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

 

[JohnRBaker]

Instead of taking German or Russian while in engineering school, perhaps Spanish or Mandarin would be a better deal.

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[rbalex]

Tagalog or Hindi would have been even better.

My former employers (I'm retired) availed themselves of these "high value" design centers. I want to make clear these engineers/designers were NOT stupid, but very unfamiliar, especially if US domestic standards were required. For a long time management felt that they were so inexpensive they could redo work three or four times if necessary. What they finally realized is they could never recover the time from that level of rework and schedules were routinely lost (time really is money in the engineering/construction world)

 

[JohnRBaker]

Hindi's a waste, most of the people that I met on one of my dozen or so trips to India could speak English just fine.

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[zdas04]

Australia and the US both have historically low consumer prices for methane. What I'm starting to see is energy intensive companies are re-doing their economics based on these very low prices and seeing that the $100/hour for 8-10 workers in an highly automated plant with fuel costs at $6/MMBTU are markedly better than the economics of paying 100 workers $5/hour and paying $30/MMBTU for fuel.

The trend has started, but the news media hasn't noticed yet. I think the future is incredibly bright in the US and Australia and anyone else who is a net exporter of energy.

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"

 

[NorthCivil]

I worked at a structural office that tried to outsource the calculations to an office in China. China would send the calcs to us, and we would comb them over for mistakes.

The time difference, language barriers, vastly different working culture... It was a mess. The China office didn't last more than a year.

 

[JohnRBaker]

The trend has started, but the news media hasn't noticed yet.

You really need to get out more...

http://www.usatoday.com/story/money/business/2013/09/04/us-energy-economy-impact/2742461/

http://nation.foxnews.com/2013/09/20/boom-natural-gas-production-sends-us-shipyards-overdrive

http://www.roundupweb.com/story/201...l-gas-an-abundant-american-resource/3393.html

http://www.fool.com/investing/gener...es-a-massive-bet-on-american-natural-gas.aspx

Those were all published within the last few weeks, but here's one from better than a year and half ago...

http://business.financialpost.com/2...as-production-to-rise-even-as-spending-falls/

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[zdas04]

John
Those stories were all about the shale gas boom. Interesting. Important. Not what I was talking about. What I'm seeing the beginnings of is the next level of trickle down benefit to the economy. Actual manufacturing industries returning to the rust belt because of cheep fuel and the possibility of automation in new factories far in excess of what anyone was willing to retrofit to level the total employment costs.

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"

 

[JohnRBaker]

While it's not the 'rust belt', isn't this why there has been such an explosion (excuse the poor taste in puns) of fertilizer plants recently in Texas and Oklahoma, cheap raw material? Also, our sister division of Siemens (the American plant is located in North Carolina) who make gas turbines for power plants, have been doing quite well for the last several years.

http://www.youtube.com/watch?v=ilzoLdXtJ2E

John R. Baker, P.E.
Product 'Evangelist'
Product Engineering Software
Siemens PLM Software Inc.
Industry Sector
Cypress, CA
Siemens PLM:
UG/NX Museum:

To an Engineer, the glass is twice as big as it needs to be.

 

[2dye4]

Errors in currency valuations that will inevitably reset.

I think of it this way.

Why would a guy in the developing world work for dollars that 'if' respent in the United States would not
buy him enough food to live on.
Of course it may buy much where he lives but this just means someone else has an unwarranted appetite for US dollars.

The balance is out of whack somewhere, I dunno where but the earned dollars are overvalued somewhere.

 

[zdas04]

The currency has always been out of whack. A larger percentage of world currencies are in sync today than ever before, but it is still a pretty small number. The bread and milk trick that I described above really highlights imbalances (if it takes 20,000 gallons of milk to buy a luxury car in the U.S. and 150,000 gallons of milk to buy the same car in Jakarta, there is a serious imbalance). Exchange rates are manipulated too much to be a decent measure.

