Manufacturing in the United States is still healthy, but it has been shaken and stirred by events unfolding in the automotive industry. In addition, high energy prices and a slowdown in new home construction have affected the confidence of assembly professionals, who are finding themselves crunched for time and talent.
The Federal Reserve Bank (Washington, DC) claims that overall industrial production in the United States rose 0.7 percent in March, when the 2007 ASSEMBLY State of the Profession survey was conducted. However, the U.S. Department of Commerce (Washington, DC) reports that new orders for durable manufactured goods increased 3.4 percent in March.
Economists have mixed feelings on whether that means the glass is half empty or half full. For instance, David Huether, chief economist at the National Association of Manufacturers (NAM, Washington, DC), says the U.S. economy is currently stuck in low gear, but will accelerate slightly in the second half of this year. “An improved trade picture and positive consumer spending will continue to be offset by a downturn in housing, pullbacks in inventories and sluggish business investment, notably in industrial equipment,” he points out.
Huether predicts that the economy will grow during the next six months. Overall, the economy is forecast to grow by 2.4 percent in 2007. Huether says the majority of the losses will be concentrated in transportation products and durable goods sectors closely connected with construction.
“Manufacturing will grow in 2007, but at a reduced 2.5 percent rate compared to 4.7 percent in 2006,” adds Daniel Meckstroth, Ph.D., chief economist at the Manufacturers Alliance/MAPI Inc. (Arlington, VA). “There are already signs of a rebound in business activity. We expect growth to pick up the pace in the second half of 2007.” Meckstroth sees positive signs coming from capacity utilization and capital investment, which both increased in March.
The results of the 12th annual State of the Profession survey reflect some of that cautious optimism. For instance, 37 percent of respondents claim they have added staff to their assembly operations, a 1 percent increase over 2006 and a 3 percent increase over 2005.
However, a serious talent and knowledge gap threatens future growth. Indeed, 41 percent of assemblers cite the skilled labor shortage as one of their biggest concerns today-a 5 percent increase over 2006 and a 7 percent jump over 2005.
“Manufacturers across the country are facing labor shortages despite the availability of good, high-paying manufacturing jobs,” says John Engler, NAM president. “These jobs are going unfilled due to a lack of employees with the qualifications needed in modern manufacturing.”
Caterpillar Inc. (Peoria, IL) is a good example of a company that’s setting record profits while faced with a labor shortage. According to Jim Reeb, director of manufacturing, part of the problem is that only 50 percent of Cat’s job applicants possess the required math and writing skills needed to work on today’s assembly lines. The company is partnering with local schools to address the issue.
Assemblers also continue to worry about the impact of globalization. Indeed, more than one-third (43 percent) of State of the Profession respondents said overseas competition creates extra stress and causes headaches. That’s especially true for assemblers in the electrical equipment and appliance industry, which includes manufacturers of batteries, flashlights, generators, household appliances, industrial controls, lighting fixtures and equipment, motors, switches and transformers. Almost one half (46 percent) of respondents in that category said global competition will affect their jobs the most during the next 12 months.
Unfortunately, the global economy is not something that will disappear. In fact, many manufacturers are “increasing their international sales and are expecting 34 percent of their total revenues to come from abroad” in 2007, says Barry Misthal, industrial manufacturing sector leader at PricewaterhouseCoopers (New York). In addition, “39 percent of manufacturers are considering expansion into new markets abroad.”
Because of globalization, assemblers continue to spend more time at work. For instance, more than one-third (39 percent) of assembly professionals claim that they are spending additional hours roaming the plant floor or working on projects. Last year, only 36 percent cited an increase vs. 34 percent in 2005.
“There’s too much work and not enough time to complete it,” notes one overloaded respondent. “I’m doing the job of what three people used to do,” adds another individual. “We’re being stretched too thin across numerous job functions.”
Not surprising, global competition is a bigger concern for assemblers who work for large manufacturers (companies with more than 2,000 employees). Almost half (48 percent) of respondents at big companies are concerned about globalization vs. 37 percent as smaller manufacturers (companies with fewer than 50 employees).
Moderate Compensation GainsThe typical State of the Profession survey respondent is 46 years old, has an average of 18 years experience and earns $72,219. However, there are exceptions at both the high and low ends of the scale. For instance, 15 percent of respondents earn less than $50,000 per year, while 20 percent take home more than $90,000.
