"Happy Days Are Here Again” was a popular song back in the 1930s. Assemblers in many industries have been singing an updated version of the tune lately, because the new golden age of American manufacturing has begun. Production activity continues to pick up, bolstered by domestic oil and gas production, growing consumer confidence and widespread reshoring activity.

The 19th annual ASSEMBLY State of the Profession survey captured some of that optimism. A majority (93 percent) of respondents expect their company to commit either the same amount or more resources toward assembly operations in the next year. That’s 9 percentage points higher than in 2013 and the highest margin in the history of the study.

“Manufacturing in the United States is getting a significant boost from the shale oil and gas boom,” says Jacob Prak, CEO of Michigan Manufacturing International, which supplies assemblies, castings, stampings, machined parts, gears, bearings and other components to OEMs. “Cheaper natural gas feed stocks are making U.S.-produced plastics and other materials less expensive than in other parts of the world. This, in turn, will mean that finished products which rely on these materials will be more competitive.

“The next 12 months will be exciting in the field of manufacturing,” claims Prak. “Companies that are well aware of the changing situations and flexible enough to adapt will be in the best position to grow and succeed.”

According to the Boston Consulting Group Inc. (BCG), cheap natural gas will have a huge impact on U.S. manufacturing over the next few years. “This cost advantage has already started to boost investment and employment and will persist for at least five years,” claims Harold Sirkin, a BCG senior partner.

“The energy cost advantage is amplified by the fact that overall U.S. manufacturing competitiveness is already improving, owing to relatively low labor costs compared with those of other developed economies, rapidly rising wages in China and high productivity,” says Sirkin.

“Several major forces are aligning right now that are dramatically reversing the fortunes of a U.S. manufacturing sector that many gave up for dead just a few years ago,” adds Sirkin. “The energy advantage and improved competitiveness are unique to the U.S. and are accelerating an American manufacturing renaissance.”

That sentiment is reflected in the 2014 State of the Professionstudy, which was conducted in March as the manufacturing sector was recovering from the affects of extreme winter weather in most parts of the United States. Bitter cold, snow and ice disrupted supply chains and slowed production during the first two months of the year.

Manufacturers in the transportation sector, which includes automobiles, boats, car parts, recreational vehicles, trucks and locomotives, are the most bullish about the future. That’s reflected in positive news coming from Detroit. March was the sixth consecutive month that consumer spending on new vehicles increased on a year-over-year basis.

Vehicle sales recently rose to a nine-year high. In fact, LMC Automotive forecasts that total light-vehicle sales in 2014 will surpass more than 16 million units, a 3 percent increase from 2013.

“Auto sales are hitting their stride… and the pace has returned to the level expected at this stage of the recovery,” says Jeff Schuster, senior vice president of forecasting at LMC Automotive. “Fueling the growth further as the year progresses is a very robust level of new-model activity, with 63 new or redesigned models expected to hit showrooms—a 60 percent increase from last year.”

The bright outlook for the U.S. auto industry is reflected in the fact that a number of Tier One suppliers have announced plans to build or expand assembly plants.

Brembo S.p.A. recently invested $115 million in its Homer, MI, brake systems facility. The 440,000-square-foot plant features 47 assembly lines that produced 10 million discs and 300,000 calipers and corner modules in 2013. This year, the plant expects to assemble 13 million discs and 400,000 calipers and modules.

BorgWarner Turbo Systems is investing more than $32 million to expand its plant in Arden, NC, to meet demand that’s expected to double over the next five years. Also, Continental AG recently invested $35 million to expand its brake systems plant in Fletcher, NC.

Delphi Automotive is spending $15 million to upgrade its printed circuit board assembly plant in Brookhaven, MS. In addition, Tower International Inc. is investing $15 million to expand operations at its plant in Meridian, MS.

Another bright spot is the industrial machinery market. “As economic conditions continue to improve worldwide, the demand for machines in sectors such as agriculture, packaging, material handling and machine tools will push revenues to $1.6 trillion this year, up from $1.5 trillion in 2013,” says Andrew Robertson, senior analyst for industrial automation at IHS Technology. “This represents annual growth of 6 percent, more than twice the 3 percent increase seen in 2013.

“The improving economic outlook is a key factor in the strong growth of machinery,” adds Robertson. “The growing populations and the expanding middle classes in developing countries are generating more disposable income. This translates into increased demand across a vast number of sectors.”

