a team that sets goals for new investment (a 27 percent increase over 2001).
Survey MethodologyASSEMBLY magazine would like to thank all the respondents who participated in its seventh annual State of the Profession survey. The survey was conducted online. All readers with e-mail addresses were contacted electronically and encouraged to click a special hot link to the online questionnaire. More than 1,800 individuals responded.
Special thanks to Vince Schneider and the Business News Publishing research department for their assistance with online survey design, distribution and tabulation.
The charts and tables in this report highlight the major data gleaned from the survey responses. On some of the questions, response rate does not equal 100 percent due to rounding or surveys that contained one or more unanswered questions. In cases where multiple responses were allowed, the total may exceed 100 percent.
Bonus Bubble BurstsTraditionally, assembly professionals rely on cash bonuses to boost their bank accounts. But, due to the shaky economy, there has been a dramatic drop off in bonus activity. Indeed, only 43 percent of the 2002 ASSEMBLY State of the Profession survey respondents claim to have received a cash bonus some time during the last 12 months, compared with 58 percent in last year’s survey.
More than 50 percent of assemblers who work for companies that manufacture instruments and related products, such as medical devices and equipment, claim they received a cash bonus during the past year. By comparison, only 38 percent of assemblers in the nonelectrical machinery industry received bonuses. Other industry segments that are not as likely to hand out bonuses include transportation equipment, furniture and fixtures, and fabricated metal products.
"We are definitely seeing the economic volatility of the past 12 months impacting bonuses," says Tracy Davis, a senior consultant at Hewitt Associates. "Since the economic landscape has changed so dramatically, companies are evaluating their current bonus plans to ensure goals are both realistic and motivating.
"Companies are facing increased questions from shareholders frustrated with poor stock returns," adds Davis. "As a result, there appears to be a willingness to be more selective with the option-eligible population in 2002."
Contract Manufacturers OptimisticContract manufacturers plan to commit more resources to assembly operations than OEMs during the next 12 months. For instance, 66 percent of the ASSEMBLY State of the Profession survey respondents who work for contract assemblers said they will be investing more, compared with only 55 percent of OEMs. And, 16 percent of OEMs expect to commit less resources to assembly, compared with only 10 percent of contractors.
This trend is confirmed by a recent survey conducted by Bear, Stearns & Co. (New York). The investment banking firm questioned a wide array of manufacturers and found that 87 percent plan to increase outsourcing activity in the coming year.
"Despite the tech downturn, and in some cases because of the downturn, OEMs expect to increase their outsourcing to reduce costs and capital spending," says Thomas Hopkins, managing director and electronics manufacturing services analyst.
According to Hopkins, the strongest responses for increasing outsourcing came from manufacturers of semiconductor equipment, consumer products, automobiles and telecommunications equipment.
Keen to Be LeanAssembly professionals are spending more time on lean manufacturing initiatives. In fact more than half (56 percent) of the respondents to the 2002 ASSEMBLY State of the Profession survey claim to have implemented lean production principles during the past 12 months. And almost one fifth (21 percent) of assemblers plan to implement lean manufacturing some time within the next 12 months.
Lean manufacturing is a production philosophy that shortens the time between the customer order and the assembly and shipment of the product by eliminating sources of waste. It focuses on value-added flow and the efficiency of the overall system. Continuous improvement, customer focus, one-piece flow and waste reduction play a key role in lean manufacturing. The goal is to eliminate non-value-added activities that prevent a one-piece flow of product.
Lean manufacturing is most common in the auto industry. Indeed, 73 percent of assemblers in the transportation equipment sector claim to be actively engaged in lean manufacturing. Assemblers in the consumer goods industry (62 percent) and fabricated metal products (58 percent) are also implementing lean initiatives.
Assemblers in the nonelectrical machinery industry appear to be less interested in lean manufacturing. In fact, one-third (34 percent) of respondents in that segment claim lean manufacturing "holds no interest for our company."
Large manufacturers (companies with 1,000 or more employees) are more likely to favor lean production principles. For example, 69 percent of assemblers in that category said they have implemented lean programs during the last 12 months, compared with only 34 percent of small manufacturers (companies with 100 or less employees). More than half (51 percent) of respondents who work for manufacturers with less than 50 employees claim lean manufacturing "holds no interest for our company."