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Plant Managers Feel the Downdraft

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LubesnGreases has completed its 2010 Lubricant Industry Salary Survey, an exclusive study conducted every other year that polls the U.S. lubricants industry on compensation for key management positions. Information was gathered directly from individuals who work for lubricants manufacturers and distributors, and was compiled by an independent statistical and research firm. We present the results in this three-part series.

October: Plant Managers

November: Sales and

Marketing Executives

December: Laboratory & Technical

U.S. plant managers responding to LubesnGreases 2010 lubricants industry salary survey say they are paid an average of $95,729. About 71 percent of our 63 respondents work for lube manufacturers, where pay averages $102,000, while those plant managers who work for lubricant distributors told us they average $79,700. (The median for these responses was $93,000 for manufacturing plant managers and $68,500 for those with distributors.)

Those figures stand in stark contrast to the compensation reported by respondents to our last survey in 2008, when plant managers overall said they averaged $111,100. Thats a difference of more than $15,000, in just two recession-plagued years.

Direct comparisons from 2008 to 2010 should not be made, however, because each biannual survey hears from a different pool of respondents. This means the survey cannot say definitively that salaries are lower now – just that this years respondents report lower average salaries than did the 2008 respondents.

One explanation for the $15,000 slouch, for example, may be that a higher percentage of the responses this year came from those working for smaller companies. Past surveys have consistently shown that company size is a major factor in pay; compensation tends to rise with company size.

The 2010 survey saw a repeat of many patterns and trends seen in previous years. Plant managers working for lubricant manufacturers consistently earn more than those at lube distributors. The more employees supervised, the better the pay. And the biggest paydays are reported by those working in the Southwestern United States.

Looking for the Best

A check with those on the other side of the hiring table confirms that plant managers are seen as key contributors to lubricant company success. We also heard that competition for each job opening is quite heated these days, possibly due to the recession.

Fred Sansom, director of operations at Quaker Chemical, told LubesnGreases he was flooded with resumes last year when he sought a plant manager for the companys new plant in Middletown, Ohio, which in November began making hydraulic fluids, rolling oils and metalworking fluids. It took many months, he recalled, and it was difficult to find the right person. We needed someone with experience, who knew good manufacturing processes and techniques, and had engineering and problem-solving skills.

His company posted the position on popular job search sites such as Monster.com, and also turned to a placement agency that it has used before. We were very specific in our needs, Sansom said, but it may be that with jobs so short, everyone threw their resumes at us in desperation. That actually can make the process harder in some ways, with hours spent separating the qualified from the unqualified. In the end, the successful hire came through the search firm; coming from the chemical industry, he brought needed skills and experience in batch processing and engineering.

Tom Overdeck, president at KOST USA, also opened a new plant recently, in the Bond Hill area of Cincinnati. In our case, it was an easy process, he told LubesnGreases. We kept the same person who was our plant manager before, at our prior plant. We believe as much as possible in promoting from within.

Lubricant production carries a significant learning curve, he said, which makes it hard to go outside the company when filling key positions, and even harder to go outside the industry. In general, for this industry it makes the most sense to develop people internally. There are a lot of things to learn that you can only do by experience, and that knowledge is not transferable from the outside.

At KOST, he added, were in growth mode, and were adding people all the time. By contrast, major oil companies are starting to downsize, he observed, pointing to recent announcements by Shell and Chevron. There are a lot of trained and competent people out there now, looking. I wouldnt quite call it a buyers market, but everyone seems to be searching for something. We can attract a better cut of individual now, because people especially are searching for job security.

Profile of a Manager

The plant managers answering LubesnGreases 2010 Salary Survey are, in general, a well-seasoned lot. They average 19 years of relevant work experience (a bit less for those with lube distributors), including 11 years with their present employer. The average respondent is 47 years old; 92 percent are male.

Our respondents ranged the gamut in company size: 36 percent said they worked at firms with 50 or fewer employees; 37 percent with companies having 51 to 500 employees; and 27 percent at companies with more than 500 on the payroll. The progression in average pay for lube manufacturing plant managers moved in lockstep along that scale, starting at $55,300 for the smallest companies and topping out at $121,600 for those at companies with over 500 employees.