The Manufacturers Alliance for Productivity and Innovation (MAPI) predicts that U.S. manufacturing will grow 3 percent in 2014 and 4 percent in 2015.

“While consumer-driven manufacturing will grow at a consistently moderate rate, the industries driven by investment will grow at a higher rate,” claims Daniel Meckstroth, Ph.D., chief economist at MAPI. “Energy infrastructure and manufacturing machinery will see increases as firms replace and expand equipment.

“Aerospace will also experience a big ramp-up in production,” Meckstroth points out. “In addition, there will be growth in the construction supply chain—HVAC, wood, paint, appliances and furniture—as we anticipate both residential and nonresidential increases. The acceleration driver will be investment.”

MAPI expects industrial equipment expenditures to grow 8 percent in 2014 and 11 percent in 2015. The outlook for spending on transportation equipment is for growth of 6 percent in 2014 and 4 percent in 2015.

“We anticipate 1 million housing starts in 2014 and 1.4 million starts in 2015,” says Meckstroth. “Manufacturing production will finally approach its prerecession peak by the end of 2014.”

Quality Concerns

In the wake of massive recalls in the auto industry, many assemblers are focusing extra attention on quality. Indeed, more than one-half (53 percent) of State of the Profession respondents are currently dealing with issues relating to quality. That’s 4 percentage points higher than in 2013.

In addition, two-thirds (66 percent) of respondents claim that product quality is the No. 1 factor that will contribute to their companies’ competitive advantage during the next 12 months. That’s 5 percentage points higher than in 2012. And, it’s the first time in the 19-year history of the study that quality ranks above other factors, such as continuous improvement and manufacturing flexibility.

The U.S. auto industry is on track to recall more vehicles this year than ever. Part of the problem is the increasing complexity of automobiles. Also, automakers keep unveiling more products with a higher mix of parts and components across multiple vehicle platforms.

In many cases, lead time between exterior design approval and the start of sales has been compressed to less than two years. These accelerated design cycles strain engineers and supply chains, creating an environment that’s ripe for quality lapses.

More than two-thirds (73 percent) of assemblers in the contract manufacturing industry are involved with quality initiatives, following by transportation equipment (69 percent), electrical equipment and appliances (68 percent) and fabricated metal products (68 percent).

Product quality is slightly more important to large manufacturers (companies with more than 1,000 employees) than small manufacturers (companies with fewer than 50 employees). More than two-thirds (72 percent) of assemblers at large manufacturers claim that quality will contribute to their overall competitive advantage during the next 12 months vs. 56 percent of assembly professional at small manufacturers.

The quality crusade is also reflected in the types of production equipment that manufacturers are investing in. Test and inspection equipment was cited by two-thirds (66 percent) of respondents, followed by automated assembly equipment and systems (59 percent), and computers and software (51 percent).

Quality concerns go hand-in-hand with the reshoring trend. Many manufacturers are eager to move production back to the United States from China and elsewhere to improve quality.

“Our [latest] survey indicates a significant shift in manufacturing footprint,” says David Simchi-Levi, a professor of engineering systems at the Massachusetts Institute of Technology and founder of the MIT Forum for Supply Chain Innovation. “[However], the fact that companies are moving manufacturing closer to market demand and others are considering such a move does not mean the end of manufacturing in low-cost countries.

“It suggests that we are in the middle of a transformation from a global manufacturing strategy, where the focus is on low-cost countries, to a more regional strategy,” adds Simchi-Levi.

The 2014 State of the Profession survey reflects the recent increase in reshoring. For instance, 11 percent of respondents claim that their company has brought jobs back to the states from overseas during the past year. And, 14 percent expect their companies to reshore assembly operations during the next 12 months.

Midsize manufacturers (companies with 250 to 1,000 employees) are more likely to reshore. Nearly one-quarter (22 percent) of respondents in that category plan to shift assembly operations back to the United States during the next 12 months vs. 12 percent of large manufacturers (companies with more than 1,000 employees) and 2 percent of small manufacturers (companies with less than 50 employees).

More than one-third (39 percent) of assembly professionals in the electrical equipment and appliance sector expect their company to reshore operations during the next 12 months. The transportation equipment industry (22 percent) also expects to see more reshoring activity.

“The reshoring trend is more than anecdotal,” claims Justin Rose, a partner at the Boston Consulting Group. “As the costs and benefits become more apparent, we expect more companies to consider manufacturing in the United States if their products are to be consumed in the United States.”

