2006 U.S. Ethanol Industry Salary Survey Report

By Tom Bryan | December 13, 2006
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For the second straight year, EPM has commissioned a salary survey of U.S. ethanol plant personnel. This year's report was conducted by an independent company—Stillwater, Minn.-based Readex Research—and it's slightly different, but every bit as useful, as the original version published in late 2005.

The 2006 U.S. Ethanol Industry Salary Survey was conducted in accordance with accepted research standards and practices. A complete report containing all survey results was provided to EPM, and the following information, graphics and editorial interpretation were gleaned from that data. This year's survey was conducted completely via e-mail from Sept. 11-13. The results are based on the 309 respondents who indicated they work full time at an operating U.S. ethanol production facility.

The purpose of the survey was to provide a profile of U.S. ethanol plant personnel salary compensation. Specific areas of inquiry included:

--Respondent's demographics—gender, age and education level
--Respondent's professional qualifications—years of employment in the ethanol industry
--Respondent's current work situation—nature of organization, size of organization, job responsibilities and job satisfaction
--Respondent's current annual salary and compensation benefits

As with any research, the results of this survey should be interpreted with the potential of what Readex calls "non-response bias" in mind. It is unknown how those who responded to the survey may be different from those who didn't respond. In general, the higher the response rate, the lower the probability of estimation errors due to non-response and thus, the more stable the results.
The margin of error for percentages based on 309 usable responses is plus or minus 5.2 percent at the 95 percent confidence level. That is, 95 percent of the time, Readex is confident that percentages in the actual population (i.e., the U.S. ethanol industry) wouldn't vary by more than this in either direction. The margin of error for percentages based on smaller sample sizes will be larger.
Before getting into the details, let's start with the essential salary findings.

Demographics
The typical respondent to this year's survey is 42 years old. According to the results, 87 percent of respondents have completed at least some college, including 72 percent who are college grads. Males (85 percent of respondents) outnumbered females (15 percent of respondents) by over a five-to-one margin.

Facility Profile
Respondents said the size of the ethanol plant they are employed at is, on average, 55.7 MMgy. At the categorical extremes, 12 percent said their facilities are less than 20 MMgy and 17 percent said their facilities are 100 MMgy or larger.

It's worth noting that veterans who have worked in the ethanol industry for more than 15 years aren't much more likely to work in a plant that's larger than 100 MMgy (27 percent) as one that is 40 MMgy to 59 MMgy (25 percent) or even less than 20 MMgy (21 percent). That said, the survey results clearly show that ethanol plant employees with greater than 15 years of experience are 10 percent to 13 percent more likely to work at 100-plus MMgy facilities than their less-seasoned colleagues.

About half—52 percent—of ethanol plant employees with less than five years of experience are working at 40 MMgy to 60 MMgy facilities. That appears to make sense since a good number of U.S. ethanol plants built in the last half-decade have been of that particular capacity. On the other hand, only 7 percent of respondents with less than five years on the job are working at the smallest (20 MMgy or less) plants.

Interestingly, 39 percent of the "corporate managers" who responded to the survey said they are employed at 100-plus MMgy plants, while only 11 percent of them work at 20 MMgy to 30 MMgy plants. This may represent the fact that larger ethanol production companies are more inclined to create corporate management positions, while smaller facilities may opt to have a more traditional model, where a general manager answers directly to a board of directors.

Of those ethanol plant employees who have received a raise due to a promotion and/or change in responsibilities, most (67 percent) work at facilities that produce 59 MMgy or less annually. However, that may be statistically insignificant because a corresponding 69 percent of respondents who haven't received a raise from their employer as a result of a promotion and/or a change in responsibilities also work for plants that are 59 MMgy or smaller.

Work Profile
Overall, the people who responded to this years survey are quite experienced, having been employed in it over eight year's, on average. However, it's clear that newer professionals, as well as more experienced professionals, are represented in this population. Approximately 11 percent of respondents have been employed in the ethanol industry less than one year compared to approximately 9 percent who have been employed in it for 20 years or more.

Of all the plant managers who responded to the survey, the largest group of them—28 percent—have worked in the ethanol industry for 10 to 14 years. That's not terribly interesting at first glance, but compared with the ethanol industry-specific experience of a typical general manager or corporate manager, it becomes noteworthy. That is, only 17 percent of corporate managers are likely to have 10 to 14 years of experience, and even less (14 percent) general managers are likely to have that many years under their belt in the ethanol industry. This may be a result of the commonplace ethanol industry practice of encouraging ambitious, capable operators and other entry-level personnel to work their way up to plant manager roles. Corporate managers and general managers, on the other hand, are frequently transplanted from outside industries. This trend is backed up in another survey question that asked respondents what industry they had obtained the majority of their work experience in. Not surprisingly, 64 percent of all responding plant managers said they have obtained most of their work experience in the ethanol industry itself. Only 25 percent of corporate managers and 19 percent of general managers said the same thing. Instead, those positions are more frequently held by managers who cut their teeth on the business side of agricultural processing, the food and beverage industries, or industrial manufacturing.

