Salary Survey--The Worst Is Over

We hit the trifecta these past 12 months. September 11. A tumbling stock market. A worldwide economic slowdown.

Amid the most unsettled economic times in many years, most of the major industrial machine-building market segments you work in took a terrible beating in sales revenue. It's a time we'll all be happy to see behind us.

Despite the stormy weather, control system designers in our machine building industries reported only a 2.3% drop in salaries over the past year in this year's salary survey results. And while many respondents noted business was down and layoffs were occurring all around them, job security actually inched up one percentage point.

The average salary reported was $66,139. While that was down $1,553 from last year's average, this year's response group reported a 3.2% pay increase (respondents differ year to year). There was a great deal of disparity among our machine building groups, with the average salary in industrial fans, blowers, and air purification equipment coming in at just $46,500 while $80,429 was the mean earned in semiconductor manufacturing machinery.

The form for this second annual survey was attached to the front of our April issue. It's notable that back then the Dow Jones Industrial Average was above 10,000, analysts were marveling about how the stock market was shaking off that little Enron mess, and WorldCom had issued a mere earnings warning. So, all in all, things were looking up back then.

This year we received 209 responses in time for tabulation. Many respondents provided comments, ranging from cynical: "There never was nor will there ever be such a thing as job security," says an electrical engineer working in the engines and turbines category--to stoic: "There have been at least two cuts in salaried and hourly employees and I was not impacted," notes a 54-60-year-old electrical engineer working in the chemical industry.

We'll get back to the numbers in a minute. Let's talk a bit more how you feel,about your job, the security of that job, and of manufacturing in general?

"Since 9/11, the slowdown has worried upper management, thus causing concern down the line," writes a 37-45-year-old man in research and development at a Wisconsin pump manufacturer.

While the economy certainly was tottering before September 11 last year, many respondents cite that date and its events as the beginning of a slide that persists to today

"We observed a significant reduction in business after the 9/11/2001 terrorism incident. It was a like a door slammed shut for several months. All of our customers delayed whatever projects they could," Donald Donkervoet wrote in his survey form. He's president of Generation Technology Inc., a Dallas rebuilder of engines, turbines, and other large pieces of rotating equipment.

"The last quarter of 2001 and the first quarter of this year were pitifully poor,the worst I've seen in 12 years," he said in a follow-up interview. "We didn't lay anybody off, but we had to make work. A large service shop nearby laid off half their people. But in the past two months, we started seeing some business come back. No big pent-up demand, just a return to normalcy. We're not working any overtime yet, but we're optimistic."

"Our industry (industrial HVAC) relies heavily on commercial development. It will take at least a year, if the economy continues improving, for us to recover," writes a female electrical engineer in Indiana. "It could be ugly in the meantime, especially with all that dot-com office space sitting empty."

September 11 will affect some industries,and their suppliers,further down the road. "We design and build custom automated equipment for aerospace manufacturing," says Eric Nordin, a project engineer at Electroimpact Inc., a Mukilteo, Wash., machine tool builder. "It's a very cyclical industry. Right now we're very busy, but with the downturn in air travel and increasing fuel costs, which will undoubtedly affect the cost of air travel, I worry about what the future will hold for my company."

Some suspect that September 11 was an excuse for economic cuts by their employers. "There have been no raises and no new hires since September 11. I think that was an excuse, as I don't think our business was really affected," comments a 28-36-year-old electrical engineer at a western New York engineering and systems integration firm. A man at a New Jersey HVAC firm concurs: "Corporate HQ is using 9-11 as an excuse for a salary freeze."

As we said, economic woes predated the terrorist attacks. "Sales are down and have been for some time. Job security is low," writes a 28-36-year-old at a Maryland systems integration firm. "Salaried personnel have not received an increase in two years," concurs a 54-60-year-old mechanical engineer at a North Carolina maker of metalworking machinery.

"Twice a month we wait for pink slips," adds a 54-60-year-old Wisconsin man involved in system integration and material handling, earning $36,000-$40,000. "They're downsizing,the permanent layoff of people with more than 25 years of seniority, while retaining low-seniority employees. Less pay means less cost to company. They're also transferring work/jobs to lower-pay non-union plants (some of them new)."