Growing Skills Gap

As the reshoring trend continues, manufacturers are increasingly faced with a rising skills gap and talent shortage. In fact, almost half (46 percent) of State of the Professionrespondents claim that the number of people employed at their plant has increased during the past year, which is a 6 percentage point increase over 2013.

However, the severe labor shortage will affect future hiring plans. More than one-third (43 percent) of respondents claim they are having trouble finding skilled workers.

Assemblers in the plastics and rubber industry report the biggest demand (64 percent) for new employees, followed by the electrical equipment and appliance industry (56 percent) and contract manufacturers (53 percent) The computer and electronics products industry (31 percent) has hired the fewest number of assemblers in the past 12 months.

Midsized manufacturers (companies with 250 to 500 employees) have hired the most assemblers in the past year (54 percent), while small manufacturers (companies with less than 50 employees) have hired the fewest number of assemblers (28 percent).

As the oil and gas boom continues, manufacturers in the energy industry (59 percent) expect to have the hardest time finding qualified assemblers. On the other hand, only 32 percent of assembly professionals in the electrical equipment and appliance industry predict they’ll experience a talent shortage.

Midsized manufacturers (56 percent) expect to have the hardest time finding skilled workers in the near future, followed by large manufacturers (40 percent) and small manufacturers (35 percent). Assemblers in the South (48 percent) report having the most difficulty finding employees vs. 37 percent of assembly professionals in the Northeast.

It takes an average of one to three months to fill skilled manufacturing positions today. More than one-fourth (27 percent) of respondents claim that its takes four to six months to fill the typical position. However, 9 percent say that it takes more than seven months.

According to a recent study conducted by Accenture and The Manufacturing Institute, U.S. manufacturers may be losing up to 11 percent of their earnings annually as a result of increased production costs stemming from a shortage of skilled workers.

“The skills shortage facing U.S. manufacturers is apparent from this report and its severity can be measured in dollars,” says Matt Reilly, senior managing director at Accenture Strategy North America. “Manufacturers’ plans to increase production and grow over the next five years are positive indicators, but are likely to exacerbate the problem. Given today’s limited pool of relevant talent, companies may have to forget the notion of the perfect candidate. Instead, they should look for more generalist skills in candidates and develop them to match the specific work that needs to be done.”

When manufacturers are unable to fill roles, overtime, downtime and cycle times increase. Also, more materials are lost to scrap and quality suffers.

“More than 70 percent of the respondents reported at least a 5 percent increase in overtime costs, and 32 percent reported an increase of 10 percent or more,” notes Reilly. “As manufacturers used overtime to maintain base production levels, 61 percent said their downtime increased by at least 5 percent, as they lacked enough people to run and maintain equipment.”

“It’s getting harder to tell the workers from the managers in today’s plants,” adds Blake Moret, chairman of The Manufacturing Institute’s Board of Trustees and senior vice president of the Control Products and Solutions business at Rockwell Automation. “Production workers, engineers and managers all spend a significant part of their day using advanced technology to configure, control and monitor processes. While these skills are in high demand, the number of qualified people who have them is small.

“Manufacturers will need to invest in training to develop a highly skilled production workforce that supports the advanced technologies that are essential to modern manufacturing competitiveness,” warns Moret.

To mitigate the skills shortage, manufacturers tend to spend more on average for training new hires as opposed to existing employees, with 55 percent spending at least $1,000 per new hire, as compared to 42 percent who said they spend at a similar level on training for existing employees. However, the study found no correlation between spending on training and impact on skill shortages.

“Successful companies spend training dollars as part of an overall strategy designed to address critical skill shortages, with clear objectives set for the short-, medium- and long-term,” says Reilly.

Variable Compensation

The typical State of the Profession survey respondent is 51 years old, has 25 years of experience and earns $84,012. However, there are exceptions at both the high and low ends of the scale. For instance, 18 percent of respondents take home less than $60,000 per year, while 36 percent earn more than $90,000.

On average, men earn 19 percent more than women. Also, 45 percent of women respondents earn less than $60,000 vs. 16 percent of men

One factor that accounts for some of this discrepancy is the fact that women respondents have less experience than men. Women represented only 5 percent of respondents and had an average of 16 years of experience vs. 25 years for men. In fact, more than three-quarters (78 percent) of men have more than 15 years experience, while 50 percent of women have less than 15 years experience in the assembly field.

