American manufacturers are wearing tighter belts these days. Most of the downsizing and outsourcing efforts have been made. Armed with flexible assembly lines and lean production philosophies, manufacturers in many different industries are operating at new levels of efficiency. It's part of the brave new world of manufacturing.
The Federal Reserve Bank (Washington, DC) claims that overall industrial production in the United States rose 0.6 percent in March, when the 2006 ASSEMBLY State of the Profession survey was conducted. In addition, the U.S. Department of Commerce (Washington, DC) reports that new orders for durable manufactured goods increased 6.1 percent in March.
According to David Huether, chief economist at the National Association of Manufacturers (NAM, Washington, DC), that was the biggest monthly jump in 10 months. "This was the fourth rise in the past five months and, with increases in virtually every sector, it was the single strongest monthly increase in half a year," says Huether.
"The report indicates that businesses remain confident in the economic outlook and are committing to significant capital investments," adds Huether. "However, the recent rise in energy prices could begin to dampen this outlook, especially if sustained high gasoline prices begin to eat into consumer spending." The U.S. economy expanded 4.8 percent in the first quarter of 2006, which was the fastest pace in more than two years. "Strong global growth and moderately strong capital spending has allowed for a solid manufacturing expansion in the face of rising input prices," says Cliff Waldman, an economist at the Manufacturers Alliance/MAPI Inc. (Arlington, VA).
"While rising interest rates, a slowing housing market, and the growing price and supply difficulties for a number of raw materials will likely slow factory growth in the latter part of 2006 and 2007, the manufacturing sector looks to be on a steady course for at least the next few years," proclaims Waldman.
The results of the 11th annual State of the Profession survey reflect some of that optimism. For instance, 36 percent of respondents claim they have added staff to their assembly operations, a 6 percent increase over 2005 and a 17 percent increase over 2004.
Manufacturers also appear to be slightly less willing to allocate resources to improve their production facilities. When asked, "How do you see your company committing resources toward improving assembly operations during the next 3 years?" 14 percent of respondents said "less resources," which is 1 percent higher than last year.
However, global competition looms on the horizon and threatens to burst the bubble for assembly professionals. Indeed, 53 percent of assemblers cite globalization and offshore production as their biggest concern today, a 11 percent increase over 2005 and a 19 percent jump over 2004.
"Chinese competition is going to get rid of my job," says one disgruntled respondent. Another individual claims that "increased global competition is leading to more stress."
Unfortunately, globalization is a fact of life today. According to the NAM, one out of every five manufacturing jobs is tied to exports. "Goods exports, most of which are manufactured products, rose by a robust 17.8 percent in the first quarter, the fastest quarterly pace in five and one-half years," says Huether. "This is a positive sign."
Assemblers also continue spending more time at work. For instance, the average respondent spends 48 hours a week sitting behind a desk or roaming the plant floor. That's approximately 30 minutes more than in 2005 and more than 1 hour longer than in 2004.
"Because of overseas competition, there is a greater workload, which requires more time to do it," notes an overworked respondent. "We are faced with impossible time constraints today," adds another individual. "There is too much work, not enough people, long hours and little recognition."
Slicing the Salary Pie
The typical State of the Profession survey respondent is 47 years old, has an average of 19 years experience and earns $66,673. However, there are exceptions at both the high and low ends of the scale. For instance, 14 percent of respondents earn less than $50,000 per year, while 23 percent take home more than $90,000. Two-thirds (67 percent) of respondents received a pay increase over the last 12 months. The average salary increase was 3 percent. But, not everyone was that fortunate. One-third (33 percent) of assemblers did not receive a raise.
That 3 percent salary increase is slightly lower than the national average for all white-collar workers in the United States, according to Steven Gross, a leader in the compensation consulting practice at Mercer Human Resource Consulting Inc. (New York). "Although employers are seeing signs of an improved economy and pay increases are up a bit, the era of salary freezes is over," he proclaims.
A majority of State of the Profession respondents (77 percent) expect to receive a salary increase at their next review, which is a 6 percent increase vs. 2005. Assemblers in the medical equipment, devices and instruments industry feel most confident about receiving an increase. Indeed, 95 percent of those individuals say they expect a raise.
Other industry segments that expect more money include furniture and fixtures (89 percent) and plastics and rubber products manufacturing (87 percent). Assemblers who work for machinery manufacturers are less optimistic: Only 67 percent expect to receive a raise.
More than half (51 percent) of respondents received a cash bonus during the last 12 months, compared to 47 percent in 2005 and 45 percent in 2004. Most of that extra compensation is tied to overall company performance.