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"

 

[davefitz]

I think the next progression is toward "expert systems" displacing engineers significantly, both offshore and local. The confluence of very much faster computers plus the lack of qualified new generation engineers in some western countries will drive a demand for such "expert systems", and the end result will be a viable ( and very much competitive) alternative to staff/ design engineers.

"Whom the gods would destroy, they first make mad "

 

[ornerynorsk]

It's all about moving toward equilibrium. China is beginning to realize they're working very cheaply. I've been seeing labor-related costs creep up in the factories that I do business with. Is India the new China? I've heard a lot of people allude to this, but I'm not so sure about that.

Parts of developed Africa are beginning to come into their own, as well.



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.

 

[cranky108]

I saw something a few days ago about China is advancing twards robotic factories. Maybe as an additional source of labor, or to keep factories compettive. Either way there costs are attempting to balance with the rest of the world.

The problem with expert systems is the same thing that computers did to acturaterals (those people who develop insurance stats), that there will be fewer experts required, and the ones that survive will need PHD's. More people with higher mental capacity will be forced into common jobs, and lower mental capacity (or social issues) will be pushed into the vast expance of manual labor or homeless.

This is not a prediction, but a concern. To keep sales of iphones up in the future, we will be needing to make more "Hi Welcome to Walmart" jobs.

 

[2dye4]

cranky

That is exactly what I have been thinking for a while.
As an example from music. Before recordings musicians could make money playing, but then came recordings and the very best of the best of the best could be heard by nearly anyone very cheaply. This made the game only a paying gig for those at the very top.

Same has been happening to engineering for a while. Factory automation is getting so plug and play that staff do not need to know
much to make it run. If they have trouble the technical support can help them online.
So now the very best engineers write the software and design the systems that are mass produced and can be used by many low level staff.

Power engineering may be somewhat protected because it takes some intuition to formulate the problem and as of yet computers do poorly at formulating exactly what needs to be solved.

I am really concerned that the middle skilled jobs like BS engineering are going to continue to go down.
Then top it off with what will a creative and moderately intelligent person do for a living, can we stand to sack groceries.

 

[KENAT]

2dye4, perhaps music is not the example you intended it to be.

With the advent of PC based editing software etc. and online file distribution (including iTunes, UTube etc.) then it can be argued that music is heading back to where many artists make a lot of their money from performing and less from recordings, and that the barrier to entry for new artists is lower than it has been for a long time.

Is there any kind of analogy with Engineering and some of the additive manufacturing techniques and other technologies? (FYI, I tend to be in the camp that 3D printing is being a little over sold right now but things do change.)

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[davefitz]

In the extreme case, where all work is provided by robots or other automated systems, the fraction of the polulace that needs to be employed will drop, yet the need to distribute the basics of food ,clothing and shelter to the populace remains. The current western concept of linking work =>> salary==>purchasing power==>consumption of products would need to be modified,and likely include a move toward socialism, but it is not clear how the upper elite would be determined.

120 yrs ago 60% of the polulace were farmers, now less than 5% provide all agricultural products . One can imagine a similar transformation across the board to all sorts of employment- it would effect more than distribution of goods, but would likely impact political systems, and religion as well.

"Whom the gods would destroy, they first make mad "

 

[TenPenny]

As a friend of mine said, no matter what, things will still break, even robots. Maintenance is the place to be.

 

[CheckerHater]

but it is not clear how the upper elite would be determined

You may want to watch this movie:

http://www.amazon.com/Dead-Mans-Blu...d=1380639431&sr=1-1&keywords=dead+man's+bluff

 

[cranky108]

If socialism is where we are headding, with a large part of the population dependit on the goverment for money, then an ever larger share of taxes must come from the few of us who remain employed. The only way for those of us who are not the elite to maintain our level is for us to move off of purchacing food, and things. I.E. grow or produce more of our food, fuel, and things, or move more purchases to the black market (no taxes).

Even the illusion of bartering is part of the black market according to the IRS, as they expect you to pay the equivlent taxes.

So to me it is looking like back to the farm is the only way to keep off the goverment net. I don't exactly want that, but it is a possibility.

Maybe we can do offshore work for other countries.