In addition to gender, many different factors determine pay rates, such as age, education, experience, location and type of industry.

Industry experience is the biggest factor that determines pay rates. Individuals with more than 15 years of experience (76 percent of respondents) earn more than assemblers with less than 10 years of experience in the assembly field (16 percent of respondents).

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 31 percent have been with their present employer for less than five years.

Many assemblers are benefiting from the resurgence in manufacturing. More than half (57 percent) of respondents received a pay increase over the last 12 months, which is a 3 percentage point increase over 2013. Only 8 percent experienced a decrease in salary. Although salary raises varied widely, the average increase was 4 percent.

More than one half (55 percent) of ASSEMBLY’s respondents received a cash bonus during the last 12 months. That’s a 4 percentage point increase over 2013 and an 8 percentage point increase over 2012. Extra compensation was typically based on overall company and plant performance, in addition to meeting deadlines for new projects, implementing cost reduction programs and launching new products.

More than two-thirds (72 percent) of assemblers who work for contract manufacturers received a cash bonus during the past year, followed by assemblers in the medical equipment (60 percent) and transportation equipment (60 percent) industries.

More than half (59 percent) of State of the Profession respondents expect to receive a salary increase at their next review. Assemblers in the electrical equipment and appliance industry feel most confident about receiving an increase in the near future. Indeed, 78 percent of those individuals say they expect a raise.

But, assembly professionals who work in the machinery industry are less optimistic. Only 44 percent expect a raise during the next 12 months.

Assemblers who work for larger manufacturers (1,000 or more employees) are more likely to receive a bonus than those employed by companies with less than 100 employees.

Geography Lesson

Assembly salaries typically vary from region to region, based on the local cost of living. The West (Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming), which is home to 15 percent of State of the Profession respondents, boasts the highest salaries—an average of $106,228.

On the other hand, assemblers in the Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin), which is home to 38 percent of respondents, average $78,581.

With an average salary of $83,053, the Northeast most closely resembles the national average of $84,012. That region, which includes Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, is home to 20 percent of respondents.

Assemblers in the South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia) earn an average salary of $80,565.

Only 17 percent of assembly professionals in the South earn more than $100, 000 vs. 54 percent of assemblers in the West. However, assemblers in the West tend to work one hour a week more than the national average of 47 hours vs. assemblers in the Northeast, who work 45 hours a week.

Only 13 percent of respondents in the South expect to work more hours during the next 12 months vs. 30 percent in the Midwest, which is home to the booming auto industry. However, 68 percent assemblers in the South expect to receive a raise in the near future vs. 59 percent in the Midwest.

But, money doesn’t always buy happiness. Assembly professionals in the Midwest tend to be more satisfied than their peers in other parts of the country, even though they have the lowest average salaries. More than half (56 percent) claim to be “extremely satisfied” vs. 39 percent of assemblers in the West.

Size Matters

The size of a manufacturer usually affects salary and job satisfaction in the assembly profession. For instance, assemblers who work in companies with more than 2,000 employees tend to be well compensated. Indeed, 56 percent of assemblers at those companies earn more than $90,000.

On the other hand, only 17 percent of assemblers at small manufacturers (companies with less than 50 employees) earn more than $90,000. Assembly professionals who work in larger companies also claim to be a happier (40 percent) than people who work for small firms (33 percent).

Assemblers in the aerospace industry earn higher salaries than their peers in other sectors. For instance, they earn 9 percent more than the national average of $84,012.

Assembly professionals in the fabricated metal products and contract manufacturing industries also boast higher-than-average compensation. However, respondents who work in the plastics and rubber products industry earn 12 percent less than the national average. Assemblers in the medical equipment and supplies industry earn salaries that closely match the national average.

Manufacturing engineers (54 percent of respondents) rank slightly behind design engineers (15 percent of respondents) when it comes to compensation. According to the 2014 State of the Profession survey, design engineers earn an average of $79,745 vs. $79,060 for manufacturing engineers.

Age is another key factor that affects compensation. For instance, assembly professionals who are more than 60 years old (24 percent of respondents) typically earn the highest salaries. They average $75,064 vs. assemblers who are under 40 (12 percent of respondents), who earn an average of $69,256.

Salaries also fluctuate dramatically based on type and level of education. For example, assembly professionals with just a bachelor’s degree (42 percent of respondents) earn an average of $90,170. However, assemblers armed with a master’s degree (13 percent of respondents) earn $97,589.