What's apparent is that plant managers at many U.S. ethanol plants actually have more in-plant experience than their direct superiors, but usually less business and management training, and typically less education, too.

Respondents are highly involved in purchasing decisions for their facilities. Virtually all of them—95 percent—have some level of decision-making influence for the selection of materials, components and/or services for the ethanol plants they work at. In fact, two in five respondents indicated they "authorize" and/or "approve" purchasing selections. General managers are actually more likely to make purchasing decisions than corporate managers, which is not surprising given the nature of each job.

Job titles/functions among survey respondents vary a good deal, which is to be expected, but plant managers make up the largest single group, accounting for 13 percent of the 309 respondents (39 individuals). This is followed closely by corporate managers (CEOs/COOs) and general managers, each accounting for 12 percent of total survey respondents. According to Readex, no other single job title/function represents more than 10 percent of respondents. It should be noted that very few operators, lead operators, lab technicians, boiler technicians, maintenance managers and maintenance technicians responded to the survey. In fact, none of those positions alone accounted for more than 3 percent of total survey respondents. Therefore, Readex grouped those positions together into one category referred to in the "Job Title/Function" pie chart as "other."

Despite the fact that most of this year's survey respondents were upper-management personnel, EPM editors felt it was important to publish the salary findings for some of the plant personnel positions that had statistically less significant participation in the survey. As indicated earlier, the margin of error for such small sample sizes is relatively large, and it should be noted that the salary reports for these positions may not represent industry norms.

Experience, Hours
Nine in 10 respondents said they worked in some other industry prior to working in the ethanol industry. Three industries, in particular, were mentioned frequently by respondents—agriculture (22 percent), industrial manufacturing (12 percent), and the food and beverage industries (12 percent). Not surprisingly, the highest proportion of respondents—35 percent—indicated that they have obtained the majority of their work experience in the ethanol industry itself.

Once again, it looks as though folks in the ethanol industry are working quite a bit more than a typical 40-hour work week. On average, respondents to this year's survey said they work about 51 hours per week—27 percent more than standard "full-time" status.

Interestingly, even plant personnel who have worked in the ethanol for less than five years—usually but not always an indicator of nonsenior management status—tend to work long hours. In fact, nearly 60 percent of those individuals regularly work more than 40 hours per week, and 18 percent work 60 hours per week or more on average. The numbers were similar for plant personnel with five to 15 years of experience in the business, as well as for those with more than 15 years of experience.

Who works the most? According to the survey results, it's the people who also make the most money: corporate managers. On average, the CEOs and COOs of U.S. ethanol plants are putting in long hours for their handsome compensation, working about 60 hours per week. About one-fifth of all corporate managers are working more than 70 hours per week—a distinction less than one in 10 general managers claim. Plant managers and general managers are typically clocking 50 to 55 hours. However, there's a good number of plant managers and general managers—47 percent and 53 percent, respectively—who typically put in more than 55 hours per week.

Job Satisfaction
Job satisfaction is high in the U.S. ethanol industry. By indicating a rating of four or five on a five-point scale where five equals "very satisfied" and one equals "not at all satisfied," 79 percent of respondents indicated a high level of satisfaction with their current position, compensation aside. Again this year, those with the highest pay—and working the longest hours—were the most satisfied with the non-monetary aspects of their jobs. Corporate managers had a mean rating of 4.6 on Readex's satisfaction scale, indicating that the industry's ethanol plant leaders truly like what they do for a living.

According to Readex, to some extent, job satisfaction can be measured by employment tenure. Three in four respondents have remained loyal to their current employer by sticking with the company for the past five to seven years. In fact, 22 percent have been employed by their current facility for 10 years or longer. It's clear, however, that lower-level plant personnel (operators, etc.) are more likely (at 81 percent) to have only worked for one ethanol plant in the past five years, compared to their bosses. For example, only 58 percent of corporate managers, 64 percent of plant managers and 72 percent of general managers have stayed at one plant for the past five years. It's hard to be certain why this trend is occurring, but the most likely answer is that upper-level managers are in higher demand in the ethanol industry than lower-level personnel—either that, or they are simply more likely to relocate for a better position.

