Engineering is Going Overseas - Goodbye Jobs II 27

[havesealwilltravel]

The original thread was becoming too long. Let's continue the discussion here.

 

[corus]

jmw is incorrect in saying that half your salary goes in tax to the government in the UK. The average income tax level is 22%. With the lowest level at 10% and the highest at 40%. If half your salary goes out in taxes then you must be in the top band, lucky you. In comparison to other countries in europe the UK has lower tax levels but we see no mass influx of swedish engineers fleeing their heavy tax burden. Some people actually prefer to stay in their country that offers a welfare state with good protection against unemployment, free health care (at the point of delivery), and employment rights even though the tax is higher to pay for these benefits of society. Some don't of course and go to work in places where there are no taxes, such as Saudi Arabia etc. They don't stay long though.

corus

 

[chris9]

India seems to be the first choice for most companies when outsourcing engineering work such as CAD/FEA etc. In my view, this trend is being driven by accountants, directors and shareholders keen to save money and not by the engineers themselves.

In the UK some companies are closing down their Indian call centres and bringing back jobs because they are losing customers. The call centre staff in India were not selling as many new products compared to their UK equivalents.

In my opinion there will still be lots demand for qualified engineers in the West and I for one am not at all worried about losing my job due to outsourcing.

 

[sacem1]

Well for you cris9 about not worring for losing your job because of outsourcing to India, but how about losing it because the whole cars are going to be built over there? About a week ago I read in the economic section of our local newspaper that Rover had signed an agreement to import between 10,000 and 20,000 cars from a manufacturer in India with a car designed and built completly in India to be sold in the UK as an entry level Rover car, this I understand after the company from India outbid another possible supplier from ......China, looks like they are beggining to crawl in, don't they?

SACEM1

 

[JoeTank]

chris9,
You raise an interesting point... the effectiveness of the outsourced engineering work. I have only encountered outsourcing a few times. In one instance, a power utility selected a brand name A&E in the midwest to perform facility design for a major expansion on a power plant. The A&E outsourced the structural design to an south asian firm. No problem, after all, anyone can perform structural analysis and design, right? As the project progressed past the details and construction began, the problems began to surface. $100,000 reworks here, $20,000 reworks there... it just kept going on and on. Obviously the outsourcing didn't work in this case. Other projects have suffered similarly. Has anyone else heard of these same types of problems?

Steve Braune
Tank Industry Consultants

http://www.tankindustry.com

 

[jmw]

It's also about the financial environment that the government creates for its manufacturing and engineering base.
Many years ago the tax situation in the UK was so bad that car companies where making components in the UK and shipping them overseas at a nominal loss. Once assembled overseas they canme back as "expensive" subassemblies for final assembly into the car. In effect the car production costs were as much as the sales price...except for the profit taken overseas on the sub-assembly work.
If government cares about a particular industry sector then it can do something about it.

 

[arunmrao]

sacem1,you are very current with your information. The Indian car being exported to Rover is an entry level car,manufactured with indigenous knowhow. The shipment for these cars has begun.The company Tata's is a well known and respected company in India.

stevebraune,if all the outsourced jobs were a disaster then by now these ripples of dissatisfaction would have grown into a wave. But that is not true. The wave is a positive one for outsourcing. Many companies are announcing hiring professionals in 1000's over here.

 

[JoeTank]

arunmaro,
I agree that if all outsourced jobs were a disaster then the growth in outsourcing would quickly turn around and collapse. I suspect that the instance cited by me is not typical. The problems are typically not an issue of how good the engineers in India are. The issue often has more to do with project management and communications. I believe the challenge for conducting work offshore will continue to be the communications based. Phone, fax, telex, email, etc will never replace the face-to-face communications. Communications-wise, the distance from Chicago to India is equal to the distance from Chicago to Houston. US based firms that share work between offices still have these types of problems.

What would greatly concern me is your statement that engineers are being hired by the thousands. That type of rapid growth will present quality challenges. I've been thru it before. It can be solved, but it will take a bit of time. Until resolved, I would expect a period of more project "disasters". I guess in the overall scheme of things, growth problems are lot more fun that shrinking employment problems.