Obtaining a master’s in business administration (MBA) is a good way to ensure a higher salary. However, the ASSEMBLY survey discovered that MBAs typically work seven more hours per week than non-MBAs.

Time Marches On

Assemblers work an average of 47 hours a week. In fact, 76 percent of 2014 State of the Profession respondents often work more than 40 hours a week.

Assembly professionals in the contract manufacturing and the fabricated metal products industries work the longest weeks (48 hours). Assemblers in the electrical equipment and medical equipment industries have the shortest work week (46 hours).

Twenty-one percent of assemblers claim that their average work week will increase during the next 12 months. More than one-third (37 percent) of assembly professionals who work in the transportation equipment industry, which includes automakers and suppliers, expect to work more hours during the next 12 months vs. only 11 percent of assemblers in the plastic and rubber products industry.

Assembly professionals who work for large manufacturers plan to spend more time at work than their counterparts in smaller companies. Twenty-two 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 13 percent of assemblers who work for companies with less than 50 employees expect to experience longer work weeks ahead.

The majority (56 percent) of respondents claim that they are doing the same amount of work-related travel today vs. one year ago. Only 12 percent of assemblers say they are doing more travel. Manufacturing engineers (14 percent) tend to travel more than design engineers (7 percent).

More than one-half (56 percent) of respondents believe that time constraints will affect their ability to do their jobs during the next 12 months. Time-related pressure will pose the biggest challenge to assemblers who work in small companies and the electrical equipment and appliances (67 percent), fabricated metals (66 percent) and transportation equipment (60 percent) industries.

In addition to product quality (66 percent), assemblers will spend more time on continuous improvement efforts (64 percent) and manufacturing flexibility (54 percent) in the near future.

More than three-quarters (84 percent) of assembly professionals in the transportation equipment industry believe that continuous improvement initiatives will contribute to their companies’ overall competitive advantage during the next 12 months. Other industries bullish on continuous improvement include contract manufacturing (76 percent), medical equipment (68 percent) and aerospace (67 percent).

A majority (78 percent) of assemblers in the transportation equipment segment will also be focusing on flexibility, followed by contract manufacturers (69 percent) and machinery manufacturers (57 percent).

Survey Methodology

ASSEMBLY magazine would like to thank all the respondents who participated in its 19th annual State of the Profession survey. The survey was conducted online in March 2014 by BNP Media’s market research division. It was sent to more than 16,000 randomly selected subscribers with an e-mail address.

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.

Special thanks to Andrea Littles for her assistance with online survey design, distribution and tabulation.


About the Industries

Participants in the 2014 State of the Profession survey were comprised of the following industry segments, based on the North American Industry Classification System:

Aerospace: includes airplanes, helicopters, jet engines, missiles, rockets and satellites.

Computer and electronic products: includes antennas, audiovisual equipment, automatic teller machines, clocks, computers and peripherals, connectors, digital cameras, flat-panel displays, laboratory instruments, loudspeakers, navigational instruments, printed circuit boards, process control instruments, railroad signaling equipment, semiconductors, smoke detectors, stereos, telephone apparatus, televisions, test and inspection equipment, transmitters, video recorders and watches.

Contract manufacturing: includes third-party companies that manufacture components, subassemblies or complete products for other companies.

Electrical equipment and appliances: includes batteries, flashlights, generators, household appliances, industrial controls, lamp bulbs, lighting fixtures and equipment, motors, switches and transformers.

Energy manufacturing: includes oil and gas equipment, solar panels and wind turbines.

Fabricated metal products: includes ammunition, cans and containers, cutlery, doors, fences, firearms, hand tools, hinges, ladders, locks, metal stampings, plumbing fixtures, prefabricated buildings, springs, valves and windows.

Machinery manufacturing: includes agricultural equipment, construction equipment, conveyors, food processing machinery, lawn and garden equipment, machine tools, office machines, packaging machinery, photographic equipment, printing presses, power tools, pumps and compressors, refrigeration and heating equipment, textile machinery, vending machines and welding equipment.

Medical equipment and supplies: includes diagnostic equipment, orthopedic and prosthetic appliances, and surgical instruments.

Plastics and rubber products: includes belts, bottles, floor coverings, hoses, packaging materials, pipes and fittings, plumbing fixtures and tires.

Transportation equipment: includes automobiles and automotive components, boats, engines, motor homes, railroad locomotives and rolling stock, recreational vehicles, ships, trailers and trucks.