Salary increases grind to a halt in 2005.

The chief executive officers (CEOs) of very large manufacturers earned 33% more in 2005 than in 2004. But CEOs and other upper-level employees of smaller companies--the group that metalcasters are most closely associated with--weren't quite so lucky.

According to the National Executive Compensation Survey, which gathers information on the cash compensation of executives, as well as a variety of benefits and perquisites (or incidental profits), the total change in median salaries (the midway point between the lowest salary and the highest salary) for the 33 primary upper management positions in manufacturing was less than a 1% increase between 2004 and 2005. Average salaries, which are more subject to fluctuation due to extremes, showed a very slight decrease across the manufacturing management force. Manufacturing management's average total compensation also showed a gain of less than 1%.

CEOs of small and mid-range manufacturers--in all sales volume categories but two--earned less average total compensation in 2005 than in 2004. Total compensation accounts for base salary, bonuses and all other cash payments.

Ups and Downs

Changes in median and average salaries were minimal when taken from all positions in the manufacturing sector. But there were winners, as well as some losers, in certain job descriptions.

Directors of supply chain management, who "plan and direct the procurement, transportation, storage and delivery of raw, in-process and finished goods and/or materials," showed the greatest gains. The median salary for that position earned a 13.8% greater base amount in 2005 than 2004.

Operations executives not involved in manufacturing and heads of purchasing also earned significantly greater base salaries in 2005 compared to 2004 at 7.8% and 8.4%.

Those experiencing the highest loss in base salary were heads of industrial engineering, which the National Association of Manufacturers' Employers Association Group (EAG) defines as those "responsible for methods, layout, process flow and equipment or tooling requirements for the production and/or processing operations." That group lost 10.3% of their base salary. Also showing notable declines were the median base salaries of multifunction executives (-7.4%) and chief manufacturing executives (-5.6%).

Table 1 lists the percent change in the median salaries of each job category in the public and private sectors of manufacturing based on sales volume up to more than $1 billion from 2004 to 2005. Fig. 1 presents all salaries as a percentage of the CEO's pay, where the chief executive is represented by 100%. The data is based on nationwide earnings and includes all sales volume breakouts.

Participants

The EAG conducts the National Executive Compensation Survey each year in conjunction with several co-sponsors.

This year, the 31st edition of the survey included 18 other employer associations across the nation and attracted participation from 1,561 manufacturing and service organizations employing 11,890 upper managers in 34 different positions. Of those, 803 were manufacturing organizations and 758 were service organizations. The data used here is according to manufacturing organizations only.

Thirty-three of the 34 job classifications apply to the manufacturing industry; however, employees are not spread evenly over those positions. Organizations surveyed may or may not have employed individuals in the role described.

What It Means

The National Association of Manufacturers reports that 370,114 manufacturing businesses were in operation in 2004. Participants in the present survey accounted for 0.002% of those businesses. The information should be used for baseline purposes only, as many location and industry specific factors can influence the national findings. The complete survey breaks this information down by region, industry type and sales volume.

For More Information

Visit www.afsinc.org/HR for additional information regarding the National Executive Compensation Survey.

"Surveys Reveal Wage, Salary Increases," MODERN CASTING Staff Report, Nov. 2005, p. 43.

A MODERN CASTING Staff Report

Table 1. Salary Change by Job Classification
for All Manufacturing Firms Surveyed

Classification %                      % Change Median
                                        Salary from
                                       2004 to 2005

Chief Executive Officer                      0
Chief Operating Officer                     0.2
Multi-Function Executive                   -7.4
Engineering/Research Executive             -2.2
Manufacturing Executive                    -5.6
Financial/Accounting Executive             -1.6
Sales/Marketing Executive                   2.0
Human Resources Executive                   0.6
Engineer                                    1.9
General Sales Manager                       0.1
Manufacturing Manager/Plant Manager         1.2
Purchasing Head                             8.4
Quality Control Head                        1.2
Industrial Engineering Head                -10.3
Chief Information Officer                   1.0
Operations Executive                        7.8
Supply Chain Management                    13.8

Fig. 1 The CEO draws the highest salary in any manufacturing or
service operation. Here, the salaries of the major
manufacturing positions are listed as a percentage of the CEO's.

Percentage of Highest Salary Earned

Chief Executive Officer                          100%
Chief Operating Officer                           77%
Chief Executive-Multi Function                    66%
Chief Engineering/Research Executive              54%
Chief Manufacturing Executive                     53%
Chief Financial/Accounting Executive              59%
Chief Sales/Marketing Executive                   61%
Chief Human Resources Executive                   43%
Chief Engineer                                    44%
General Sales Manager                             46%
Manufacturing/Plant Manager                       39%
Purchasing Head                                   35%
Quality Control Head                              37%
Industrial Engineering Head                       36%
Chief Information Officer                         48%
Chief Operations Executive-Non-Manufacturing      55%
Director of Supply Chain Management               50%

Note: Table made from bar graph.