Salaries for plant managers with distributors, by contrast, did not follow a straight line along company size. Their best salaries were reported by individuals working for companies with 101 to 200 employees.

Plant managers responding to the 2010 survey were also analyzed by number of people they supervise, and as in each prior survey the highest average salaries consistently went to those with the largest turf, in terms of employees. Managers with 13 or more workers under their supervision reported making an average of $119,000, while those heading staffs of six to 12 said they make an average $78,800. Those at the low end of the spectrum sometimes broke out of this pattern though. Managers with five or fewer employees under their eye reported earning an average $61,700 at lube distributors, but a handsome $99,900 at lube manufacturers.

Geography plays a big role in compensation, too, the survey again shows. Historically, U.S. lubricant manufacturers have colonized the swath of industrialized central states stretching from the Gulf Coast to Canada. So its no surprise that the majority of their plant managers responding to this years survey – about 60 percent – reported in from the South Central and North Central regions.

The greatest number of distributor plant managers also came from these two lube-hungry regions, while the next largest pool of respondents, 29 percent, came from states in the Southeast and Northeast. As in prior surveys, the region with the fewest respondents (just two replies) was the sparsely populated Northwest.

Gender Gap Yawns

The 2010 Salary Survey once again asked respondents their gender, and men as usual formed the bulk of replies. Just five of the 63 plant managers who responded (8 percent) were women, all of them working for lube manufacturing companies. In their general profile, these women are similar to their male counterparts working for lubricant manufacturers. Their average age is 47. They have 20 years of relevant work experience. They supervise a median of 12 employees (versus a median of 11 overseen by the men).

The salary gap, however, yawns wide. Female plant managers reported average salaries of $86,500, while men made an average $102,100. (Median salaries for both genders, comparing those who work for lube manufacturers only, was even at $93,000.) Most of the women respondents have held their job for fewer than five years, and a higher percent of them (60%) said they got a raise in the past 12 months. Other than that, the response rate from women is too low to draw any conclusions.

Weaker Pats on the Back

The survey results also suggest that the recession may have prompted more lube companies to keep their purses snapped shut when the time came for giving out raises. Only half of the plant managers in the 2010 survey told us they received a raise in the past 12 months, including 51 percent of those working for lube manufacturers and 50 percent of those with distributors. That contrasts sharply with the boom seen in 2006 and 2008, when 70 percent and 71 percent of respondents each year respectively were able to report theyd gotten raises.

The prospects for this year may not be much better, as the lubricant industry cautiously feels its way forward. Just 52 percent of plant managers said they expect to get a bonus this year, while seven out of 10 told us in 2008 they were looking forward to bonuses.

Beyond base salary and bonuses, incentives for plant managers vary strongly depending on whether their employer makes or distributes lubes. For example, 11 percent of those with lube manufacturers say theyre earning stock or equity in their company; not one respondent with a lube distributor made the same boast.

Conversely, 22 percent of plant managers with lube distributors said they earn a commission, but only 7 percent of those with lube manufacturers do. Profit sharing is also lopsided: 18 percent of lube manufacturing plant managers report that they get profit sharing, and 11 percent of their distributor counterparts expect such compensation.

The work is stimulating, and a good match between company and plant manager is essential, David B. Clark said in an interview. He fills that role at lube distributor Central Penn Co. in Elmira Heights, N.Y. Lubricants are specialties, he emphasized, and the best plant managers keep an eye on the chain of supply from manufacturer to end user. Maintaining the flow of products and keeping them on-spec is difficult – and made more so when a company changes facilities, as his company recently did. On June 1, Central Penn completed its move into an expanded plant, adding bulk storage tanks and hiring more sales staff and drivers to move branded products.

You cant just take a chemical company person and plug them into a lubes plant, Clark declared. The lubes field is technically specific, and there are always lots of changes in the equipment manufacturers product specifications. You have to keep on top of that, and how these changes affect supply. Its not like fuels, its not cut and dried.

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