"Still reluctant to increase base salaries, companies are willing to reward performance through incentives and bonuses, especially as the job market becomes more competitive and the risk of losing key talent is top of mind," says Gross.
More than two-thirds (69 percent) of assemblers who work for companies that manufacture plastic and rubber parts claim they received a cash bonus during the past year. By comparison, only 43 percent of assemblers in the medical equipment, devices and instruments industry received bonuses. Machinery manufacturers are also less likely to hand out bonuses, in addition to fabricated metal product manufacturers.
While there is still a large gender gap in the assembly profession, it appears to be slowly shrinking. Indeed, 7 percent of respondents to this year's survey were female vs. 5 percent in 2005 and 4 percent in 2003. The average salary of female assemblers is $62,428, which is 11 percent higher than 2005. Their compensation lags behind male assemblers by $10,591 vs. $16,775 in 2005. More than two-thirds (69 percent) of the women surveyed earn less than $70,000, while 52 percent of the men earn more than $70,000.
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 44 years old, while the typical male respondent was 47 years old. Also, female respondents had an average of 13 years experience in the assembly field, while men averaged 16 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 (9 percent of respondents) earn an average salary of $59,515. On the other hand, industry veterans with more than 15 years of experience (60 percent of respondents) are rewarded with salaries that average $75,732.
Assembly professionals tend to be loyal employees who stay with the same company for long periods of time. In fact, 50 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.
Assembly salaries vary according to address. Traditionally, the West region (Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming) has boasted the highest salaries in the State of the Profession survey. But, this year, the West ranks second behind the Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin), which is home to 45 percent of respondents.
The average salary in the Midwest is $72,969 vs. $72,790 in the West. That's 9 percent and 8 percent more, respectively, than the national average of $66,673.
Assemblers in the South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia) also earn more than the national average. However, they work an average of 1 hour more a week than the national average of 48 hours.
On the other end of the spectrum, assembly professionals in the Northeast (Connecticut, Maine, Maryland, Mass-achusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont) earn the lowest average salary: $69,220, which is 5 percent less than the Midwest. But, they work 2 hours less per week than the national average.
Geographic variations in compensation are common in all industries and professions. Often, those fluctuations are determined by the local cost of living. "Workers in some U.S. cities realize salary increases somewhat higher than the national average," says Ken Abosch, a business leader for Hewitt Associates (Lincolnshire, IL). For example, he says pay increases this year are higher in cities such as Houston, Los Angeles, San Francisco and Washington, DC.
Although assemblers in the Northeast receive lower compensation than their peers in other parts of the United States, they are the most confident about receiving a salary increase at their next review. Indeed, 78 percent of respondents say they expect a raise. However, only 71 percent of assemblers in the South expect to receive a salary increase.
For some people, money and happiness go together. For example, assemblers in the Northeast earn the lowest salaries and are less satisfied than their peers in other parts of the country. Indeed, only 30 percent of respondents claim to be "highly satisfied" vs. a national average of 37 percent. Assembly professionals in the West, who have the second-highest salaries, are the most satisfied, with 49 percent claiming to be "highly satisfied."
Overall, assemblers who claim to be "highly satisfied" with their jobs earn an average of $75,100, compared to $70,730 for people who claim to be "moderately satisfied" and $68,819 for respondents who are "not satisfied." Not surprisingly, highly satisfied individuals also tend to receive a cash bonus and are responsible for budgeting new assembly equipment.
Salary and job satisfaction levels in the assembly profession are usually influenced by the size of a manufacturer. For instance, assemblers who work in companies with more than 2,000 employees tend to earn the highest average salary: $86,714. On the other hand, small manufacturers with less than 100 employees pay an average salary of $65,801.
However, bigger isn't necessarily better, especially when it comes to compensation. Assembly professionals who work in smaller companies are generally much happier than those who work for larger firms. Indeed, 49 percent of respondents who work in companies with less than 50 employees claim they are "highly satisfied" with their jobs.
However, that figure drops to 26 percent for respondents who work in companies with more than 2,000 employees. Assemblers who work for manufacturers with 250 to 499 employees match the national "job satisfaction" average of 37 percent
Transportation equipment manufacturers, which includes companies that assemble automobiles, automotive components, aircraft, boats, engines, trailers and trucks, earn some of the highest average salaries: $77,102. Their compensation is 14 percent above the national average of $66,673. Other industries that boast salaries above the national average include plastics and rubber products (14 percent higher), furniture and fixtures (12 percent higher), and computers and electronic products (10 percent higher).
The fabricated metal products industry, which includes manufacturers of doors, firearms, hand tools, ladders, locks, metal stampings, plumbing fixtures, prefabricated buildings, valves and windows, most closely parallels the national average, with a salary of $67,588.
