Salaries are looking up!

By Joe Terrett, Editor   

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There is seldom a dull moment in the world economy. This was to be the year of the turnaround for Canadian manufacturers, when the US economy advances, the loonie is valued low enough to spur exports and conditions elsewhere in the world are somewhat stable.

But a hard winter got 2015 off to a slow start, the US economic resurgence is bit pokey, and the seemingly unstoppable energy sector was brought up short by a steep drop in oil prices. Globally, well there’s always something. Last year it was Ukraine, this year it’s an insolvent, defaulting Greece. All that to note Canadian manufacturers’ customary caution is well founded and reflected somewhat in their approach to compensation this year.

Not that the cash box is closed: senior executives and managers for the most part are getting increases that are in line with other industries. But owners are holding the line on their own pay as they watch the year unfold, according to the results of the fourth national salary benchmark survey conducted by the Excellence in Manufacturing Consortium (EMC), a not-for-profit organization based in Owen Sound, Ont., and PLANT magazine, an Annex Business Media publication.

Manufacturers were likely watching economic conditions and noticing the year getting off to a slow start when the survey was conducted in February and March, reinforcing their caution.


“Maybe it’s a function of a high percentage of respondents adjusting sales, looking at other markets, their product mix and what would cause a pause in revenue growth,” offers Al Diggins, EMC’s president and general manager, who noted respondents are nonetheless happy with their employment conditions and compensation.

The survey gathered a total of 1,675 responses from executives and managers who shared personal information about salaries and bonuses, and how their businesses are faring.



The results show average executive remuneration in a sector dominated by small and medium-sized enterprises (84% with 50 or less to 499 employees) will rise 3.6% to $107,532 this year compared to a 5.2% increase in 2014 when the inflation rate was 1.9%.

Executives are less optimistic about earning higher revenues (53% compared to 61% in 2014), but 54% intend to invest in new production equipment and processes over the next five years, 50% say they will hire new employees and 34% expect to add new lines of business.

“The last four years [according to past salary surveys] have been growth-oriented, a mini-trend. It’s good to see,” says Scott McNeil-Smith, EMC’s director of strategic planning and communications, and president of the Canadian Manufacturing Network. “Leading indicators are all related to growth.”

Manufacturers do have concerns (that are also consistent with the past salary surveys). Cost control tops the list for 52.7% of respondents, while 39.2% identified skills issues, followed by technology upgrades (29.9%) and capacity utilization (25.9%).


CEOs and presidents will do okay this year. They foresee a 5.5% increase after a 8.1% advance last year. Owners and partners aren’t taking much of an increase. They’re looking at 0.9% compared to 5.4% last year, which is a much better outcome than a 1.9% decrease the 2013 survey sample predicted. Vice-presidents are expecting a 7.4% boost compared to 4.8% last year, while plant managers will get a more modest 2.6% raise compared to the 5% they received in 2014. Directors are expecting 5.4% following an 8.5% increase in 2014.

Technicians/technologists are looking at a 2.1% decrease this year while safety managers are anticipating virtually no increase (0.2%) and purchasing/supply managers are not doing much better (0.6%). Logistics managers expect 7.2%, plant engineers 6.6%, design engineers 5.5%, administrative management 4.1%, production operations managers 3.3%, quality assurance managers 3.2% and materials managers 2.1%.

While most industries show salary increases, albeit mostly very modest, several recorded declines, including: beverage and tobacco; environmental; and petroleum/coal products. Plastics/rubber products and textile mills were virtually unchanged while transportation equipment jumped an impressive 18%.

What’s driving compensation?
“One of the biggest issues is businesses focusing on production gains and looking to get them without increasing head count,” explains Andy Robling, vice-president, client development for Hays Canada in Toronto, a global recruitment specialist.

“There is a focus on compensation, particularly the bonus element, which is based on productivity gains. Specific to manufacturing, you’ll see issues such as customer fill rates, inventory on hand and asset costs all being drivers of compensation.”

Most survey respondents (63%) report no change in employment status since the last survey, while 20% are working harder for their money. Although they hold the same job and salary, they’ve taken on more responsibility because of reduced staff. Most put work-life ahead of all other desired work conditions but just ahead of compensation and job security and 82% are satisfied with the balance (although they’re averaging 46 hours per week on the job). CEOs and presidents log the most time at 50 hours, followed by owner/partners, vice-presidents and plant managers at 49.

But they’re also very happy with their jobs overall (91%), job security (89%), vacation time (84%), benefits (81%) and compensation (78%).

Fifty-eight per cent of the respondents reported a portion of their pay made up of bonuses and incentives with those showing the highest percentage (20% or more) with average salaries of $201,832.

Forty-one per cent report perks or extras such as profit sharing (43%), a vehicle of some kind (28%), other enticements (29%), access to private health care (12%), club memberships and stock options (each 11%).

Hays Canada’s research shows the following additional benefits have a chance of finding their way into a company’s compensation packages: flexible work hours; extended health coverage; professional development; more vacation time; and working from home.

Companies are coping with gaps in needed skills, and they’re going to lose key employees to retirement, emphasizing the need to ensure the right people are engaged with their work and careers – and that they’ll want to stick around.

Hays Canada’s What People Want report identifies salary as always a key motivator, but Robling says benefits, company culture and career progression are elements that add up to more than salary when you look at what matters to people.

