The Electronics Source Book
June 29, 2005
Engineering jobs are migrating globally
You know a trend has reached full steam when it hits the top of the New York Times bestseller list. The book that has topped that list for the last few weeks is “The World Is Flat,” by New York Times foreign affairs columnist, Tom Friedman. In the book, Friedman argues that the world is flat in terms of information jobs, specifically engineering jobs. You no longer have to go to Redmond, Wash. to work for Microsoft. You can work for Microsoft in Bangalore, India.
In the past, freshly graduated engineers flocked to the United States from all over the globe, China, India, Taiwan, Indonesia, even Mexico. But during the past few years, immigration has started to worry about the influx of smart immigrants – a side affect of the war on terror – and many U.S. companies are just as happy to pay the lower wages to those engineers who wish to stay in their native countries.
Engineering wages in India now run roughly $6 per hour, $10 per hour for a Ph.D. In Mexico you can hire engineers for $15 to $20 per hour. That compares with rates of $70 per hour in the United States. Plus, India, China and Mexico are now graduating record numbers of engineers. India alone is graduating 360,000 engineers per year.
According to the U.S. National Intelligence Council, the number of engineers graduating in the United States peaked in 1985 and has gone down 20 percent since then. According to Technology Forecasters Inc., Mexico is now graduating more engineers than the United States. India and China have both surpassed America in the number of engineers graduated on an annual basis. Forrester Research estimates that the United States will give up 3.3 million high tech service jobs by 2015. These jobs collectively represent $136 billion in wages.
This is all evidence of Friedman’s notion that the world is flat. An engineering job in California in the past was destined to stay in California. Now that job can be done in Bangalore, Beijing or Guadalajara for less than half the rate that it costs to keep that work in the United States.
Changes to information-based jobs can come quickly. Just a few years ago – during the recession that followed the dot com crash – the government of Mexico plowed resources into technology centers to attract high tech jobs. The state of Jalisco poured in additional funding to draw jobs to the Guadalajara area. One result is the Mexico Center for Semiconductor Technology, which has become known for its leading edge IC technology.
The Mexican investment paid off. The Guadalajara area has attracted 12 global OEMs, 16 EMS providers and 24 design centers. There are a total of 700 companies involved with manufacturing in the area. On the software side, Mexico has become strong in middleware because of the many legacy systems that are already installed there and need to be connected to emerging technology.
Global companies have responded to the Mexican investment in Guadalajara. GE Engines has 600 engineers working in the area, while first-tier automotive supplier, Delphi, has 2,200 engineers working on projects in Jalisco.
This shift in engineering jobs will not necessarily hurt engineering employment in the United States, at least not immediately. Engineers in the electronic industry will be up to their necks in work over the coming few years as they struggle to engineer their way through the conversion to lead-free products.
Where the United States may lose its traction is in new-product innovation. Even without the migration of engineering jobs, industry experts estimate that U.S.-based engineers will not have much time for new product development. Instead they will spend their time on re-engineering for lead-free. The need for re-engineering comes just after a period – the dot com crash again – when manufacturers have laid off a good portion of their design engineers.
Is this a time for hand wringing? So far, shifts in global production have lifted prospects in the United States. The electronics industry worried about the effect of outsourced manufacturing. The result of that trend was higher living standards at home. Will the shift in engineering to China, India and Mexico also raise U.S. living standards? It’s too soon to tell, but a rising middle class in formerly third-world countries could have a positive effect across the globe.
1. Industry braces for the lead-free conversion
2. Progress on lead-free components spotty
3. IDT: 99 percent lead free already
4. Actel goes green on 100% of its FPGA products
5. Lead-free parts: Welcome to the messy supply chain
6. Are the military and telecommunications industries off the hook on RoHS?
7. Will
electronic equipment fail from tin-whisker shorts?
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