Two-thirds (67 percent) of respondents claim they 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, global leader of the broad-based rewards consulting practice at Mercer Human Resource Consulting Inc. (New York). “Employers continue to be cautious in their approach to increasing overall pay budgets,” he points out. Instead, they are concentrating on “rewarding high performers and those with skills in demand.”
More than three-fourths (78 percent) of State of the Profession respondents expect to receive a salary increase at their next review, which is 1 percent more than in 2006 and a 6 percent jump over 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 during the next 12 months. But, assembly professionals in the machinery manufacturing and transportation manufacturing industries are less optimistic: Only 75 percent think they’ll be getting more coins to put in their piggy banks.
One half (50 percent) of respondents received a cash bonus during the last 12 months, compared to 51 percent in 2006 and 47 percent in 2005. Most of that extra compensation is tied to overall company and plant performance, in addition to meeting deadlines for new projects and implementing successful cost reduction programs.
According to Gross, many companies are looking for new ways to identify and reward their top employees. For instance, some firms are beginning to “segment their workforce to identify the most valuable contributors, in a methodology similar to how they use market segmentation to identify their most important customers,” he explains.
“Apart from salary increases, the most prevalent vehicles being used to reward employees with strong skill sets are spot cash awards, project milestone awards and signing bonuses,” says Gross. “These programs will likely become more important as labor markets become more competitive.”
More than one half (57 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 46 percent of assemblers in the transportation equipment industry, which includes automakers and auto part suppliers, received bonuses.
There is still a gender gap in the assembly profession, but it’s getting smaller. The average salary of female assemblers (5 percent of respondents) is $66,808, which is 7 percent higher than in 2006 and 18 percent higher than 2005. Their compensation lags behind male assemblers by $5,718 vs. $10,591 in 2006 and $16,775 in 2005.
More than half (60 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 had an average of 15 years experience in the assembly field, while men averaged 18 years of experience.
In addition to gender and experience, several other factors determine average pay rates, such as age, education, 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 (11 percent of respondents) earn an average salary of $58,917. On the other hand, industry veterans with more than 15 years of experience (56 percent of respondents) are rewarded with salaries that average $77,027.
Assembly professionals tend to be loyal employees who stay with the same company for long periods of time. In fact, 47 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 DifferencesAssembly salaries vary from region to region. Often, those fluctuations are determined by the local cost of living. Traditionally, the West (Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming), which is home to only 14 percent of respondents, boasts the highest salaries in the State of the Profession survey.
The average salary in the West is $75,222 vs. $73,076 in 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. That’s 4 percent and 1 percent more, respectively, than the national average of $72,219.
Assemblers in the Northeast (Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont) and the South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia) earn less than the national average.
Ironically, assembly professionals in the South earn 2 percent less than the national average of $72,219 and work 1 hour more than the national average of 46.6 hours per week. That may be one reason why so many manufacturers continue to build new plants in the region.
For instance, Gateway Inc. (Irvine, CA) recently announced plans to build a 100,000 square foot computer assembly plant in LaVergne, TN. General Electric Co. (Fairfield, CT) is constructing a 200,000 square foot jet engine factory in Batesville, MS. Honda Motor Co. (Tokyo) is building a 215,000 square foot facility in Greensboro, NC, that will assemble its new HondaJet. Kia Motors Corp. (Seoul, South Korea) is building a $1 billion plant in West Point, GA. Paccar Inc. (Bellevue, WA) recently unveiled plans for a $400 million engine assembly plant in Columbus, MS. Toyota Motor Corp. (Nagoya, Japan) is building a $1.3 billion plant in Blue Springs, MS.
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, 83 percent of respondents say they expect a raise. However, only 75 percent of assemblers in the Midwest believe they’ll receive a pay increase during the next 12 months.
Sometimes, money can’t buy happiness. For example, assemblers in the South typically receive lower salaries than many of their peers in other parts of the country, but they are more satisfied with their jobs. Only 8 percent of respondents claim to be “not satisfied” vs. 13 percent in the Midwest and 10 percent in the West.
One reason for that extra bit of happiness in the South may be due to the fact that more assemblers see their companies committing resources to assembly operations during the next 3 years. Indeed, 63 percent of respondents are optimistic vs. 56 percent in the Midwest. In addition, 40 percent of assemblers in the South claim that their company has increased staff size during the past year, compared to only 34 percent of respondents in the Midwest.