Design engineers (17 percent of respondents) rank ahead of manufacturing engineers (48 percent of respondents) when it comes to compensation. Indeed, they earn an average of $4,249 more than their peers. Design managers also earn more than manufacturing process managers: They earn an average of 15 percent more. Manufacturing engineers also tend to work slightly longer hours.
Age is another key factor that affects compensation. For instance, design engineers who are under 40 years old earn less than manufacturing engineers. However, design engineers over 40 earn more than manufacturing engineers.
Assembly professionals who are more than 60 years old earn the highest salaries. For example, individuals who are 60 or older earn 20 percent more than their peers who are in their 30s and 24 percent more than 20-year-olds. The average salary for assemblers in their 60s is $76,911, compared to an average of $61,256 for respondents in their 30s.
Salaries also fluctuate dramatically based on type and level of education. For instance, assembly professionals with just a bachelor's degree (57 percent of respondents) earn an average of $71,159. However, assemblers with master's degrees (16 percent of respondents) earn an average of $14,363 more than individuals who only have 4-year college degrees (a 17 percent difference).
One way to guarantee a high salary is by obtaining a master's in business administration (MBA). The survey discovered that MBAs (8 percent of respondents) make an average of 13 percent more than non-MBAs. In fact, 68 percent of MBA respondents earn more than $75,000. However, MBAs work an average of 3 hours more per week than other individuals.
Another way to obtain a higher-than-average salary is to become certified. Assemblers who hold a certified manufacturing engineer (CMfgE) or professional engineer (P.E.) designation earn an average salary 13 percent higher than noncertified engineers. Individuals with P.E.s (7 percent of respondents) earn an average of $83,579, while CMfgEs (5 percent of respondents) make $70,679.
Most respondents claim to be satisfied with their jobs, but a closer look at the data reveals some discrepancies. For example, design engineers tend to be a little happier than manufacturing engineers. Indeed, 38 percent of design engineers claim to be "highly satisfied" vs. 30 percent of manufacturing engineers.
The happiest assemblers work in the fabricated metal products and machinery industries, where 39 percent of respondents claim to be "highly satisfied" with their jobs. In contrast, only 16 percent of assemblers in the plastics and rubber products industry are "highly satisfied."
Job satisfaction can be defined many different ways. But, here's what a few respondents had to say:
"I feel part of a successful organization," says a design engineer at a medical equipment, devices and instruments manufacturer. "I feel that my performance contributes to that success. I enjoy a career making improvements to operations and working smarter."
"As an in-house integrator, I am able to experience diversity in my work, such as project planning, conceptualization, software and hardware design, programming, installation, debugging and startup," adds a manufacturing engineer at an electrical equipment and appliance manufacturer.
"I enjoy what I do and the people I work with," notes a design engineer at a transportation equipment manufacturer. "I have the support I need to do the best job I can. I am not micromanaged and most of my ideas are supported."
"My work directly contributes to my company's success," says a plant manager in the machinery manufacturing industry. "I am making an impact."
"My job is extremely diversified and challenging," adds a manufacturing engineer in the computer and electronics industry. "When I get the job done, it is very rewarding."
Of course, some respondents are less happy with their surroundings. "Engineers at my company are not appreciated for what they contribute and are not given the visibility they deserve," laments a design engineer in the fabricated metal products industry. "Engineering is not a focus or priority for the company."
"My job is changing from design and production of local products as the company shifts manufacturing capability offshore," says a manufacturing engineer in the transportation equipment industry. "We are simply fulfilling a support role here until this plant no longer exists."
Globalization efforts have a strong impact on satisfaction. Indeed, many respondents are worried about manufacturing activity in Brazil, China, India, Eastern Europe and other overseas locations.
Global competition affects assemblers who work for both large and small manufacturers. For instance, 52 percent of respondents at small manufacturers (companies with 100 or less employees) claim that globalization is affecting their job vs. 56 percent of respondents at large manufacturers (companies with 1,000 or more employees).
Assemblers in the plastics and rubber manufacturing industry (69 percent) are most concerned about how global competition is affecting them. However, respondents in the medical equipment, devices and instruments industry (43 percent) are least concerned, perhaps because many catheters, inhalers, orthopedic implants, stents, syringes and other items are still made in the United States.
Unfortunately, globalization is not a short-term fad or trend that's going to eventually disappear. "American companies need to sell their products in overseas markets," says Wim van Acker, managing partner and director of North American operations at Roland Berger Strategy Consultants LLC (Troy, MI). "To build profitability, businesses must reduce costs by sourcing and producing in low-cost countries as well."