That said, most ethanol plant personnel aren't looking to jump ship right now. Most respondents said they aren't considering a new position outside their current facility at the present time. Just 10 percent admit to being on the prowl for a new job, and 9 percent are "strongly considering" a new job search. Almost half of respondents—48 percent—said they would consider a good opportunity if one came along, while 32 percent said they had no interest in new opportunities outside their company right now, despite a hypothetically enticing offer.

To gain insight into the factors contributing to the job satisfaction in the U.S. ethanol industry, respondents were asked to rate 11 factors by level of importance, again using a five-point scale. Interestingly, the factors most ethanol plant personnel feel are important are not just income-related issues, but intangible, feeling-related factors. In fact, respondents indicated that "challenging work" and "positive atmosphere/morale" were more important than receiving a competitive salary.

In an industry that's somewhat dependent on the continued high demand for transportation fuels, perhaps it's not surprising that only 38 percent of respondents cared a whole lot about their drive-time to and from work each day. On the other hand, only 57 percent of respondents gave "working for the renewable fuels industry" a high importance ranking, so perhaps their carefree attitude about commuting has less to do with wanting to burn more E10 and E85 and more to do with a relatively stress-free rural drive to work.

It's as interesting as it is ironic that almost one-fifth of all corporate managers don't feel a competitive salary is important to their personal job satisfaction. To be fair though, nearly 10 percent of all ethanol plant personnel felt the same way. All corporate managers surveyed indicated "challenging work" was "very important" or "important" to their job satisfaction, whereas 8 percent of plant managers and 3 percent of general managers didn't feel that way. In other words, general managers and plant managers are slightly less inclined than their bosses to correlate their job satisfaction with the degree to which they are challenged by their careers.
The survey results also indicate that ethanol plant corporate managers are less concerned about "job security," as it relates to job satisfaction, than the people who work for them. Corporate managers gave that factor a rating of 3.8, whereas all plant personnel rated it higher at 4.2.

When it comes to getting paid, well over half (59 percent) of all ethanol plant personnel feel they are compensated "about right" for what they do. Of the 41 percent of respondents who didn't feel that way, 40 percent think they deserve more money, while only 1 percent—three individual respondents—said they simply get paid too much.

Compensation
Among the 309 individuals responding to this year's survey, the average current annual salary is $83,800. Examining both ends of the spectrum, almost equal proportions indicated they earn $150,000 or more (8 percent) per year as those who indicated they earn less than $40,000 per year (11 percent).

About three in four ethanol plant employees said they aren't compensated for overtime, indicating the industry trend is to categorize ethanol plant employees—especially those who supervise others—as salaried professionals who don't typically get overtime compensation. Of those who said they do receive compensation for working over 40 hours per week, 11 percent said they are paid for the extra time they put in, while 8 percent said they get compensation for overtime in the form of additional time off. A small number of plant personnel are offered some combination of the two or some other form of compensation for overtime.

In terms of evaluations, 85 percent of respondents indicated they receive annual salary reviews, while only 2 percent said no such reviews are offered on a yearly basis. About 10 percent of the respondents said they do get salary reviews, but not on a regular, predictable schedule.

To gauge trends in the industry, respondents were asked to indicate the approximate percentage increase of their last raise from their current employer. Three-fourths said they have received a raise from their current employer. Among those who have, the average increase was 8.4 percent. Also among those who said they've received a raise, 70 percent said the increase wasn't the result of a promotion and/or change in responsibility. Notably, however, those who did indicate that they received a raise due to a promotion and/or change in responsibility received substantially more than those receiving a raise for other reasons—13.6 percent versus 6.6 percent. For all intent and purposes, this indicates that the surest way to make more money in the ethanol industry is to change proverbial hats, climb the corporate ladder and take on more—or maybe just different—responsibilities at the plant.

Including wages/salary, bonuses, insurance, pensions, etc., respondents were asked to approximate the total dollar value of their current annual compensation package. The average dollar figure provided was $115,000, based on the 84 percent of respondents answering the question. Again, that "average" should be considered high due to the negligible participation of lower level plant personnel in this survey.

When it comes to benefits, respondents indicated the most common type was health insurance (92 percent) and life insurance (80 percent), followed by monetary bonuses (78 percent). When asked if they received any monetary bonuses within the last 12 months, 63 percent indicated they did. Of those who received a monetary bonus, the average amount awarded was $17,300—again, a number that may be high due to the lopsided participation of upper-level management in this survey.


Annual Salary

A cross-tabulation-based analysis was undertaken to uncover basic correlations between salary and the variables measured in this survey. EPM asked Readex to break down salary by the following factors:

--Years in industry
--Job title/function
--Raise from promotion
--Number of employees supervised
--By purchasing involvement
--By education
--By age
--By gender

As can be expected, a respondent's annual salary, on average, increases the longer the person has been employed in the ethanol industry.