“It’s not enough for a company to say, well come and join us just because we’re a big name, or you’ve heard of us in the market. You have to get a message around all of the things you have to offer.”

It could be about training, or career progression, green credentials, corporate responsibility, or a focus on health and safety.

Robling says leading companies are putting more time and effort into developing a message to employees that makes their companies attractive.

“Biggest thing we’re seeing companies needing to do to attract new people is to get the messaging right about the packets they’re offering rather than introducing new elements into the package.”

Show me the money!
Salary levels are affected by a variety of factors, such as company revenue, years of experience, education, industries served and gender (only 23% are female – and this year’s sample reveals a 31% pay difference between the sexes).

Owners, senior executives, plant managers and materials managers top the $100,000 a year mark. CEOs and presidents are the highest earners averaging $204,273, followed by vice-presidents ($186,383), directors ($135,330), owners/partners ($133,821), design engineers ($121,838) and plant managers ($116,823).

Plant engineers average $95,732, production/operations managers $91,260, maintenance managers $89,623, while many of the other categories, including administrative management, technicians/technologists, quality managers, safety managers, logistics managers and materials managers earn between $70,800 and $82,500.

Most of the respondents (72%) have a management role only in their companies, while 7% have a controlling ownership stake, 6% are minority owners, and 5% are equal partners.

The average Joe has been on the job 22 years, 14 at the same firm and 10 at the same job.

Forty-three per cent have a university degree, 27% have a college diploma, 14% a trade or technical diploma, 13% a high school education or less and 3% a CEGEP. University grads score the highest wage rate at $120,935, 11.7% ahead of the next best-paid group, trade/technical school grads who average $107,602.

Seventy per cent of the companies pay for educational courses, 51% cover memberships in professional associations and 43% pay for professional certification programs. Twenty-one per cent don’t pay for any education upgrades or association memberships.
Similar to last year’s survey results, investing in the business is the highest priority for respondents over the next five years. Fifty-four per cent will put money into new production equipment and processes, 50% will hire new employees, 34% are adding lines of business, 27% are expanding their plants and intend to enter new geographic markets, and 23% are entering new lines of business.

Asked about what skills they need most to do their jobs, 54% of senior executives and managers cited people skills, followed by industry specific technical (for 42%) and financial (36%).

Additional training requirements include productivity/continuous improvement (27%), financial (26%), people skills and project management (both 25%), industry-specific technical skills (24%) and technical skills (23%).

The EMC/PLANT survey results continue to serve as a reminder that manufacturing is short of skilled labour and the workforce is aging, which is exacerbating the problem. Most respondents (66%) are 46 to 65 or older. Of the total, 38% are 46 to 55, 25% are 56 to 65 and 3% are older. Just 7% are 26 to 35 and 36% are in the 36 to 45 group. Under 25s account for 0.8% of the total.



New recruits
Manufacturers looking to fill gaps would be wise to recalibrate the way they engage with potential employees. Another Hays Canada report shows 90% of candidates use LinkedIn, but only 55% of manufacturers are using the networking website to recruit. Predictably, almost 60% engage more with their potential customers.

Most of the people companies want to employ are passive job seekers (doing a good job, well looked after, well paid) and they’re not applying on websites, says Robling. “Companies need to get to them, but it’s quite involved and can be expensive.”
He says unless an organization is involved in training and development, it needs to invest in a content strategy that delivers a strong message to the marketplace, making sure everything is in the mix such as values, culture and career prospects.
“A company’s internal profile becomes the external profile,” says Robling, noting online sites such as Glassdoor, which has a growing database of company reviews, CEO approval ratings, salary reports, interview reviews and questions, benefits reviews, office photos and more.

Difficulty filling employee gaps is driving companies to take action.

“We’re seeing industry taking back responsibility for hiring, training and developing employees,” says Diggins.

EMC is helping them do so. There’s greater interest in its e-learning supervisor certificate program, a collaboration with Harvard Business Publishing. The course includes a performance project, which can result in bottom line savings for a company.
“If you have a $50,000 impact while training, that more than pays for the training,” says McNeil-Smith.

He sees the skills issue as a matter of supply and demand being out of alignment. Colleges and universities are relying on historical data to develop their curricula, putting their response about two years behind current industry needs.

To bring supply and demand into better alignment, EMC used its Workplace Literacy and Essential Skills research to develop 10 case studies involving a diverse group of Canadian companies that demonstrated to management the positive impact training has on productivity and bottom lines.

MW Canada, a textile manufacturer in Cambridge, Ont. was one of the case studies. The company, which has 65 employees, initiated a technical skills certification program to improve technical communication and problem solving in production. Key measurements were reduction of downtime and improved product quality. And the research showed there was a payoff. Total annual savings were more than $20,000, ROI was 117% and productivity benefits will continue to accrue.

EMC’s next phase is MFG GPS. It’s 18 months into a three-year project that aims to develop a database that combines industry market capabilities and needs with data from colleges and universities to provide ongoing, real-time labour market information.

The third component, potentially, is certification. EMC has graduated more than 200 certified supervisors, who are now set up for higher-level management. “There’s a real need at the production level to provide certification-based learning that will make employees more productive. That’s an option we’re looking at.”

It’s difficult to predict how shortening the gap between supply and demand for skilled people will impact compensation, but as McNeil-Smith concludes, the shorter the distance between the two, the easier it will be for industry to grow and be more competitive.

Download a PDF of the 2015 EMC-PLANT Salary Survey report here.


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