Editor’s Note: Over the past months we’ve explored one engineer’s view of historical patterns and events that have set the landscape for today’s economic challenges. In this final installment, Mr. Kervill brings us into the present and concludes the series by summarizing his predictions for the future. Communication is so fast that it is not a factor in restricting today’s technology. Not only is the world flat, as described by Thomas Friedman, but it has only one time zone.
Factors Effecting Innovation
Communication
Communication is so fast that it is not a factor in restricting today’s technology. Not only is the world flat, as described by Thomas Friedman [1], but it has only one time zone.
This has the drastic effect of eliminating communication as the prime factor that limits growth of new ideas.
Thanks to the Internet and television we no longer rely on explorers like Marco Polo to bring back knowledge of gunpowder, how to grow rice, or the latest phone application!
The cost of employment
Few of us would turn down a windfall of $3.5 million (Kubasik-Lockheed) [2], but there is a huge difference between need and want. Need is a key factor. It is the lower limit of payments that a workforce can accept. Less than this limit and we will have a transitory workforce incapable of great innovation because it will be constantly changing.
If pay is much higher than the basic level of need, then business risks being unprofitable. Employee pay is a second factor which can limit or restrict new products being capitalized and turned into revenue. Consider this:
A college student graduating with $60,000 worth of debt must repay $5 for each working day for the rest of her life. If she is to be downsized at the age of 55 then the amount increases to $8 a day.
By age 30 most engineers will have added a mortgage to this financial commitment.
This means that if we are to create US jobs they need to be high tech, well-paid jobs – which leads us to the next requirement.
Literacy and Education
The third factor to consider is the technical, financial and global literacy of our workforce. These qualities are essential as never before because, as our businesses become more global the potential for insulting or alienating fellow workers, partners or even customers increases exponentially.
In terms of literacy the US ranks poorly with Asia. Results from a 2002 survey reveal that only 3% of Americans have sufficient literacy to work at the highest level of engineering.
According to the 1992 National Adult Literacy Survey the average U.S. adult reads between the 8th and 9th grade level. USA Today quoted a study showing that 1 in 7 Americans (or 14%) could read its stories. This could have a serious impact on future employment opportunities for 80% of the U.S. population. (Note: It is possible that this is not indicative of declining literacy but because such information is increasingly available we are more informed than in the past.)
The LEAP Report [3]
In 2011 the Association of American Colleges and Universities published the LEAP Report. The leap study was created as a way forward.
Agree or not – this is coming down the pike
Teagle Foundation President Richard Morrill wrote a blog post for the Huffington Post titled “What is the Value of Liberal Education?” (November 6, 2012). Mr. Morrill notes that “The key to seeing the enduring power of liberal learning is to trace how knowledge and its processes take up residence in students as they move toward becoming independent thinkers and agents of their own lives. A liberal education provides students with a broad set of capabilities such as critical thinking, effective communication, quantitative reasoning, creative thinking, problem-solving, integrative thinking, and personal and social responsibility. While not monetarily quantifiable at graduation, there is no question of the value of these capabilities for all individuals in the workforce of the future, as citizens and as human beings.”
A warning for engineers
It does not matter if you agree – this is the force that will drive the syllabi of universities and colleges– and future graduates will not only be looking to take your job but (thanks to the new syllabi) may be better qualified than you are now!
New learning should not only include familiarity with new technology but the place of America in the Global Village – so add foreign newspapers and The Economist to your weekly reading list.
It may well take 10+ years before the majority of colleges are on-stream but we should see the first graduates arriving in less than 5 years.
Do we have enough engineers?
The short answer is – unequivocally no! And we knew there was a problem in 2005 [4].
According to Russell Harrison in the first quarter of 2005, electrical engineers (EE) faced an unemployment rate that fell to 2.1%, just about its historic average. The rate had been declining since 2003 when electrical engineers faced an unemployment rate of 6.3% — the highest ever recorded for EEs.
Between 2000 and 2003, electrical engineers faced a typical, if bad, job market: unemployment went up as total employment fell. But in 2003, the situation changed. Between 2003 and the first quarter of 2005, unemployment fell along with total employment, which declined from 363,000 in 2003 to 335,000 in March of 2005, almost 8 %. The only way the number of unemployed engineers and the number of employed engineers can both fall at the same time is if a large number of engineers are simply leaving the profession.