With more years in the industry, respondents are also likely to gain more responsibility in their jobs. It isn't surprising that the average annual salaries of plant personnel increases with increased levels of responsibility. Among respondents, those in corporate management currently earn—depending on position comparisons—an average between $38,600 and $92,100 per year more than those with other job titles/functions. Specifically, corporate managers typically earn $38,600 per year more than general managers and $92,100 more than the collective "other" group which includes operators, lead operators, lab technicians, boiler technicians, maintenance managers and technicians, and other plant personnel lumped into one category.

As stated earlier, with a promotion, respondents are also likely to earn an increase in salary. Those who have received a raise from their current employer due to a promotion and/or change in responsibility earn $6,100 more, on average, than those who received a raise for other reasons.

About 78 percent of the 309 respondents directly supervise at least one other employee during an average plant shift. Again, this high percentage of management responsibility among respondents illustrates the fact that few nonmanagement personnel took part in the survey. Among plant personnel indicating they do supervise other individuals, most tended to be in charge of groups of about six people.

It may be presumed that those with higher levels of responsibility tend to have more employees to supervise. Therefore, the apparent correlation between annual salary and the number of employees supervised is fairly consistent with the other findings related to job responsibility. In other words, the more people under one's wing, the more money that person is likely to make. Depending on the number of "others" supervised, those who supervise five or more employees earn an average of $23,300 more than those who only supervise one to two people. Interestingly, those who supervise no employees earn an average of $74,200—$5,100 more than those who manage one to two people.

There's an interesting, but perhaps not unusual, occurrence in the ethanol industry of plant managers—typically the second, third or fourth person in command at a facility—claiming responsibility for "directly" supervising the greatest number of employees at the plant. Nearly 70 percent of plant managers said they manage 10 or more employees at all times; 46 percent of them said they manage 20 or more people. In contrast, most general managers and corporate managers said they directly manage four to six individuals. In effect, what is described in the survey results is a pyramid-like chain of command that is necessary to the functioning of any industrial facility. However, what is obvious is that a high amount of management pressure is being placed on plant managers.

Another factor related to job responsibilities is the level of influence an ethanol plant employee has in purchasing decisions. Those who "authorize/approve" the selection of materials, components and/or services for their facilities earn more—$42,400 more, in fact—than those who just "recommend selections." This shows that those who make purchasing decisions—general managers and plant managers, in particular—are highly valued people at ethanol plants.

An investment in higher education appears to strongly influence one's salary at an ethanol plant. Those with college degrees earn $20,600 more, on average, than those with just "some college" experience or training after high school.

It might be a form of reverse age discrimination to presume that those who are older should make more money than those who are younger. However, because experience typically comes with age, such a presumption is merited in the ethanol industry, where older employees have significantly more earning power than their younger counterparts. Respondents who are 50 years old or more earn an average of $40,900 more than those younger than 35 years old.

Finally, this year's salary survey shows that, on average, males in the ethanol industry earn $38,800 more than females. One reason for this drastic disparity may be the fact that few females are ethanol plant corporate managers, and possibly none are general managers or plant managers. So, the gap perhaps says more about the fact that females aren't well-represented among upper-level ethanol plant management more than it does about females and males getting paid differently for the same jobs. According to Readex, there aren't many differences in the profile of each gender, making it difficult to assess the reason for the salary gap. However, males have been employed in the ethanol industry for slightly more years, on average, than females (8.5 versus 6.5 years), and males typically supervise significantly more employees than females, on average (6.7 versus 1.6)—two factors that have been shown to positively influence salary.

Tom Bryan is editorial director of Ethanol Producer Magazine. Reach him at tbryan@bbibiofuels.com or (701) 746-8385.

Note: The survey sample—the number of ethanol plant employees contacted by Readex—was 2,546. Potential respondents were selected in systematic fashion (i.e., all those identified as ethanol plant employees) by Readex utilizing Ethanol Producer Magazine's exiting database of ethanol plant personnel. The survey was closed for tabulation with 500 usable responses—a 24 percent response rate based on the "net effective mail-out" of 2,077. The results presented in this report are based on the 309 respondents who indicated they work full time at an ethanol production facility. These 309 individuals represent an estimated 1,500 industry professionals. As with any research, the results of this survey should be interpreted with the potential of non-response bias in mind. It is unknown how those who responded to the survey may be different from those who didn't respond. In general, the higher the response rate, the lower the probability of estimation errors due to non-response and, thus, the more stable the results.