Offshoring, outsourcing, inshoring, reshoring, Where are we really headed? 13

[ManifestDestiny]

Hi folks

Offshoring (and the ensuing layoffs) has really gathered pace since the GFC. You've heard, you've seen, you know. In australia at least, offshoring seems to have really ramped up in the past few years. I understand the business case, it doesn't make sense to pay a local worker $100/hr when someone from a developing economy can do it for $4 and a bag of rice.

The question is, how far can it go? Will we reach a point where any job that doesn't actually require a physical presence can just be done remotely? From what im seeing in the US, the offshoring craze seems to be stalling, businesses are finding out that work is not to standard and some are bringing back their engineering (re-shoring). Some say its ok because offshored work to certain countries is never good quality. I think this is farcical in the long term, because eventually the quality will come in to line with that of any western country because business will demand it. They're not opening up multi million dollar "technical centres" for nothing.

Im curious how engineers now and into the near future can adapt to such a change in the jobs market, and what does one do to stay attractive to an employer.

Regards
Sam
Brisbane, Australia

Young Engineer. American old west enthusiast

 

[moltenmetal]

The whole notion that you can continuously grow an economy on a percentage basis is a pyramid scam, albeit one which had a pretty good run. That good run has made people believe it without question, even though anybody with a basic understanding of mathematics should know better. Any geometric series has to come up against some real, physical constraints at some point. Technology has been good at removing some of the major ones we ran into in past- food and energy production- but even those are coming up against real physical limits.

Increases in productivity per worker inevitably mean lower employment. And in my view, fewer people truly participating in the economy creating goods and services of real economic value has to mean a decline in the standard of living for everyone on average.

To me, the solution has to be a smaller population. Once you're up against physical scarcity of resources, you can either have too many people scratching and biting for those limited resources, or a smaller number living in comparative abundance. And although the world's population is still growing, the rate of growth has greatly slowed. Development seems to do that pretty well- better than anything else that has ever been tried. The only question I have is whether or not we'll find ourselves hard up against one of those physical constraints before population peaks and starts to fall. The results could be really, really ugly.

If your question is where the best place to hide in a so-called developed "western" nation to get through this unscathed, then don't ask me- I have no idea. Every profession and white-collar job is potentially vulnerable to competition from people who have comparative economic advantage, either real or manufactured by a government like China's which deliberately manipulates the value of their currency. Suck it up- that's life in a globalized economy. Yeah, you can narrow your focus to stuff that will always need to be done locally (maintenance, local construction), but you'll be competing with lots of people for those jobs too.

 

[cranky108]

I don't think resources are that much in short supply, except for green pieces of paper. And to me the problem is in the goverment control of those green pieces of paper. Maybe we need the free market, and not goverment control.
However printing money is not an answer. Bank lending will increase money supply faster than goverment printing, however at these interest rates, why would they want to lend money?

We should have known that trading with China will at some level drag us lower as they rise up. What needs to happen is manufacturing here. And we are seeing some of that happen in small business, and with new ideas. But we are at the same time trying to kill it with excessive taxes and paperwork.

Some small manufacturing can be done in your extra bedroom. All it takes is a computer, 3D printer, and some marketing (I don't have the last part). And with our countries appitite for new and improved you should be able to make some money.

 

[RossABQ]

To me, the solution has to be a smaller population.

Bingo! There isn't a problem we face (energy, food, water, pollution, etc.) that is not directly and immediately mitigated (and at no cost) if you knock the population down 20 - 30%. This is nowhere more apparent than in the sub-saharan African continent. For some reason, this is a topic that has fallen out of public discourse?!

 

[GregLocock]

True, but the reason it has done so is that there is no morally acceptable way to limit population involuntarily, and the best way we've found so far that is acceptable and effective ata large scale is to raise 3rd world living standards.

I'm not entirely doom and gloom about this approach as I think that first world technology is getting more efficient as time goes on. However as I've said before, if our current state is 1 billion first worlders using say 5 units of resources per capita, and there are 6 billion third worlders using 1 unit per capita (that ratio is probably on the low side), then a future equilibrium state with everyone using the same amount of resources per capita using 11 billion units of resources demands we firstworlders somehow manage on 31% of our current resource load, or we reduce the number of people, or we use more resources. There is no other option I think.

