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01 May 2004

Offshoring trend could mean new beginnings

By Ellen Fussell

The unemployment rate for U.S. electrical and electronics engineers averaged 6.2% in 2003, a 47.6% increase over the previous year (4.2%), reported the Department of Labor's Bureau of Statistics. And "while overseas outsourcing cannot be blamed for all of the unemployment facing American engineers, it certainly is a major contributing factor," said Ron Hira in his IEEE-USA testimony to the House Small Business Committee on 20 October 2003. So what's an engineer to do in the face of climbing unemployment, outsourcing, and offshoring?

A different perspective

The outlook is hardly rosy for some sectors of engineering in the face of jobs moving offshore, but all is not lost according to a research study by the Information Technol-ogy Association of America. Outsourcing creates U.S. jobs through higher productivity, which induces investment and expansion, the study said. Although economists still debate about whether productivity increases from outsourcing high-paying U.S. jobs, work abroad has translated into meaningful economic improvement in the current recovery, in which job growth has been slow. U.S. companies using foreign workers lower costs, increase labor productivity, and produce income that companies can use to expand in the U.S. and abroad—the premise of the Information Technology Association study, which also claims twice as many jobs appear from outsourcing as disappear. This in turn produces wage increases in various sectors.

"Yes people lose their jobs, and that's always a sad scenario," said Roddy Martin, vice president of industry research at AMR in Boston. "But the resilient people, like nature, will bounce back and move themselves into positions with more value added in the new role."

Where's the opportunity?

Martin's theory is that because they outsource manufacturing to other parts of the world, manufacturers are being forced to use technology to improve communication and collaboration with those manufacturers. "You have to learn to manage and collaborate across the supply chain," Martin said. "Productivity improvement will come from companies being forced in these outsourcing scenarios to use their technology investment more effectively—to consolidate specifications."

The goal is to leverage productivity from billions of technology investment dollars, he said. If a manufacturer is in control of processes, it's more cost effective and easier to give the work to someone else to do, so the manufacturer can manage the entire scenario. "If you go into a manufacturing site, how many engineers are programming systems on the sites? They're running production operations more effectively. Instead of being involved in manufacturing they're involved in development work." The offshoring of these "doing" manufacturing jobs will catapult the manufacturers to focus on core skills "rather than peripheral activities like programming," he said.

What about U.S. jobs?

Although the reaction among many in the workforce is one of dismay, Martin said the change will actually raise opportunities by putting pressure on engineers to upgrade their skills—to become knowledge workers in a new kind of economy that controls content and collaboration rather than detail at low income levels. When an engineer in the U.S. loses his job for higher productivity and low-income workers offshore, he'll have to ask, "What can I do to put myself in a position where I'm in an influential management role in the new relationship rather than a doing role?" People who were programmers will need to "up-skill" to become analysts or systems analysts or engineers, Martin said.

"When there's a burning platform to change, people galvanize their behaviors to change," he said. Those who are losing their jobs are taking a step back, "and those resilient survivors understand what role they can play in this outsourcing manufacturing relationship," Martin said. "The only value-added role is of managing and collaborating with these offshore engineers—using technology."

A contracting comeback?

More and more engineers are looking to contract employment to offset the discomfort of displacement. As a contractor, you may get assignments from a contract firm to work on particular projects for a company, said Paul Kostek in IEEE's Today's Engineer article, "Contract Engineering: A Viable Career Alternative." The contract firm pays you an hourly rate and collects fees (generally 40% to 50% more than the contractor's hourly rate) from the company you're working for. But one of the most inspiring reasons for being a contract engineer is you can rely on the contract firm to find assignments for you, he said. "Sometimes, contract work opens a door that might otherwise not be available to you. In fact, contract positions sometimes lead to permanent full-time positions."

That's a little different from working on your own as a consultant, which is a bit more complex. As a consultant, "you have to find assignments, work the assignments, bill and collect your fees, and of course, continually market your services for future assignments," Kostek said. "As a consultant, you should explore incorporating or establishing a sole proprietorship. Though not required, such business structures are worth considering."

As a contractor, you'll find the company you're contracting with will drive your hourly rate. "You can set a target rate for yourself, but you will have to negotiate your final rate with the contract company representing you." One advantage of being a contractor rather than a consultant is the per diem. Contract firms' standard practice for the past few years has been to split a contractor's hourly rate into salary and per diem. Contracts can run from as little as ninety days to three years or longer. These agreements aren't firm, however. Companies using them can end the agreement, or extend it, at any time.

Before accepting an assignment, research the company in question and the project at hand. Learn the company's history with contractors and be sure you know up front how viable the project is. You'll also want to develop contacts within the company as well as with the contractor. "A good network will keep you employed. Contract engineering can become a career in itself, or it can be a stepping stone to full-time consulting or a full-time position," he said. It also offers you the flexibility to work for different companies and even industries to develop more skills.

Other business briefs

Chanhassen, Minn.–based BP used the Rosemount 3420 Fieldbus Interface Module from Emerson Process Management to add Foundation fieldbus technology to its existing plant and traditional distributed control system on its Hull chemicals plant in the U.K.

