Fallout: The Financial Crisis

Why more engineers are losing jobs

Marketplace Staff Jun 17, 2009
Fallout: The Financial Crisis

Why more engineers are losing jobs

Marketplace Staff Jun 17, 2009


Kai Ryssdal: Engineers weren’t always thought of as the coolest people in the room — the whole pocket-protector stereotype and all. They did usually have jobs, though, when it was tough for others to find work. The rise of the high-tech economy has finally given engineers a measure of respect. I mean, who doesn’t love somebody who can figure out your computer networking problems on the fly?

But now engineers are losing their jobs faster than people in a lot of other professions are. Even graduates of the best schools are getting laid off as companies downsize and outsource or offshore operations to other countries. And the answer is not all about finding cheaper labor, either. Janet Babin has more from the Marketplace Innovation Desk at North Carolina Public Radio.

JANET BABIN: Meet one of the changing economy’s recent victims: Josh Oechslin.

JOSH OECHSLIN: Hello, Marketplace listeners, my name is Josh Oechslin. I live in San Jose, Calif.

Oechslin graduated from Stanford University last June with a master’s in mechanical engineering. He specialized in electronic gadgets. He quickly landed a job as a systems engineer in the semiconductor industry.

You’re probably thinking boring. Actually, Oechslin designed robots. But it didn’t last long. His job was soon outsourced to another country.

Oechslin: I didn’t think that after four months of employment at my first job out of grad school I would be laid off with 900 other people in the semiconductor industry.

According to industry trade group IEEE, engineers of all stripes are losing their jobs at a faster rate than other professionals. When the economy sours and money’s tight, research and development becomes expendable. And so do the engineers that staff R&D.

Hewlett-Packard, Microsoft and IBM have shed thousands of jobs this year, many in technology. And it’s not just new hires. Civil engineer Rick Clark spent 11 years at IBM. He had experience in several departments, including real estate and manufacturing. Clark thought his job was secure. Then in January…

Rick Clark: My manager called me into his office. Um, I expected him to say, “You’re safe.” But he surprised me and said, “You’re included in the layoff.”

That wasn’t the only surprise. Clark’s manager handed him a brochure about an IBM program called Project Match. It offers laid-off employees new positions with the company. But there’re in emerging markets like India and China. Engineers there typically earn less than half the salary of their U.S. counterparts. IBM transplants like Clark would earn the going rate.

Clark: I considered it an insult. You know it’s pretty common knowledge that IBM has been offshoring jobs, so this is sort of like a cold slap in the face.

IBM wouldn’t discuss the program. Companies have long outsourced jobs to save money. But that’s not the only reason firms are shifting highly skilled workers overseas these days.

Vivek Wadhwa at Duke University’s Pratt School of Engineering says globalization has transformed world markets. Wadhwa says firms need top talent where markets are growing the fastest, and that’s places like India and China.

Vivek Wadhwa: It used to be about saving cost. Now it’s because that’s where the opportunities are. That’s where they can develop their futuristic technologies, that’s where they can bring in lots of revenue. So if you’re developing products for foreign markets, you want to understand foreign customers.

And some workers revel in the challenge emerging markets provide. Wim Elfrink is chief globalization officer at Cisco with a background in engineering. He’s Dutch born, and spent almost a decade at Cisco in California. Then he agreed to start up the company’s site in Bangalore.

Wim Elfrink: Nothing is comparable to India! My boys are 8 and 12 years old. So also for them, a new schooling system, leaving the comforts of California behind them, it was quite a transition.

Cisco’s goal is to have 20 percent of its workforce from all levels of the company based in Bangalore. And it’s hiring engineers.

Josh Oechslin, the Stanford grad, said he’d consider a move like that. But now it doesn’t look like he’ll have to. After six months of searching, he landed a new job in his field. He started last week.

I’m Janet Babin for Marketplace.

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