Now, can we get an acceptable standard of living on 31% of our current resource usage within say 50 years?

It sounds a lot but it is 'only' 2% per year, which is not ridiculous in a planned economy but we don't have one. An easy example is that if I take one plane flight around the world every 3 years instead of two that reduces my oil usage by 17%, so that's the next 8 years of oil sorted there. That is of course a reduction in standard of living, that may be acceptable. Switch to diesel instead of gasoline in my car, that's another 15%, so that's another 7 years (that ones already gone though). There will, of course be unforeseen consequences.





Cheers

Greg Locock


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[cranky108]

Some how you seem to miss the fact that some locations require more energy to live at the same level as other locations. Also different activities can use different fuels then what we currently use. The production of fuels creates lower skilled jobs which seem to be in short supply. I.E. to heat my home, I can use coal, electricty, natural gas, propane, diesel, wood, solar, oil or some combonition provided I can install the proper appliances, however in some places they don't need to heat there homes. However, I don't need AC like those people who live in Death Valley.

So saying everyone need to reduce there energy consumption by some amount is not true, or even doable.

Another aspect that can be argued is poorer countries need to increase there useage of solar panels, or wind, or etc. We can also increase our production of bio-natural gas, but there are no tax incentives like that of solar and wind.

Undeveloped countries mean just that. The poeple, energy production, and the land have not been developed. Not that we have to cut back so we can provide them with energy.

 

[SnTMan]

Quoting P.J. O'Rourke on overpopulation: "just enough of me, way too many of you".

Regards,

Mike

 

[RossABQ]

The production of fuels creates lower skilled jobs which seem to be in short supply.

Having just driven thru the oil patch, I beg to differ. Towns that were drying up and all but ghost towns are thriving, throughout the panhandle and lower plains. Same story overseas, I know an Aussie who is making $200k a year on a drilling ship. Coal mining? If you can find a job, they pay well, although maybe not considering the health impacts.

But I agree with your statements about it being impractical to equally reduce consumption, based on geographical differences. But the numbers of old houses with minimal or even no insulation in the US is shocking. Short of the gov't paying to knock them down and replace them with energy efficient homes, I don't see any possibility of them being replaced until they fall apart or burn down.

 

[GregLocock]

I don't remember saying it would be painless or easy. I said there would be unintended consequences, and perhaps we'd have to stop living in energy intensive habitats as if they were extensions of the temperate zones. Incidentally we seemed to have jumped onto energy, I think the same applies to many other resources, energy is just the easiest to think about.

Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

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[looslib]

Back to the original poster.

I worked at one company that used a lot of design engineers in India. They were on the corporate payroll as employees of our Indian company. They used our same software and in my case, I sent them our customization files to get parameters into the files so we could process them into our system when they returned the work. The labor cost quoted for a job was about 20% of what an engineer was being bnilled at in our plant. The hours to do the job was 2-3 times more than what we estimated the job would take. Lower overall cost right? No way. They did not run our customized programs for the drawing title blocks, everything was hard text, not parameters. Work comes back and one of the in plant engineers has to review and redo every drawing because they don't meee our requirements. So, cost is back to where it would have been if we had done it in house plus we are now 3 times the amount of time from start to completion since they took 2X and we had to redo it all.

After that major design project, the company decided to change the way they did the outsourcing to India. We brought 4-6 engineers on a work visa to our facility and trained them in our procedures and how to use the customized software tools. After their 6-9 months here, they went back and another group was brought over and the training repeated. This eventually got us engineers in India who would do things the way we wanted them done. Expensive, maybe, but as I have said, Training is an investment in your resiurces, not an expense that can be cut first.


"Wildfires are dangerous, hard to control, and economically catastrophic."

Ben Loosli

 

[Pmatherne]

Would it be worth learning arabic? I am in the oil and gas industry and I have not seen that language mentioned. My fiance knows a little arabic and is willing to teach me so she can relearn it as well.

