4 minute read
Benchmarking
Strong Demand Optimism Against Workforce Headwinds
By Troy Nix, executive director, ARPM
The Association of Rubber Products Manufacturers’ (ARPM) most recent industry study reveals the need for significant expansion of the workforce over the next 12 months to meet market demands, but the headwinds of wage inflation, employee turnover and new hire recruitment will make meeting customer expectations difficult.
Rubber and plastics processor business leaders anticipate the expansion of the industry’s workforce by more than 20% over the next year, according to the ARPM’s newly published study on wage, compensation and workforce trends. Travis Turek, president of Bruckman Rubber Co. and current leader of ARPM’s board of directors, stated in a recent interview that “although our industry faces many challenges with employee retention and wage competition from other market segments, customer demand and strong short-term forecasts are forcing many in our sector to staff up in order to meet needs.” As a result of these needs, total aggregated hiring forecasts of this year’s participants reveal the need to onboard nearly 5,100 additional workers.
ARPM’s 2022 Wage and Salary Study was strongly supported as over 260 manufacturing executives, located in 37 states across the US, provided data on 55 job descriptions and a variety of inquiries related to the state of employment. The bulk of the nearly 25,000 employees represented in this year’s study work predominately for small to midsized processors located in the Midwest with sales revenues between $5M to $50M.
Compensation inflation
Over three quarters (76%) of the manufacturing job descriptions, including both shop floor and support personnel, experienced median compensation increases over the last year, with nearly four out of 10 rising 5% or more. The most substantial annual wage increases included such positions as automation technicians at 18% and tooling engineers at 13%.
As business leaders work to raise wages and improve benefits to meet market demands, some leaders have adjusted their hourly wages for entry-level operators as much as 29% over the last two years in order to run production machines. Over the last three years, entry operator wages have increased by over 7% per year – meaning that the $13 per hour median wage in 2019 has grown to the new median wage of $16 per hour. The highest entry-level machine operator starting wage documented in this year’s report was $22 per hour (see Chart 1).
Another telling metric tracked over the last decade is the total median cost of the combined annual compensation for nine of the most common management staff-level positions. Positions referred to in this single compensation number include salaries for the general manager and managers in engineering, human resources, information systems, maintenance, plant, purchasing, quality and sales. The 2022 total median compensation of $915,637 has increased by 10%, or $84,000, over just the last two years and by over $226,000 over the last decade.
Chart 1. Machine Operator Median Hourly Wage Trend
Chart 2. Employee Turnover Rates
Despite raising compensation, professional roundtable exchanges between member business leaders of the ARPM have revealed that higher starting wages alone don’t necessarily do the trick in landing new employees. Many are using additional tactics in conjunction with higher starting pay rates to attract workers to their organizations.
Some companies are incorporating onsite job fairs, hiring bonuses and open interview processes connected to immediate, on the spot, job offers to those meeting hiring criteria. From a marketing perspective, handing out logoed candy during parades with hiring messages and QR-coded business cards given to service sector employees (restaurants, fast food, lodging, convenience stores) who demonstrate solid work-related skills are tactics that more and more businesses are using.
The shift in employee turnover
The old adage, “what a difference a year makes” can be easily applied to trends in employee turnover. Over the last year, turnover rates have worsened dramatically for the majority of rubber and plastics processors providing data for this year’s survey. Exactly half of the surveyed population revealed an existing employee turnover rate in excess of 15%, which is a rise of 22 percentage points from last year.
The truth about current employee turnover comes at a time when most management teams are working their hardest to modify retention tactics to improve how employees view their companies: from eliminating attendance policies, paid bonuses for showing up to work on time for a week, to “work when you want to work” schedules. However, even with all of the tactics being used to retain people, the industry recognized a 60% jump over the last year in the number of companies with an employee turnover rate greater than 25% (see Chart 2).
Although the issues associated with wage inflation and recruitment/retention challenges are significant, seasoned executives expressed sentiment that strong market demand outweighs issues associated with labor.
To discover the latest wage and compensation rates, along with the most recent workforce management benchmarks covering shift differentials, overtime, PTO and more, visit www.arpminc.com. u