Harrison makes an excellent point – “Declining employment can be as worrisome as increasing unemployment. The economy can still benefit from an unemployed engineer who has taken a non-engineering job. But when an engineer leaves the profession, those high-value skills may be lost for good.”
Can universities and colleges provide enough engineering graduates?
The short answer is again – unequivocally no!
Excerpt from The Economist on the Future of Jobs
“In 2008, one in four workers in America with a degree in science, technology, engineering, or mathematics was 50 or over. Lockheed Martin, an aerospace firm, expects nearly half its science and engineering workforce to retire by 2019 and will have to hire a total of 142,000 engineers. Currently only 60,000 engineers a year graduate from American universities. [5]”
So how are the other 100,000 engineers needed by Lockheed being trained? And what about other large companies that employ older workers and those about to retire?
Clearly there are not enough engineers. Perhaps now is the time for senior managers to consider taking on more interns, giving engineers an apprentice who would assist engineers and in doing so, learn what engineering is all about while they are still in school?
Jobs, Start-ups and Funding
Until recently, most entrepreneurs started their companies with their own money or some form of ‘angel’. Taking on the whole financial risk means full control and remuneration. If significant capital was needed the entrepreneur sought either a partner or an investor.
Now we have Crowd Funding – which is a huge benefit for getting start-up capital. Please note that in 2013 the legislation around Crowd/Cloud funding will change.
Technology has advanced. Computing power is cheap – 3-D printing can eliminate the need for machinists and many start-up and fully-fledged businesses can operate from a couple of laptop computers. Bricks and mortar have been replaced by the internet – so the original investment associated with setting up business is a fraction of the cost 10-20 years ago.
Sunset and sunrise
If a business is established, has been around for ages, will always be there, and where there is little change of technology it is considered a sunset industry, water, sewage, coal power generation, nuclear power generation, hospitals, teaching and insurance. The financial returns of sunset industries are well known and from the perspective of investing money they are assumed to give low risk and low return rewards.
Then there are sunrise industries – these industries weren’t here yesterday and some won’t be here tomorrow. And some sunrise industries will grow and become new entities that will shape our environment. Google, Facebook, and solar power generation are new and continue to spawn new infant industries.
So what is the future?
We can expect many engineers leaving the workplace to be older engineers retiring within the next 5 to 10 years and thus removing themselves from the market.
As this happens we can expect to see an acute shortage of experienced engineers who will work at an artificially low rate created by downsizing. Companies will be forced to pay higher rates until we return to previous (realistic) hourly rates.
Given that there will be a shortage of engineers and that full-time employment of a specialist is always inefficient then a logical natural solution is for more engineers to become contractors.
The Dilbert effect and the consultant
From another perspective, the only route to higher pay was for an engineer to transfer into management – which led to the loss of some very good engineers and an even worse consequence of more than a few dreadful managers: a double loss to the industry. (Dilbert is, indeed, alive and well!)
For many years the only way that an engineer could make good money (as an engineer) was to become a consultant. Hiring a consultant is the logical model to reduce the impact of our impending engineer shortage by making better use of scarce resources. It will, however require industry to be prepared to pay a much higher price for the convenience of employing a consultant on a daily or even hourly rate on an as-needed basis.
The fire-fighter, the engineer and the plant [7]
Large corporations have a range of options available, including those available to the SMEs (Small and Medium size Enterprises).
The classic solution has been to create a small team of ‘firefighters’ (engineers placed into a project that needs help). When the problems are found and solutions identified then the team moves on to the next project. This is a smart way for large employers to maximize their scarce engineering resources. It also helps to create a team with a greater chance of a successful outcome (see footnote – The Plant).
Small businesses have often employed a consultant engineer to perform specialist engineering tasks and then release them to work for another company – this is a logical way forward for industries that cannot afford to employ experts in all fields.
Work has Changed FOREVER
Remember the massive layoffs between 1996 – 2010? Well some of those jobs have gone forever and will never come back. Let me repeat, some of those jobs have gone forever and will never come back!
It has happened before and will happen again. The word processor brought an end to the massive typing pools we saw in 1950s movies. So what became of all those typists? Did they starve; did they sit about for the rest of their lives waiting for another typist job to land on their lap? No! Some retired – others retrained – others took new careers.