Future PE Engineer
Pet project I am working on to help other engineers, not much yet hoping to get it grow as I learn more

http://www.peexamquestions.com

 

[zdas04]

33 years in Oil & Gas. I can speak several dialects of English (i.e., "Arkansas", "Navy", "Oil Field") and that is about it. I have zero skills with languages and have worked pretty much everywhere that Oil & Gas is produced. I've taught classes with interpreters and done field technical audits with "native guides" (usually PhD Petroleum Engineers with lots of skills and good English). I haven't found a lack of Arabic, Spanish, French, Italian, Farsi, Tagalog, or Brit to be a hindrance. Americans are so insular that every office in another country in this industry has more than a few American-English speakers just to cope with our failings. Many of my colleagues made the effort to learn the local language (one guy spent a year learning Arabic just before being transferred to Argentina), and seemed to get less cooperation from the locals than those of us that throw ourselves on the mercy of the local populace.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.
The plural of anecdote is not "data"

 

[CheckerHater]

Training is an investment in your resources, not an expense that can be cut first.

Tru dat. So is quality control.

 

[cranky108]

As much of a concern is where you purchase equipment from. I've seen equipment that would not perform to spec. not because of the engineers and programmers, but because they could not do full power testing at 60 Hertz. Had they had that capability they would have seen the problems.

The other side of it is we were not allowed to visit the factory during construction, so we could not see the quality in the construction. And years later, the problem with over seas factory visits limits us to US products, or unseen factories.

And I think there is another alternitive to insourcing, and outsourcing, and that is automating, which can replace all engineers, but can leverage workload.

 

[KENAT]

Cranky, is there another typo in your last sentence?

Posting guidelines faq731-376

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(probably not aimed specifically at you)
What is Engineering anyway: faq1088-1484​

 

[cranky108]

Can't. Thanks.

 

[GregLocock]

There's a neat, complex, saying which I heard from Toyota "The only one who will always have a job is the one who can succesfully eliminate his own job". There's the rather less neat one I heard at company X, "X is a company that employs a few smart people to design systems so that dumb people can design cars".





Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

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[cranky108]

Judging from what I have seen of the new cars, the auto manufacturers have quite a few dumb people designing cars. Or maybe the designs fit the type of people who buy them.

I sort of see it like a popcorn machine I had the recent pleasure to repare recently. The complex elements were cramed into the amount of space the astetic elements allowed.

I see it as assemblies will be designed, and reused over several years/models/brands, and the engineering will be juggling assemblies togather. The problem is because no one is looking at the whole product, no one will see that you can't change the oil filter with out removing the right frount tire.

I am not trying to pick on the automotive industry, because this translates to other industries, but because I believe the auto industry builds a complex product. I see that simple products may not be engineered in the future, like popcorn machines. At most they maybe run by a consultant, but the more complex products will still be engineered.

The shame here is the number of engineers that are not employed as engineers, and the shortage of engineers in some fields. The university's are not prepairing the students to the right job openings.

 

[TomDOT]

Tesla seems to be building a nice product - no need to remove the tire to reach the oil filter either!

Heck, they can now swap out the entire battery pack in a matter of a few minutes.

Of course, they have an engineer running the company, not an MBA.

 

[ornerynorsk]

It's the trend one often sees in design cycle. Things start out big, robust, over-built, plenty of maintenance access. Occam's razor inevitably goes to work as each revision trims and prunes at inefficiencies. Maintenance is a secondary consideration in design because the primary design consideration is the intended use and functionality of the article. Why sacrifice efficiencies in 1000 instances of use over convenience in 1 instance of maintenance? This is the root cause of goods trending toward disposability rather than durability and repairability.

Little comfort for us "weekend mechanics", though.

It is better to have enough ideas for some of them to be wrong, than to be always right by having no ideas at all.

 

[GregLocock]

My 1973 ford escort had plenty of room for maintenance, which was just as well since it needed it quite often.

My 2013 ford fiesta is physically shorter, yet has aircon, 5 speed transmission, slightly bigger engine, catalytic converters, EFI, ABS and so on. Now given that not many of the big items have got smaller, exactly how do you propose we package all this stuff without cramming it all together, or making the car bigger?



Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

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