Overall, assemblers who claim to be “highly satisfied” with their jobs earn an average of $73,772, compared to $71,671 for people who claim they are “not satisfied.” Not surprisingly, highly satisfied individuals also tend to receive a cash bonus and are responsible for budgeting new assembly equipment.
Sometimes, Size MattersSalary 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: $87,414. On the other hand, small manufacturers with less than 100 employees pay an average salary of $66,270.
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, 53 percent of respondents who work in companies with less than 50 employees claim they are “highly satisfied” with their jobs.
“Working in a small company allows an individual to be very involved in all aspects of a product, including everything from design to sales,” notes a manufacturing engineer in the medical equipment, devices and instruments industry. He says large companies typically have “lots of walls and politics,” and more layers of bureaucracy.
Satisfaction levels drop to 26 percent for respondents who work in companies with more than 2,000 employees. Assemblers who work for manufacturers with 500 to 999 employees most closely match the national “job satisfaction” average of 34 percent.
Assembly professionals in the computer and electronic products industry, which includes companies that produce antennas, audiovisual equipment, computers and peripherals, connectors, laboratory instruments, loudspeakers, navigational instruments, printed circuit boards, process control instruments, satellites, semiconductors and telephone apparatus, earn the highest salaries: $74,945. Their compensation is 4 percent above the national average of $72,219.
Other industries that boast salaries above the national average include medical equipment, devices and instruments (2 percent higher) and transportation equipment (1 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 $71,729.
Manufacturing engineers (45 percent of respondents) rank slightly ahead of design engineers (15 percent of respondents) when it comes to compensation. They earn an average of $612 more than their peers. They also tend to work slightly longer hours. However, design managers earn quite a bit more than manufacturing process managers: an average of 13 percent more.
Age is another key factor that often 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 typically earn the highest salaries. For example, individuals who are 60 or older earn 14 percent more than their peers who are in their 30s and 34 percent more than 20-year-olds. The average salary for assemblers in their 60s is $78,086, compared to an average of $67,137 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 (58 percent of respondents) earn an average of $72,401. However, assemblers with master’s degrees (19 percent of respondents) earn an average of $12,799 more than individuals who only have 4-year college degrees (a 15 percent difference).
One way to earn a higher salary is by obtaining a master’s in business administration (MBA). The ASSEMBLY survey discovered that MBAs (10 percent of respondents) make an average of 19 percent more than non-MBAs. In fact, 63 percent of MBA respondents earn more than $80,000. However, MBAs work an average of 5 hours more per week than other individuals.
Another way to guarantee 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 7 percent higher than noncertified engineers. Individuals with P.E.s (6 percent of respondents) earn an average of $77,353, while CMfgEs (5 percent of respondents) make $77,235.
Can You Buy Happiness?Most respondents claim to be satisfied with their jobs, but a closer look at the data reveals some differences. For example, manufacturing engineers tend to be a little happier than design engineers. Indeed, 28 percent of manufacturing engineers claim to be “highly satisfied” vs. 24 percent of design engineers.
The happiest assemblers work in the plastics and rubber products industry, where 51 percent of respondents claim to be “highly satisfied” with their jobs. In contrast, only 28 percent of assemblers in the transportation equipment industry are “highly satisfied.”
Job satisfaction can be defined many different ways. But, here’s what a few respondents had to say:
“I have broad decision-making authority and support from management,” says --a manufacturing engineer in the computer and electronic products industry.
“Challenging work, good recognition and great coworkers make my job fun,” adds a design engineer at a machinery manufacturer. “Every day is a new challenge. No two days are ever the same.”
“I enjoy doing new things and pushing the envelope on what can be done,” notes a manufacturing engineer at a medical equipment, devices and instruments company. “There is no box here.”
“Since going private, my company is much more fun to work at,” claims a plant manager at a transportation equipment manufacturer. “Goals are straightforward.”
“I enjoy the challenge of working with teams to improve processes and document cost impacts,” explains a manufacturing engineer at another transportation equipment builder.
“I have a lot of influence on projects and changes that directly affect the bottom line of the company,” says a design engineer in the computer and electronic products industry. “I feel that I am an integral part of the team and that management listens to my ideas.”