When will the next transition in employment happen? Look around you: it is happening now!
All change is positive – it just depends on your perspective
The modern capability to create new products has just reached a new height. One designer with a PC and a 3-D printer can now replace several design draughtsmen, a buyer, a goods inwards inspector, someone to run the stores and an inventory controller, plus all the bookkeepers needed to track the time of all those individuals. This is a good thing, and a good time for entrepreneurs.
The rise of small business
Now is the time for small business. The right ten people can outpace a 1990s company of 100 or more in terms of design capability, throughput and ability to build a product. Computing power is cheap. Laptops capable of more than 50,000 MIPS are now common and off-the-shelf. The need for a big centralized computer center is relegated to specialist companies.
Adobe and other software providers have made their software Cloud based (or similar) and available for rent on a monthly basis.
These are major milestones and will lift restrictions from small design companies that will be able to pay as they go and never need worry about updates, software or hardware compatibility issues again.
Individuals are now empowered to take an idea, build a company and take ownership. (It can be stressful but is infinitely preferable to pleading to spend $100 of the company’s money in order to save $1,000, or to spend hours of your own time, writing proposals to your employer justifying why the company should patent your idea and pay its shareholders millions.
Large versus small
Whereas large businesses gain headlines in the press whenever they layoff a couple thousand people, small businesses seldom receive accolades for employing more than half the workers in the US.
According to SEPH data [7], in 2011 small businesses employed between 58% to 68% of professional service staff. Small businesses are smaller, less bureaucratic than large businesses and can respond to changes and needs much quicker.
It is small businesses that will change the face of industry, leading large companies in employing surplus labor. It is small business that will stimulate and sell into new markets. It is small business that will lead the way into a successful future.
Now is a good time to be an entrepreneur
Those of you who have read my books on regulatory compliance and product safety may remember this quotation from Krishnamurti “In oneself lies the whole world and if you know how to look and learn, the door is there and the key is in your hand. Nobody on earth can give you either the key or the door to open, except yourself.”
Well, the key is in your hand. here is much help8 for start-up businesses – there is even Crowd Funding (also called Cloud Funding). So, do you have the courage to open the door before you?
Just remember: “If you get up one more time than you fall you will make it through.” – Chinese proverb 
References
- “The World is Flat” Thomas L. Friedman – read also “The Lexus and the Olive Tree”
- http://www.washingtonpost.com/business/capitalbusiness/kubasik-to-receive-35-million-separation-payment/2012/11/12/e60a42f2-2cdd-11e2-a99d-5c4203af7b7a_story.html
- http://www.aacu.org/leap/index.cfm
- http://www.todaysengineer.org/2005/Sep/pulse.asp
- The Economist Magazine Special Report September 10, 2011 Print Edition
- http://en.wikipedia.org/wiki/Team_Role_Inventories
- http://www.ic.gc.ca/eic/site/061.nsf/eng/02719.html
- See “Jobs, Start-ups and Funding”
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Gregg Kervill Kervill started out as a physicist but has spent all of his career in electronics because, as he puts it, it was more fun. Gregg career as an electronics design engineer began in the industrial controls, consumer electronics, space and military markets. He completed a Diploma in Industrial Management (the forerunner of the MBA) in the 1980s with a thesis on the application of Kan Ban and JIT to highly variable product lines. Also in the 1980s, he became involved with product safety for military products, and became a CSA design verification engineer for Digital Corporation. In 1993, he formed GK Consultants Ltd, with whom he has maintained a web presence. A registered consultant to the European Union (advising on Slovenia’s entry to the EU), Gregg has contracted to NIST and the US-Consumer Electronics Association, and has advised the UK, Northern Ireland, Slovenia and Hong Kong governments. He has also provided pro bono support to Virginia Governor Mark Warner’s VALET export program, as well as the planning and strategy committee of the City of Austin, Texas. Since 1995, he has lectured and consulted on three continents, published three engineering books, and created the first multi-media training software for electrical product safety. Currently he is developing web-based training material from world-class subject matter experts (SMEs) for the Phoenix Technical Group, an internet-based company with a presence in the US, UK, and Brazil. |
