Engineering is Going Overseas - Goodbye Jobs II 27

[havesealwilltravel]

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

 

[mabn]

Hello all

It's been put forth that economic and social disparities exist between the delveloped and devolping nations of the world; and that these disparities are allowing multi-national companies to export jobs from the devloped to the developing nations: hence, engineering is going overseas.

There is work being done by the Organisation for Economic Co-Operation and Development (OECD) to lobby International Financial Institutions, Multilateral Development Banks (like World Bank and InterAmerican Bank), and Export Credit Agencies to converge the environmental and social requirements that these institutions do business under.

These institutions control the money that allow multi-national companies to do business and support private sector projects in developing countries. Many of the surveys and reports that OECD has put together on these institutions have not been made public, but it has been made known that many of these institutions have little or no environmental and social requirements. OECD, along with the financial institutions that do implement environmental and social responsibility in their business practices, are tryinng to force open the eyes of those that do not.

The following is a link to some of this information:

http://www.oecd.org/department/0,2688,en_2649_34181_1_1_1_1_1,00.html

The goal is a global level playing field for all to do business on.

Mabn

 

[mabn]

Hello again,

This is another link to an article that I think summarizes globalization very well. It does a good job of examining the flaws and pointing a direction for the future. It's actually the best I've seen.

http://www.spectacle.org/0701/globalisation.html

Mabn

 

[EngineerDave]

OUTSOURCING IS GOOD?

http://moneycentral.msn.com/content/invest/extra/P79592.asp

What do you think of this?

 

[2dye4]

Yet another source proclaiming a turn around in hiring
due to outsourcing with no reasoning or data to back it up.

You know the unemployment numbers for march come out
on friday. Expect more damage control articles.

 

[ietech]

EngineerDave,

Thanks for the link, the article was very interesting but seemed to neglect to address, in depth, the loss of manufacturing and engineering jobs.

Losses in IT of course have been significant but I not sure if the IT jobs account for the major damage to our economy.
I strongly believe manufacturing, engineering, lumber, steel, fisheries etc. have, in the past, been the backbone of our economy. Unfortunately the above-mentioned industries have failed horribly in America in recent years and probably will not return. It would be fortunate if we could get some of the IT jobs back at least that is something positive.

My hope is that major manufacturing returns to America --- but I really doubt that it will happen.

Regards,

ietech

 

[jmw]

Industry is the macro case.

Suppose we look at "US, UK, or any other industrialised nation as we would a single manufacturing company, the micro.

A company starts with a new product. We are familiar with product life cycles. Development through to boom sales, market leader status, then cut-throat competition, right through to end of life planning.

No company survives as a single product company.

The best companies have new products under devlopment all the time. As each product reaches its end of life, other products are at different stages in their life cycle.

Somewhere there is part of the engineering team doing cosmetic make-overs on an old and tired product to milk all they can out of it while somewhere else another team is ironing bugs out of prototypes of the next product.

Products start out life not quite right.
If they are unique, then they will be made right in the first few years and during that time marketing will get a better handle on things because now they have real market data and not just wishes and "value judgments" to go by. The product will be refined.

Probably the development team will move to the next new product, some addittional skills will be hired. Some of the skills will move to product maintenance and look after the product during its life.

Soon the unique status will go. Some of the people will move to competitors. Competitors don't have to pioneer the market or develop the necessary skills, they are going to come after the skills your company has developed and they will target your market.
They get a shorter time to market and they will bring fesh ideas.

A "Me-Too" product requires some compelling technical or commercial advantage to get a share of that market, though sometimes, just by being a biger company they can take market share without these advantages for a whole varietty of reasons. One thing, these products have to be right when they hit the market, or maybe they skip the high-margin niche-market and go for the market your company doesn't seem to know is there. They'll grab that and come back for the niche-market sector later when you're not looking.

After a while, every man and his dog is making this product, the skills are everywhere (you really do fulfill managemenst dream that no one is indispensible) and prices get cut to the bone; manufacturing moves overseas.

If it is a smart, well managed company that looks after its skills base, looks after its ideas men and knows where the market is, then it can afford to be philosophical because there are a whole string of new products in the pipeline.

See, the problem is that sooner or later, everyone can make a steam engine or a car. The smart companies are well managed and don't spill tears over the inevitable, and they don't go down in flames trying to live off one product well beyond its useful life. They have it sussed, they have growth through more investment in R&D in new skills, in new products, in new idea and new technologies, in marketing and sales. They are switched on, they are on the ball.