“I enjoy working with new technology, and the challenge of constantly improving our operation to keep up with the competition,” adds a manufacturing engineer at an electrical equipment and appliance manufacturer.
However, some respondents are not as happy with their jobs. “My company is driven by short-term financial imperatives rather than long-term goals,” gripes a manufacturing engineer in the fabricated metal products industry. “Management is not making good use of internal experience and expertise.”
“Industry pressures to move to low-cost countries have resulted in the restructuring of my department,” adds a design engineer at a plastics and rubber products manufacturer. “I now have to revert back to a lesser job in order to stay employed.”
The skilled labor shortage is having a big impact on job satisfaction. Indeed, many respondents are worried about finding and keeping operators today. It’s a problem that affects assemblers who work for both large and small manufacturers. For instance, 43 percent of respondents at small manufacturers (companies with 100 or less employees) claim that the skilled labor shortage is affecting their job vs. 37 percent of respondents at large manufacturers (companies with 1,000 or more employees).
Assemblers in the fabricated metal products industry (58 percent) are most concerned about the growing shortage of skilled labor. However, respondents in the computer and electronic products industry (30 percent) are least concerned.
Like it or not, the skilled labor shortage is not going to disappear anytime soon. A recent survey conducted by Manpower Inc. (Milwaukee) says qualified production operators continue to be in short supply and are the “hardest position to fill.”
Legislators in Washington have finally started to address this issue. For instance, members of Congress recently introduced the America Competes Act (S. 761) and the 21st Century Competitiveness Act (H.R.2272), which aim to boost academic interest in science, technology, engineering and math.
Time CrunchSometimes, the amount of hours a person works can affect their happiness. Unfortunately, assembly professionals continue to put in long hours. In fact, 87 percent of respondents currently work more than 40 hours a week. The national average is 47 hours.
Assemblers in the fabricated metal products industry work the longest days, with a weekly average of 47.1 hours. At the other end of the spectrum, respondents who work in the furniture and fixtures industry work an average of 43.6 hours per week.
However, assembly professionals 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 $78,776. Individuals who typically work 41 to 45 hours a week earn $70,242.
Corporate managers claim to have the longest work weeks: an average of 48.5 hours. By comparison, manufacturing process managers average 48 hours and design managers average 47.3 hours, followed by manufacturing engineers (45.9 hours) and design engineers (45.1 hours).
More than one-third (35 percent) of respondents who work in the transportation equipment sector expect to put in more hours in the months ahead, compared to only 10 percent of assemblers in the plastics and rubber products industry.
Assemblers in the Midwest plan to work more than their peers in other parts of the country. For instance, 30 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. On the other hand, only 25 percent of assemblers in the Northeast expect to work longer hours.
Assembly professionals who work for large manufacturers plan to spend more time at work than their counterparts in smaller companies. Thirty 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 19 percent of assemblers who work for companies with 50 to 100 employees foresee longer work weeks ahead.
More than half (55 percent) of respondents said mounting time constraints will affect their ability to do their jobs during the next 12 months. Time constraints will also have a bigger impact on assemblers who work in large companies. For instance, 70 percent of assembly professionals who work for companies with 2,000 or more employees will be affected by time constraints vs. only 45 percent of respondents in companies with less than 50 employees.
Time constraints will cause the most stress on assemblers who work in the medical equipment, devices and instruments industry (73 percent), who are under severe pressure to launch new products and meet deadlines for projects. However, respondents in the plastics and rubber products industry (42 percent) will be under the least amount of time constraints.
Hot TechnologiesMost 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 (58 percent) of respondents said “more resources.” Only 13 percent said “less resources,” while the remainder (29 percent) said resources will remain the same.
Assembly professionals plan to implement a wide variety of new technologies, such as robotics (40 percent of respondents) and wireless networks (40 percent), to boost productivity. But, they’re also turning to evolving technologies, such as structural adhesives and nanotechnology, to gain a competitive edge in the marketplace.
In many industries, manufacturers are turning to structural adhesives to replace or enhance rivets, bolts, welding and other traditional fastening methods. Acrylics, epoxies, urethanes and other structural adhesives are typically used for applications that require significant load carrying capability, fatigue strength and long-term durability.
Other advantages include:
Cost savings. Adhesive joining methods typically offer significant material and labor cost savings over welding and mechanical joining methods.