Steve Braune
Tank Industry Consultants

http://www.tankindustry.com

 

[flamby]

Chris9,

"In my view, this trend is being driven by accountants, directors and shareholders keen to save money and not by the engineers themselves."

May I know what makes you think that engineers are more charitable than the others in their profession and give less concern to making or saving money?

It is part and parcel of engineer's job to see the money issues as well. If your job demands it, you hardly have a choice.

Regards.

 

[chris9]

flame,

In the UK accountants, directors and shareholders often make the decision to outsource because they run the company. The engineers (or the ones doing the work) are often tasked with implementing the outsourcing.

I'm not against outsourcing because I do it myself but it is not the easy option. Maybe if the moneymen knew the true cost of outsourcing such as project management, long distance communication, checking and quality control they wouldn't be quite so keen.

I think engineers are good at saving money because they recognise false economy when it comes down to engineering issues and accountants can't see this. (I'm not saying all outsourcing is false economy sometimes it can be good for the business)

Half price FEA results are worthless if you don't believe the results or they are wrong. I'm not saying Indian engineers are any less competent than in the UK but how can they see the big picture and arrive at the most cost effective solution when working from the other side of the world? (They don't get to hear any of the office discussions outside of a meeting)

 

[arunmrao]

Stevebraune,

. "Phone, fax, telex, email, etc will never replace the face-to-face communications."

I am happy to find one more person who believes in face to face meeting. I strongly believe in this and many times I travel more than 500 miles to resolve an issue.

I too am astonished about this mass recruitment, with little or no emphasis on talent or commitment,except common factor being lure for the green bucks.I do not understand as to how they could mold these youngsters in a short time. Perhaps the requirement levels are low.

Communication is an issue. Locally too I am disappointed by the quality of response and give up making enquiries. Knowledge of English or accent is not the issue. It is the ability to comprehend the caller's needs and effectively reply,which will be appreciated.

flame,
Many of the engineers who climb up the ladder forget that they were engineers and behave ridiculously. At that time they are neither engineers nor management gurus,but put on airs. It is funny dealing with them.

chris9,
Some of the pitfalls associated with outsourcing raised by you are also my concern.But as long as it brings returns to business there is not much anyone can do.In a similar vein an Indian consultancy firm working for an Indian project can be as ineffective if it has not visited the site . To overcome this lacuna, site engineers are now recruited into consultancy organizations.
It is still a learning curve and I am sure some of the issues will be overcome.

As Steve put it "growth problems are more fun than shrinking jobs problem"

 

[RDK]

I am surprised that this thread is still so active.

Americans have a well-known propensity to rally around the flag and their president. It is one of their country’s major strengths.

Now that President Bush has stated that outsourcing jobs to other countries is a good idea, (in his economic report referred to above), I would expect all loyal Americans to rally around the words of their president and work harder at outsourcing jobs.

Since Canada is the lowest cost of doing business country in the industrialized world we stand to benefit. See thread730-87634

Thank you Mr. President.


Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion

http://www.kitsonengineering.com

 

[funnelguy]

Rick,

You must be bored... stirring the pot a little?

I checked your referenced link to your other thread and found it to be nothing more than a thinly disguised marketing advertisement bought and paid for by its "sponsors". Pure pablum.

Americans are perhaps more jingoistic or patriotic than some would wish. We do not blindly follow our leaders, however. The battle currently looks to be between Bush and Kerry. Both are NAFTA and international free trade supporters so the votes will be decided on other issues. Kerry has been pounding Bush over the loss of 2.6 million jobs here in the US. I find Kerry's support of offshore outsourcing interesting given the Democratic party's labor ties and the GAO's continuing to malign NAFTA and similar treaties effects on our economy and jobs.

I really don't see Canada benefiting from any of this. Canada will simply be passed by eventually as US corporations expand their expertise in offshore outsourcing to more efficient producers in Asia and elsewhere. When necessary, offshore producers will build facilities in the US as required by trade treaties. Someday we'll be assembling Korean, Chinese and Indian cars and trucks here just as we currently do with German and Japanese producers. It's all about quotas and consumers.

 

[GregLocock]

It might be worth separating out /manufacturing/ jobs from /engineering/ jobs in this discussion.