On the macro side of things it's the same.
You have to look at the management and see if they can cut the mustard.
Did they take care of the skills base?
Did they look after all the tools they need to suceed?
Can they plan beyond next wednesday? do they have to worry about being re-elected? Do they have their focus on the country or on their retirement, the lecture ciruit, the autobiography, directorships of all those companies that are going down the pan, being president of the EU or merging the US Canad and Mexico into one great big industrial super economy? or something else?

Industries are like products, they come and they go. Sooner or later they go where labour is cheap, taxes low, and where someone put some effort into providing the necessaru skills. What is important is what the guys at home are doing about the next industry?

The reason we notice this stuff is the life cycles are coming down. Where once a product could survive 40 years, 10 is good. We are not talking about a job or a skill you will get to use for your whole working life, it won't be needed. Again, i aks, if you have the brains and the talent, shouldn't re-training recognise the need to re-direct those skills? In evry company i have worked for, and some have been absolute dogs, even they have some budget for on the job training or for special training. What is government doing? In any industrialised country?

JMW

http://www.viscoanalyser.com

 

[2dye4]

POP QUIZ


_______ is the mother of invention ???

The missing word of course is necessity.
What we are seeing now in industry is the saturation of
necessity. The acid test of a succesful product is not one
that is purchased just once by early adopters or the
curious but a product that is so usefull to everyday life
that if the old one dies an individual is likely to
re-purchase.
We are running out of such things to make.
The last great product that defied this logic is the
personal computer. It was perfectly reasonable to assume
that people would not buy them for home use beyond the
initial curiosity stage because there is no need for them
in the home. However the internet and digital imaging changed the game and created applications for computers in
the home.
On another level they satisfied the human need to
communicate with others. Ditto for cell phones.

What blue sky product can you imagine that will fill a
fundamental human need that is not allready in a commodity
status ??

There are some things to come I am sure but I do not think
the pace of invention is sustainable.

As another hypothetical situation. What if automated manufacturing became so effecient that no significant
population was needed to create the goods. Say it could be
done with 0.01% of the population. How does this scenario
work out in the long run if people do not contribute to
the creation of the items they need on a daily basis. How
does wealth and buying power get transferred among the
99.99% not involved.

I fear that there is a compassionate solution to this
problem and a market solution. Which will be chosen.

Just food for though not dire predictions.

 

[chris9]

JMW,

I agree that the US and UK need to be coming up with new and better products to be globally competitive.

What I'm worried about is that the UK isn't doing this and this reflects in the pitiful UK R&D expenditure.

So if we're not investing much in R&D and we can't compete with India and China on price, what will happen?

I think it's already happened in the UK and we are now a nation of salesmen and shopkeepers relying on imported goods to survive.

 

[jmw]

The UK has discovered the "service industry" and doesn't evenb support non-painful initiatives for sustaining engineering.

Politicians have their uses, but I'm not sure what they are.

2dye4, i am reminded of a great physicist who, at the beinning of the 20th century said "there will be no new physics, everything major is already known" or words to that effect. (I'm sure someone will help me out with who and exactly what was said. I know one our members has the quote from IBM boss that there is a possible market for 4 PCs. I am very wary of make absolutits statements of this sort.

You cite the PC, but mobile phones are the biggest boom product currently then we have the whole arena of personal portable entertainment systems and we haven't even gotten to satellite telephones. These are slowly making a revival as newer technology helps.

Who would have thought the Walkman would have such a future?
What is the next big boon? don't know but on past evidence someone will think of something.

JMW

http://www.viscoanalyser.com

 

[2dye4]

I am certain that eventually pure science research will
give us some tools to make new unforseen advances.
My concern stems from the onslaught of propaganda from the
last 5 years or so concerning up and coming products that
as I see it fall into two categories.

60% Stuff that sounds gee wiz but you really would not
want to buy after some though.
Internet conected toasters.
Home robots.
Many others

30% Things that sound good but have insurmountable tech
problems associated with mass utilization.

In short to 90% of the future is BS.
Don't believe me. Go back 5 years and read any number
of magazines about the new creations due out in 3 years.

This says to me that big business is struggling to find
things to fill the R&D pipeline with.

