I've been to a lot of news conferences and Washington hearings where U.S. manufacturers talk about how U.S. economic policy is making them less competitive with the rest of the world, from higher natural gas and resin prices to rising health-care costs.
Let me suggest another area in which U.S. industry also looks uncompetitive: executive compensation.
Judging by several studies, pay for executives in the United States is much higher than for counterparts around the world, even in other developed countries.
Chief executives in the United Kingdom make, on average, 37 percent of what their U.S. counterparts do, while the slightly better-paid German corporate leaders make 42 percent and the French make 33 percent of U.S. CEOs. Japanese CEOs pull in just 20 percent of their U.S. counterparts.
That data comes from compensation consulting firm Towers Perrin and its report, ``WorldWide Total Renumeration 2003-2004,'' which looks at average compensation for CEOs, managers and manufacturing employees at industrial companies with at least $500 million in sales. A study from the liberal Center for American Progress came to similar conclusions. According to Towers Perrin, the average U.S. CEO made $2.25 million in annual pay and benefits in that period. The closest competitor, the Swiss executives, took home $1.19 million. (The typical executive in Shanghai, by comparison, made $99,000 and in India, $222,000.)
The data for factory-floor employees doesn't look so skewed. Swiss employees top the list, with $60,200 in pay and benefits, followed by the United States at $51,100, Japan at $48,200 and Germany at $44,800. (A worker in Shanghai costs $4,600 a year, and in India, $3,900, for those of you wondering where the bottom is.)
The numbers raise an interesting question: As companies look for the lowest-cost locations, should they consider outsourcing their executive talent?
Plastics News takes its annual look at executive compensation for the North American plastics processing industry this week, and it's clear it was a good year for the corporate chiefs. The top 100 took home an average of $1.22 million - 36 percent more than last year - after dropping about 10 percent in 2003 and holding flat for a few years before that. Clearly, many firms had better years in 2004 than the previous two or three, and you can't deny that manufacturing firms need strong, motivated leaders.
If you work in manufacturing, you're acutely aware of the changes in global markets and of how the Internet is shrinking the distance from Baltimore to Bangalore.
The U.S. government has a new manufacturing czar, and that should bring much-needed attention to the industry's very real worries, like soaring natural gas prices. But I find myself questioning whether a national government pushing the war in Iraq and unsustainable tax cuts is keeping its eye on that ball.
And when I look at the outsized rewards that U.S. industry gives its executives, I wonder if both the gains and the sacrifices of the changing economy will be shared equitably.
Steve Toloken is Plastics News' Washington-based staff reporter.