There is no doubt that vehicle manufacture will move into SE Asia in a big way - the funding from the governments concerned is huge (even when compared with the similar bribes offered by other countries) and it will take many years for the wages of the workers to catch up with those in alternative countries.

So far as I know the only country that does not offer bribes to foreign car companies to set up is Japan. The USA offers some good deals in Kentucky, for example, and I'm sure there are plenty of other states willing to ease the establishment of a new assembly plant. In Australia we have the ludicrous situation where neighbouring states bid against each other to get manufacturing plants set up.

Getting engineering outsourced is a different kettle of fish. Up until the last twenty years or so it was unusual (but by no means unheard of) to source product development out of a different continent. With the improvement in communications that is no longer the case, so each contract goes out globally. This has actually increased the number of automotive product engineering jobs in first world countries, even though they may have moved around a bit from country to country. I think we'll see an increase in product engineering in developing nations, and the only way we are going to be able to avoid working over there (or working over here for their wages) is to continue to innovate so they can't catch up. Now, that is a pretty tall requirement, but it is the way of the world.

Incidentally Dave "It pains me to see new graduates struggling to find jobs after 4 or sometimes 5 years of study (which was my case since I went to a school where co-op was mandatory)."

(1) Why does society have to provide employment for someone in their chosen profession? Does the student not have a responsibility to choose a discipline that has suitable vacancies? My friends who did History of Art at university are not working as Art Historians, and I somehow doubt they expected to.

(2) We are going to need 200 engineers in the next two years. Do you think we'll get /any/ applications from your graduates? I doubt it. We'll try and recruit locally, and then go overseas, as usual. It has to be said we prefer to cherry-pick and get people with 3 years experience or more, but that is not a rule.


Cheers

Greg Locock

 

[PVH]

http://www.saeindia.org/

 

[PVH]

I guess the big question for this board is then as an engineer in America, what specialty and education do you need to sustain a high income level and avoid being bypassed by outsourcing? From my perspective it looks like all R&D and test engineering can be outsourced to India and China for cheaper. What does that leave here but local construction management, testifying as an engineering expert witness in our courts, managing engineering groups overseas and conducting local market reasearch and sales. Not much fun engineering stuff left after that.

 

[PSE]

PVH,

You could always get an MBA, formally move into management and assist in the outsourcing process . With a technical background you could work in identifying acceptable contractors. That along with your "managing engineering groups overseas". May it never be truly so for any of us.

Regards,

 

[Lorentz]

I think PVH is correct in his assessment of which jobs are exportable and which are likely to remain.

While some engineers who find their jobs outsourced may be able to transition into fields like construction, I think that many will not, and it would be best to keep an open mind and consider jobs which are completely outside engineering.

I know of one electrical engineer who was unable to find employment after completing his Ph.D. and ended up teaching high school physics. Another Ph.D. left his job (because his wife was not happy in the city they were located) to move across country and manage a doughnut shop.

Both of these cases occurred before outsourcing was a major issue. Maybe these engineers were "ahead of the curve" since their jobs cannot be exported.

 

[corus]

Interestingly there was a similar story to that quoted by Lorenz, of a PhD student in micro-biology who gave up looking for work in the UK and became a plumber. The good news is that you can now find out exactly what lurks under the plug hole.

corus

 

[2dye4]

Finally some acknowledgement that there may not
be a new boom industry coming.
I'm tired of these &^%$ economists saying just wait till
companies reinvest the money they are making on outsourcing
into new high tech industries designed in the US.

Just because it has happened before don't make it so now.
Why should one expect corporations with big bank accounts
to start new ventures because they have spare cash.
They won't do this. They will sit on it until something
profitable comes allong.

http://www.businessweek.com/magazine/content/04_12/b3875614.htm

 

[chris9]

I agree large corporations who are making good profits will re-invest in the winning formulae i.e outsourcing.

Why should they pour their money into Western R&D when they can invest in Asian R&D for a fraction of the cost?

The UK tank industry is currently on its knees and will disappear altogether in a few years. Hundreds of years of accumulated knowledge and skills will be lost forever. When it’s gone it’s gone!

I’m sure we will see a mini boom in the short term but the general trend will be downwards until our leaders realise what they are losing. I hope they see it before it’s too late.