As far as satellite phones. I don't want one. A cell phone
works allmost everywhere. Osama might buy one.
There is much personal portable entertainment allready out
there. There will be incremental improvements but I don't
see anything impacting the economy.

One last note.
Everything changes. Even endless prosperity.

 

[funnelguy]

Still stirring the pot....

I see a few references to electronics. Cell phones, Walkmen, PC's and the like.

Why should any consumer product be engineered or manufactured in the US, UK or any other "developed" nation?

Why should any corporation put in the R&D effort and $$$ to create a new product when "reverse engineering" the competition and having the clones made in China is much less risky?

Manufacturing has been moving out of the US for more than 30 years. Does it really suprise anyone that engineering jobs and IT jobs are following suit? The vast majority of my TA's in college over 20 years ago were foreign students. People are people the world over. Math and science obviously were not invented in a nation that's only a couple of hundred years old.

The part that is amazing to me is the efficiency of our current shipping methods and means of communication. There was a time when only large manufacturers and employers could effectively outsource their wares. Widgets made by the millions and such. Today, even 5 man shops compete against companies half way around the world. Only international shipping charges and delays and the odd communication breakdown keeps domestic shops ahead of offshore competitors represented through domestic sales agents. I suspect the offshore shops will improve their abilities in these areas as time goes on.

I suppose I'll continue in manufacturing. I enjoy it. Programming would have been a good second career, but I don't see a future there, either. That leaves civil service or medicine, IMO. Civil service won't pay my bills, and I hate needles. Technology seems to have replaced the need for many draftsmen, engineers and machinists in the US. Now I know how a farmer feels.

I expect the next wave in this country will be to lower our barriers to migrant workers and companies. Producing cheaper widgets for our consumers has been behind the outsourcing drive. I hear complaints that lead me to believe that we will soon see "migrant" construction contractors and trucking firms. Shouldn't building construction and shipping costs also be lowered by the use of offshore labor? Couldn't their employers provide them with temporary housing on site while in the US on assignment? Farmers do this. Seems like a logical progression to me. I suppose any industry could benefit from a transient, low cost workforce.

Just stirring the pot...

 

[glenn11897]

It’s clear that there are a lot of issues regarding outsourcing. Personally, outsourcing work mainly benefits rich folks. (Sure, any person reading this would see the writer as a person who probably lost his job or someone who hates outsourcing). No I do not. In fact I love the idea of a global economy. Finally, those people can put food on their table, provide for their family etc. etc.

But, the sad fact is these American (European also) companies will most likely be greeted by the corrupt leaders of those countries. Only spreading the wealth to only a few. Do people really think the prosperity will spread to everyone or at least to almost everyone? I don’t see the Walton family sharing their wealth to those factory workers in India, Mexico etc. etc. Not even to their minimum wage workers here in the US. Wait, weren’t they in the Worlds richest people (for how many years straight…). Oh, and CEO pay are at all time high – no surprise there.

I wish I win the next super lotto drawing…Whoever coined “survival of the fittest” was probably a rich folk, coz he didn’t want you to know that it is the“survival of the greediest.” Really!!!

 

[EngineerDave]

A question about "migrant" workers....

Could the US utilize migrant workers at a lower labor rate than minimum wage, as a method of producing cheaper products in this country?

Said manufacturing plants would be supported by low wage migrant workers and Americans could continue to work there as engineers at their normal labor rates.

Certainly such a condition would probably lead to revolt over time, but I was just wondering about that. It wouldn't exactly be right to pay migrants a much lower wage and of course the incentive for them to work in the US wouldn't be as great if they were only earning a fraction more than what they would earn in their home country such as Mexico.

 

[funnelguy]

EngineerDave,
Quote, "Could the US utilize migrant workers at a lower labor rate than minimum wage, as a method of producing cheaper products in this country?"

Certainly, we already do this with agriculture as I mentioned in the post above. A few laws may need to be passed to spread the concept to other industries, but I don't see this as a major impediment. Both political parties support free trade and this is just an expansion of that concept.

Quote, "Said manufacturing plants would be supported by low wage migrant workers and Americans could continue to work there as engineers at their normal labor rates."

Why on earth would we allow engineers to be overcompensated? Obviously, there are competent engineers available in the migrant worker's homelands that could be employed cheaper than the US engineers. The added benefit would be that the engineers and workers would not have a language barrier.