Design flexibility. Engineers are able to create more varied designs, because structural adhesives eliminate the need to allocate space for mechanical fasteners.
Lower weight. Adhesives significantly lower the weight of assembled products.
Structural integrity. Adhesives can minimize problems associated with joints failing due to vibration. Also, advances in adhesive additives improve quality control by helping assemblers determine if enough adhesive has been placed in the joint to make a good bond.
Structural adhesives are most popular in the machinery manufacturing industry, which includes builders of agricultural equipment, machine tools, packaging equipment, printing presses, power tools, pumps, compressors and refrigeration equipment, where 19 percent of respondents claim they will use the technology in their plants during the next 12 months. Transportation equipment manufacturers (18 percent) are also heavy users of structural adhesives.
Nanotechnology promises to transform the way that millions of products are designed and assembled. Many experts claim that it will revolutionize traditional industries such as automotive, aerospace, appliance, electronics, medical devices and consumer products.
Matthew Nordan, president of Lux Research Inc. (New York), says nanotechnology is “a set of tools and processes for manipulating matter that can be applied to virtually any manufactured good.” By 2014, he predicts that 4 percent of general manufactured goods, 50 percent of electronics and IT products, and 16 percent of goods in healthcare and life sciences will incorporate emerging nanotechnology.
According to the State of the Profession survey, use of nanotechnology has increased from 3 percent in 2006 to 5 percent in 2007. Ten percent of respondents at large manufacturers claim they will implement the technology in their plants or products during the next 12 months vs. 5 percent of respondents at small manufacturers.
Manufacturers in the computer and electronic products industry (10 percent) expressed the most interest in nanotechnology. The technology is least popular among manufacturers of electrical equipment and appliances (1 percent).
Survey MethodologyASSEMBLY magazine would like to thank all the respondents who participated in its 12th 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.
Upstream Assembly Helps Squeeze Out CostMany upstream manufacturing operations, such as machine shops, injection molders and die casters, are now assembling the parts that they make. They are offering assembly as a value-added service for their customers. It helps cut costs, streamline logistics and reduce excess waste in supply chains.
The goal of upstream assembly is to assemble as many individual parts as possible into subassemblies at the same location where the parts are initially made. Although the trend started in the auto industry, other manufacturers are adopting it. For instance, Boeing Commercial Airplanes (Renton, WA) is using this strategy to build its new 787 Dreamliner, which was officially unveiled this month.
According to the 2007 ASSEMBLY State of the Profession survey, more than one half (62 percent) of respondents claim that they have relied on parts suppliers to also provide assembly services. Upstream assembly is most commonly used in the medical equipment, devices and instruments industry, where 78 percent of assemblers have relied on suppliers to assemble components during the last 12 months.
Assembly professionals in the computer and electronic products (72 percent), electric equipment and appliances (64 percent) and plastics and rubber products (62 percent) industries are also using upstream assembly to cut costs and strengthen their supply chains.
Large manufacturers (companies with 2,000 or more employees) are more likely to subscribe to the upstream assembly concept. For example, 68 percent of assemblers in that category say they have relied on suppliers to provide assembly services during the last 12 months, compared to only 48 percent of small manufacturers (companies with fewer than 50 employees).
Robots Are on the RiseManufacturers are purchasing more robots to increase productivity. More than one-third (40 percent) of the 12th annual State of the Profession survey respondents said they will be implementing robotic technology in their plants during the next 12 months. That’s a healthy 4 percent increase over 2006.
Robots are most popular among companies looking to improve manufacturing flexibility (42 percent of respondents). Specifically, the biggest demand for robots is in the plastics and rubber products industry, where 64 percent of respondents claim they will use the technology in their plants during the next 12 months, which is an 11 percent increase over 2006.
Fabricated metal products manufacturers (46 percent) and medical equipment, devices and instruments manufacturers (43 percent) are also eager to harness robotic technology on the plant floor. The market is being propelled by increasing demand for miniaturization, such as medical implants, in addition to higher levels of accuracy and repeatability. Furniture and fixture manufacturers (27 percent) are less interested in purchasing robots.
Smaller companies also appear more willing to invest in robots. For example, 45 percent of manufacturers with 50 to 250 employees plan to use robotics technology during the next 12 months. In contrast, only 36 percent of manufacturers with more than 1,000 employees plan to commit resources to robots, perhaps because they have already made initial investments.