Cidra Corporation entered into a strategic distribution agreement with ODS B.V. of Barendrecht, the Netherlands, whereupon ODS will distribute Cidra's line of Sonartrac process monitoring systems.

City Public Service (CPS), a municipally owned energy company providing natural gas and electric service, has selected Invensys to implement an advanced Foxboro gas distribution SCADA system in a new state-of-the-art primary control center now under construction in San Antonio, Texas.

ConocoPhillips awarded Honeywell the Belanak Supplier Quality Initiative Gold Award for Delivery Supplier Excellence—recognizing Honeywell for delivering excellent solutions on schedule and with zero cost growth.

Control and Information System Integrators Association (CSIA) has accepted as associate member Moore Industries-International, Inc., a supplier of signal interface instruments, process control, and distributed I/O networks.

Doosan Heavy Industries awarded high-tech instruments company Thermo Electron Corporation a long-term contract to supply nuclear instrumentation systems for four new nuclear power plants under construction in South Korea. Four deliveries are scheduled between January 2007 and May 2008.

Ember Corporation purchased core radio frequency (RF) chip technology and services from U.K.-based Cambridge Consultants Ltd (CCL), allowing Ember to offer radio, networking, and microcontroller technology in a single 802.15.4 "ZigBee" chip.

HBM, Inc., a supplier of measurement technologies, products, and solutions for industrial test and measurement applications, was awarded an $8.7 million contract to provide data acquisition hardware and software for structural tests on the F-35 Joint Strike Fighter program. The order is comprised of MGCplus hardware and its Catman Enterprise software for data acquisition and analysis during the testing program.

Honeywell Process Solutions received a $1.1 million contract for advanced process control and supporting infrastructure from TNK-BP for its Ryazan Refinery in Russia. The project is scheduled to be completed in the third quarter of 2004.

Honeywell Process Solutions received a $3.8 million contract to automate refinery and power plant operations for Croatia's national oil and gas company INA Industrija Nafte Zagreb. Automation will increase production and environmental performance at the Rijeka Refinery by providing more accurate monitoring and control of the fluid catalytic cracking unit and power plant.

Honeywell Process Solutions also received a $4.1 million contract to automate all major areas of the Tata Steel G-blast furnace in Jamshedpur, India, allowing Tata Steel to operate the blast furnace at peak efficiency by linking controls and sharing information across all major furnace operations.

Honeywell Process Solutions received an order from BP in Trinidad and Tobago (BPTT) for an extensive automation solution for BPTT's Cannonball Development Project, located offshore Trinidad.

Iconics formed a technology partnership with Saflink to support Saflink's Biometric Identity Assurance Management software within the Iconics Genesis32 Automation Suite.

Moore Industries' process control and distributed I/O network, the NET Concentrator System with a real-time signal gateway between the field or factory floor and the control strategy, got OPC Foundation approval for the system's OPC server, confirming the connectivity and interoperability of the NCS with other OPC vendors.

National Instruments reduced prices of up to 25% for 13 of its data acquisition modules, a development that continues the company's twenty-six-year history of reducing the total cost of measurement and control for engineers and scientists.

Noordgastransport B.V. has selected the Experion Process Knowledge System (PKS) and fieldbus instrumentation for its gas treatment plant in Uithuizen, the Netherlands, to replace its single-loop control and relay-based emergency shutdown system. Honeywell will manage the upgrade project, providing hardware and software engineering services.

RF Micro Devices, Inc., a provider of proprietary radio frequency integrated circuits for wireless communications applications, announced a patent award for its method of integrated power control—based on collector voltage control.

Telvent, Abengoa's information technology subsidiary, has a contract to supply Petrobras Transporte (Transpetro) with backup liquids and gas management control systems to address security and safety concerns. Telvent will provide engineering and commissioning of the two off-site control centers that will serve as backup to the National Masters in Rio de Janeiro. ?

Career moves

Arco Data Protection Solutions (DPS), a Hollywood, Fla.–based manufacturer of data protection computer hardware products, appointed Lawrence F. Steffann as its new president and chief executive officer.

Bosch Rexroth AG named Reiner Leipold-Büttner executive vice president for engineering and manufacturing in Lohr, Germany.

Coventor Inc. out of Cary, N.C., appointed chief executive officer and founder, Mike Jamiolkowski, to the governing council of the MEMS Industry Group, an industry association serving the commercial microelectromechanical systems (MEMS) technology marketplace.

FKI Logistex Automation Division hired George Parr as national accounts manager, east coast, for its Custom Engineered Systems (CES) group.

Kai Moellendorf is the new director of manufacturing at TRUMPF Inc., a Connecticut-based fabricator of machinery and industrial lasers with research and development investments of more than $63 million last year and more than 500 North American employees. Stephan Bundschu is the new director of engineering at TRUMPF Inc.

Microfabrica has elected Silicon Valley veteran Dr. David Lam as chairman of the board.

Millennial Net, Inc., a hardware and software developer for self-organizing wireless sensor networks, appointed Mark Pacelle vice president of marketing.