According to van Acker, cost pressures and globalization will make it more important for U.S. companies to develop "global manufacturing footprints." To operate successfully in today's global marketplace, he says manufacturers need to develop hub-and-spoke networks to optimize their global footprints and value-added processes.
"A typical hub-and-spoke network includes a global lead center for research and development, and regional hubs for pooling, sharing and managing various key functions," he explains. "[It also includes] local spokes for just-in-time manufacturing and assembly operations at nearby customer plants, and shared service centers for engineering, drafting and overhead functions."
No Time for Fun
Often, the amount of hours a person works influences their happiness. Unfortunately, assembly professionals continue to work long hours. In fact, 92 percent of respondents currently work more than 40 hours a week-a 2 percent increase over 2005 and a 7 percent increase over 2004. The national average is 48 hours.
Assemblers in the plastic and rubber products industry, which includes manufacturers of belts, bottles, floor coverings, hoses, pipes, plumbing fixtures and tires, put in the longest days, with a weekly average of 48.7 hours. Respondents who work for machinery manufacturers and medical device manufacturers also average more than 48 hours a week.
Assemblers who work longer hours tend to earn higher salaries. For instance, individuals who work an average of 51 to 60 hours a week earn an average of $81,156. Individuals who typically work 41 to 45 hours a week earn $65,804.
Not surprisingly, corporate managers claim to have the longest work weeks: an average of 53.7 hours. By comparison, manufacturing process managers average 50.3 hours and design managers average 48.4 hours, followed by manufacturing engineers (46.5 hours) and design engineers (46.2 hours).
More than one-third (40 percent) of respondents who work in the transportation equipment industry expect to put in more hours in the months ahead, compared to only 14 percent of assemblers in the medical equipment, devices and instruments industry.
Assemblers in the South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia) plan to work more than their peers in other parts of the country. For instance, 35 percent of respondents in that part of the United States believe the hours they spend at work each week will increase during the year ahead. In sharp contrast, only 19 percent of assemblers in the West expect to work longer hours.
Assemblers who work for large manufacturers plan to spend more time at work than their counterparts in smaller companies. Indeed, 32 percent of respondents who work for manufacturers with more than 1,000 employees expect to work more hours per week in the next 12 months. However, only 22 percent of assemblers who work for manufacturers with 50 to 100 employees foresee longer work weeks.
Most assemblers are optimistic about future investments in capital equipment. When asked, "How do you see your company committing resources toward improving assembly operations during the next 3 years?" more than half (60 percent) of respondents said "more resources." Only 14 percent said "less resources," while the remainder (26 percent) said resources will remain the same.
Assemblers plan to implement a wide variety of new technologies, such as wireless networks, robotics and machine vision to reduce production costs and gain a competitive edge in the marketplace.
Respondents who are using flexible manufacturing to remain competitive plan to invest heavily in robotics. According Roland Berger Strategy Consultants, there are numerous untapped applications for industrial robots. In fact, manufacturers in the United States only use 63 robots per every 10,000 employees vs. 148 robots per 10,000 workers in Germany. Those figures pale in comparison to Japan, where there are three times as many robotic applications as in North America.
Robotics is most popular in the plastics and rubber products industry, where 53 percent of respondents claim they will use the technology in their plants during the next 12 months. Small companies also appear more willing to invest in robots. For example, 35 percent of manufacturers with less than 100 employees plan to use robotics technology during the next 12 months. In sharp contrast, only 32 percent of manufacturers with more than 1,000 employees plan to commit resources to robots, perhaps because they have already made initial investments.
Wireless network technology is also popular with smaller manufacturers. It offers numerous benefits for assembly applications, including:
- Cost. Wireless networks negate the cost of the cable previously needed to connect devices and controllers. Eliminating the need for wires inherently decreases installation time, providing a significant savings on materials and labor costs.
- Flexibility. Wireless solutions allow easier add-ons, removals and changes to the network. This is especially valuable in applications where change-outs or expansions are frequent and expensive.
- Mobility. Portable operator interfaces having wireless monitoring and control capabilities allow operators, engineers and maintenance personnel to interface with equipment remotely, enhancing operator safety and providing the flexible network architectures desired in plant installations.
Almost one-half (48 percent) of respondents at small manufacturers claim they will implement wireless systems in their plants during the next 12 months vs. 40 percent of respondents at large manufacturers. Manufacturers in the fabricated metal products industry (46 percent) expressed the most interest in wireless systems. The technology is least popular among manufacturers of medical equipment, devices and instruments (36 percent).
ASSEMBLY magazine would like to thank all the respondents who participated in its 11th 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.
Special thanks to Vince Schneider, Erin Taylor and the BNP Media 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, the 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.