No, ideally we would want to minimize the number of overcompensated US citizens. They would need to be multi-lingual and would most likely deal with governmental issues, upper echelon management and human resources (both here and in the migrant worker's homeland).

The basic tradeoff here would be shipping costs and import tarriffs against somewhat higher wages, taxes and regulatory costs. But hey, then the automakers could finally make a decent profit AND lower the price of their product.

Because we all know that the price of the product is linked to the cost of manufacture, right?

 

[Lorentz]

I had to give you a star for your last post funnelguy.

No body stirs the pot better than you.

 

[funnelguy]

Uhhh thank you, thank you very much!

Seriously, I enjoy a good debate as much as the next guy. I try to build these arguments using existing logic or expanding on it. I'll leave it to others to tear them apart. Hopefully, they'll keep us thinking.

 

[Lorentz]

funnelguy, I think it is important every now and then to re-examine our basic beliefs. After all, why should society be interested in maintaining engineer's salaries at a high level? Just because a question makes us uncomfortable is no reason not to ask it. In fact, that might indicate it's a question that needs to be answered.

 

[PSE]

Lorentz,

"funnelguy, I think it is important every now and then to re-examine our basic beliefs. After all, why should society be interested in maintaining engineer's salaries at a high level? Just because a question makes us uncomfortable is no reason not to ask it. In fact, that might indicate it's a question that needs to be answered."

If you extend that argument (taken to an extreme) to any profession, none would have any greater worth relative to another (true communism?). What incentive is there to do anything at that point? Salary is a way of keeping score of "relative worth" either to society or to a company. The big difference with outsourcing is with going to countries where the baseline societal costs are lower. An engineer in India likely makes a higher salary than an unskilled laborer. The same is likely true in any other country. However, due to the baseline societal cost of living overall, it costs less to do things there. Given time, those costs will rise and the jobs will move on elsewhere. The likely spot next will be the African continent provided countries there can become and remain politically stable.

Regards,

 

[profengmen]

Greglocock,
I couldn't agree more.

I proposed a question a few months back, in the original thread; "How many engineers have lost their job overseas." I received one reply and was told to "check back in six months."

Looks like whining to me also. For a group of professionals that seem to be so smart, constantly comparing themselves to Doctors and lawyers, they don't seem to have a firm grasp of supply and demand.

Nature will take its course, and the business world will adjust accordingly. The profit margins will continue to rise, and the bonus schedules for those that are in executive management will also rise. That's why people go into business, that's why they start companies; to make money and then more money. If you don't like it, tough noggie, that's the world you live in, we call it reality.

I can only think about all the whining the railroad industry did when the highway system came in, I remember all the whining about Japan taking over the world and "doing to the USA industrially what they could not do militarily.” It all gets pretty old after a while.

America is full of over consumption and excess. We super size everything, eat too much, drink too much and yes, goof off too much. We almost never sacrifice and have become so spoiled that we whine like children as soon as a challenge comes our way.

If you are a true engineer, and see a problem, fix it. Shut up and fix it. If you think your job is in jeopardy, fix it; do something to make yourself useful; do something to make yourself marketable. Start your own business and be a leader, instead of a whining follower.

We are all affected. We run an iron foundry here, and China has become a firm competitive foe. All of our competition is making parts for less overseas. We adjusted our business strategy to compete and have managed to maintain the jobs of 150 people. We had to lay off 50 people, but we have managed to retain more. We didn’t whine and complain about the business we lost. We adjusted and rebalanced, we used our brains to stay in business… I suggest you whiners do the same.

No one owes you a thing, that ain't the American way.

 

[arunmrao]

profengmen!
I must congratulate you on your entrepreneurship. Facing competition from China is tough. they have now started arm twisting Indian foundries. They have stopped supplying foundry grade coke for the cupolas,as a result the coke prices have shot up by 300%. Also they are perpetually hungry for raw materials,iron ore mine owners have grown rich over night and the local steel plants are starving for it. I am told that they have imported 2 bn$ worth of steel scrap from US this year. Every Chinese resident in US is a business representative for steel scrap sourcing. The cost of scrap in US has shot up from 80$/ton to 300$/ton. Yet they sell castings back to US at 800$/ton. This is truly baffling. There are issues connected with this pricing which go beyond the limits of this forum,hence I shall not discuss.

I too have an alloy steel foundry and have been severely affected by the steep rise in raw material costs,without appreciable increase in sales cost.