Subscribe
PLANT

Plant pay takes a hike

It’s been a rough couple of years for manufacturers but executive and management-level pay in the sector dominated by small and medium-sized enterprises (SMEs) rose almost 4% in 2010 after a dismal 0.8% increase in 2009.


March 29, 2011
by JOE TERRETT, Editor

It’s been a rough couple of years for manufacturers but executive and management-level pay in the sector dominated by small and medium-sized enterprises (SMEs) rose almost 4% in 2010 after a dismal 0.8% increase in 2009, according to the results of a new national survey of Canadian companies.

This first salary benchmark survey conducted by the Excellence in Manufacturing Consortium (EMC) and Canadian PLANT magazine, a Rogers Media publication, gathered 605 responses from executives and managers at companies across Canada, 42% of them noting some change in employment status following the economic downturn. Nonetheless, they are satisfied with job security, compensation and work-life balance.

“This is consistent with what we’re hearing from manufacturers,” says Al Diggins, president and general manager of EMC, a not-for-profit consortium of Canadian manufacturers. “A lot of it speaks to what’s happening inside the buildings where people are saying they’ve had to take on more responsibilities following lay offs and cutbacks.”

Most respondents (72%) had a management role in their companies, while 18% identified themselves as having an ownership stake. Their businesses cover a range of interests from fabricated metals to sophisticated electronics with 14.4% identifying their organizations as large (more than 500 employees) and the rest as SMEs. About 65% of the respondents work in non-union plants, and almost 30% work in plants that are at least partially unionized. The results show managers working in the unionized environments make an average of 12.5% more than those in non-unionized plants.

The average salary for all titles is $96,600, which represents a 3.98% increase over 2009 and as of October, it’s ahead of the 2.4% inflation rate in the preceding months.

Top earners

Predictably, the big money is going to owners, senior executives and plant managers who all weighed in at more than $100,000 a year. CEOs and presidents are at the top of the salary hierarchy, averaging $153,700. They’re followed by owners/partners ($141,400), vice-presidents ($136,000), directors ($111,500) and plant managers ($101,000).

Engineers average $81,700, while many of the other categories, including administrative management, purchasing/supply management, maintenance managers, and technician/technologists earn between $75,000 and $77,000. Materials managers average just under $70,000.

A variety of factors provide an upward influence on salary levels, including company revenue, years of experience, education, and the kind of products made (paper and wood, and chemicals and pharmaceuticals top the list). Because of the lopsided mix of men and women, the results also show it pays to be a guy: there’s a 31% gap between the sexes.

A bit less than half the respondents report a portion of their pay made up of bonuses and incentives, with those showing the highest percentage (20% or more) averaging $169,000. Perks or extras include profit sharing for 27%, a vehicle of some kind for 19%, stock options for 6% and club memberships for 5%, but 45% report no extras.

More than a third of the respondents (34%) do not see any changes in manufacturing salary trends, while 18% said more skills and experience are required, but 11% see salaries going up.

The typical respondent’s age is just shy of 48 with 21.8 years of experience in manufacturing. Forty-one percent have a university degree, 41% have a college or trade/technical school diploma and 13% have a high school education or less. They’re a hard-working lot, too. The average workweek is 47.6 hours.

Most respondents (65.5%) are in the 36-55 age category, 38.5% of those are 46-55; and 16.4% are 56-63. These results suggest a significant segment of the companies’ experienced people will be leaving the sector over the next decade.

Aging workforce

When EMC does a presentation that touches on the aging workforce, the accepted thinking is that for every two people who retire, less than one fills the vacancy, which means greater reliance is placed on new Canadians or making up for the shortfall elsewhere in the economy, says Scott McNeil-Smith, EMC’s director of marketing and development.

The potential impact on salaries?

“Salaries won’t necessarily be in the top range for younger people with less experience moving in to replace the longer-term people,” says McNeil-Smith.

However, he says companies breaking into new markets, especially abroad, will need people with specific skills, such as languages, experience doing business or familiarity with customs in a target market, or abilities on the shop floor related to developing products that meet various international standards.“There’s an opportunity for people to raise their salary levels based on these types of skills.”

Most respondents (86%) are happy with their jobs. Both a competitive salary and a healthy work life balance lead the job priorities list for 94%. Sevety-three per cent are happy with their pay and 78% are feeling balanced. Ninety-one per cent want a healthy benefits package and 76% said they have one. Job security is key for 89% and 84% do feel secure. Vacation time is important for 89% and 78% are satisfied with their time off. Bottom of the list is career development for 80% with 67% declaring themselves satisfied.

The job satisfaction responses caught the eye of Justin Graham, a senior research manager for the Rogers Connect Marketing Research team.
“Given the impact of the recession over the last couple of years, it’s interesting that overall satisfaction with job security (84% satisfied, including 35% very satisfied) is the highest ranked influencer of job satisfaction,” says Graham.

The recession has also influenced their feelings about training. He observes most of the respondents (38%) cited productivity or continuous improvement as an area requiring additional work.

They were asked what it takes to do their jobs and people skills ranked most important by a landslide, according to 44% of those surveyed.
“In contrast the second most important skill, industry specific technical skills, is cited by just one-in-ten (10%),” says Graham. Even farther back are productivity/continuous improvement (8%), financial and project management (both 7%) and analysis (6%).

Diggins views the focus on people skills, somewhat taken for granted in the past, as prudent. With ongoing shortages of skilled people and impending retirements among baby boomers, he says companies need to do the best they can with the people they have. There will be much more head hunting going on. “Keeping the right people will depend on keeping people happy.”

Optimistic about the future

Many of the companies (45%) said revenues were up from 2009, 16% said they were the same while 18% reported a decrease. And they are optimistic about the future. Over the next five years 64% plan to invest in new production equipment and processes, 58% will be hiring more employees, 33% will be entering new geographic markets and the same percentage will be adding new lines of business.

There are some issues that concern respondents. First for 59% of them is cost control, followed by skills shortages (43%), reorganization (30%), technology upgrades and forecasting (both 29%), supplier relationship management (25%) and capacity shortages (23%).

“Cost containment is a big issue,” says McNeil-Smith. “Turning cost centres into profit centres is one way to keep a lid on things.”

He cites, as an example, the purchasing co-operative EMC established in the London, Ont. area that will pool purchases of several manufacturers for savings that fall directly to the bottom line.

These are all areas EMC has been addressing, says McNeil-Smith. “But one of the most asked questions from members has to do with how to benchmark salaries. The results of this survey will help them access that important information.”

The survey, fielded in late November and early December, has a +/-3.3% margin of error, 18 times out of 20.