Salary Trends and the Future of Metal Fabrication
Nothing gets people talking in this industry like the lack of skilled labor or, right now, the lack of work shifts. No manufacturer can truly automate all of its labor issues, although automation has become an increasingly important part of the puzzle.
Of course, some manufacturers can automate more. Indeed, a large part of the respondents to the “2022 Capital Equipment Forecast”, which will be published shortly by the Association of Manufacturers and Manufacturers Intl. (FMA)said the lack of labor would be a big driver of their investment strategy going forward.
Yet even the best automation wouldn’t be very effective without the right people, and the right people need a competitive salary. The trends revealed in the 2021 “Salary and Benefits Survey”, published by FMA, provide insight into what a competitive salary really is.
Stability before chaos
Introducing the survey, Steve Zerio, a member of FMA’s management advisory board and president of Triumph Partners, a Michigan-based consulting firm, wrote, “About 69% of respondents believe that 2022 will increase the salaries of 2% or more, compared to only 47% per year. one year ago. Hearing how busy many FMA members are right now shows the intention to take full care of compensation. … The survey shows relative stability in a time of personal chaos, although some chaos is not visible until the 2022 survey.”
Wage increases in metal fabrication were most pronounced in workshops. While executives saw average annual increases of just 1.6% and office workers 2.3%, blue-collar workers saw their salaries increase by 3.1%. This trend should continue. Of course, granting wage increases that significantly outweigh productivity gains puts a manufacturer in a tough spot. But when a shop has the right technology and can make the most of every dollar paid, it’s headed in the right direction.
In this regard, manufacturers have headed in the right direction. Participants in FMA’s Custom Metal Fabrication 2021 “Financial ratios and operational benchmarking survey” (covering fiscal 2020) reported average revenue per employee of more than $208,000, down slightly from the $214,000 reported the previous year, but up significantly from the 170 $000 reported three years ago.
Market forces affecting wages
Several labor market forces could influence wage growth in metal manufacturing. For jobs less affected by automation, the tight labor market is driving up wages, especially for those with broadly applicable skills, such as those who can drive a forklift. Since 2018, salaries for forklift drivers have increased as much or often more than skilled machine operator positions, at least when measured by median salary.
According to the 2021 survey, most forklift drivers (those between the 25th and 75th percentile) earned between $32,240 and $41,600, with a median of $39,520. The average was nearly identical, at $39,810. Positions with higher averages than medians tend to have more salaries clustered at the top of the spectrum. These high salaries pull the average salary higher. For drivers, this is not the case.
Salaries for more specialized and skilled positions evolve differently. Starting salaries remain low at some companies, but average salaries are above the median. Translation: More report salaries at the higher end of the income range. The best examples include experienced operators of press brakes and laser cutting machines. Their average salaries are above the median, sometimes by several thousand dollars. Both have a few at the extremes earning very low and very high salaries. But again, more higher salaries pull the average salary up.
This could reflect what remains a complicated reality. Automation allows less skilled people to become more productive. However, their pay may be average or even low, as it doesn’t take years of training to bring someone up to speed, at least for some of the simpler shop jobs, especially if someone is another program and configures a machine. . They are likely required to measure parts, complete inspection paperwork, and report problems. But to solve major problems, they call the department head for help.
What is the career path for such operators? Some might be happy to clock in, have a predictable work day, and go home. Others might move up the ranks by becoming floaters, training on multiple machines. According to the FMA survey, salaries for multiple machine operators show the same pattern as those for brake and laser operators: a greater number of higher salaries push the average higher than the median. Some might choose to specialize on one machine, one day becoming the department head or tech guru — again, one of the many higher-earning people who drive up the average job salary.
Or they could move into supervision or management. Of course, this trade is dominated by small shops where there can only be a limited number of chefs. So a few might move on to other areas, like programming or estimating.
Jobs like programming and estimating illustrate the profound impacts of technological change, including the benefits and challenges it presents for employers trying to attract people to the industry. Some stores may manually nest a repeat order and use excel sheets to build an estimate for the sales team, but a few operations have nearly or completely automated both processes.
Of course, such software automation does not apply to every manufacturer’s business model. But the mere fact that these tasks can in some cases be fully automated, with 1s and 0s doing all the work that human teams did, will likely affect careers involving those skill sets. According to the FMA Salary Survey, most estimators earn between $52,000 and $70,000 per year. In the coming years, however, as the process becomes more driven by software and perhaps even artificial intelligence and machine learning, careers in estimating may change.
This does not mean that current estimators will lose their jobs. Manufacturers these days wouldn’t dare let such an experience out of their doors. But in the future, those who once specialized in estimating may wear many hats.
Exciting times for metal fabrication
As part of its FMA webinar, Zerio showed a slide with four cross-cutting elements that make up employee satisfaction: compensation, engagement, development, and resources. Compensation is at the top, for obvious reasons, but it’s not the only one. Engagement plays a part, including the use of internal company surveys, town hall meetings, company picnics, employee recognition programs and even corporate giveaways. Still, Zerio added that all of these won’t help employee engagement without honest communication about the health of the business and its future. “Consistent, open and honest communication is the true source of employee engagement,” he said.
Next comes employee development. Employees need career plans, which may include additional internal and external training. When the learning never stops, going to work becomes more interesting.
Finally, employees need resources to do their jobs. This includes tools and machines, but it also includes a business structure that makes their working lives easier. A company full of functional silos (both real and perceived) – with each working to maximize their own metrics without worrying about what’s “over the wall” in another department – creates fertile ground for the frustration of employees.
Get ready for one hell of a ride
Improving employee retention is a complicated puzzle. But if all of these pieces of the puzzle are in place, then a metal fabrication operation can offer an entire career, anchored by decades of technical expertise, but also on the cusp of significant change. New technologies like AI and machine learning aren’t just pushing stores to run their operations in new ways.
Someone starting out in a fabrication shop today will likely witness dramatic changes driven by technology and changing demographics on the shop floor. Today, a manufacturer’s youngest employees can’t remember a time before smartphones. They also see the automaton as a natural part of the manufacturing landscape; his presence could be the very reason they chose to work in the field.
As manufacturers head into 2022, with weak global supply chains exposed and demand for domestic manufacturing on the rise, metals manufacturing is on the cusp of big change and unprecedented opportunity. Those who choose to work in the field are in for a hell of a ride.