Manufacturing migration: Stemming the offshore bleed

Alongside the endemic gender divide in engineering one of the biggest problems facing the Process Industry is the migration of talented engineers, and the outsourcing of manufacturing to foreign shores.

Outsourcing vs in-house manufacturing

According to the Institution of Mechanical Engineers: “Engineering skills are highly portable internationally, more so than some other professions such as Law. Not surprisingly then international mobility for professional engineers is continually increasing.”

Sir Jonathan IveLet’s look at a case in point. Many attribute the remarkable rise of Apple to one man: English-born Head of industrial design, Sir Jonathan Ive. The UK’s loss has undoubtedly been America’s gain. According to the Daily Mail: “By designing that first iMac in 1998 and its ever more sleek successors, then the iPod, iPhone and iPad, Ive has helped turn Apple Inc from an also-ran popular chiefly with designers into the second biggest company in the world, with a higher turnover than Google or Microsoft.”

Staying with the Californian tech giants, in a separate article the Mail suggested: “When Apple decided that 8,700 engineers would be required to oversee the 200,000 iPhone workers on the production lines, it calculated that nine months would be needed to find them in America – China rustled them up in a staggering 15 days.”

Few developed nations could compete with those results. The Institution of Mechanical engineers says: “The availability of high bandwidth internet access means that engineering design and project management can now be carried out anywhere in the world. At the same time physical engineering activities can be carried out across borders so that, for example, sub-assemblies can be manufactured in one country and assembled in another.

Cheaper to outsource manufacturing to china

“This has brought some advantages to consumers by driving down costs and making more high quality manufactured good available at lower prices,” it adds. “One effect of this has been to increase the availability of engineering skills in other countries. This has increased the pool of talent available internationally, including to companies in the UK. Increasingly these potential employees can fill engineering roles either in their home country (i.e. through off-shoring) or by coming to work in the UK; both cases affect employment patterns in the UK.”

In stark contrast to the fortunes of Apple, a Forbes article discussing ‘why Amazon can’t make a Kindle in the USA’ quotes a 2009 Harvard Business Review (by Gary Pisano and Willy Shih) that cites the devastating effects that offshoring has had on whole US industries. They say: “The decline of manufacturing in a region sets off a chain reaction. Once manufacturing is outsourced, process-engineering expertise can’t be maintained, since it depends on daily interactions with manufacturing.

“Without process-engineering capabilities, companies find it increasingly difficult to conduct advanced research on next-generation process technologies,” it adds.

Boeing’s 787 Dreamliner was plagued by glitches at its launch, blamed largely on flawed components from its outsourced supply chain. Could these sorts of public relations disasters, as well as rising wages in high demand labour markets (such as India and China) be fueling a movement to re-shore some manufacturing activities then?

In an Economist article earlier this year it was suggested that a large proportion of US firms were actively considering re-shoring. It said: “The Massachusetts Institute of Technology looked at 108 American manufacturing firms with multinational operations last summer. It found that 14% of them had firm plans to bring some manufacturing back to America and one-third were actively considering such a move.”

So perhaps now, more than ever, the impetus on educating engineers, recruiting engineers and retaining home-grown engineers for the process industry needs to gather significant pace to stem the steady flow of talent migration and offshore outsourcing.

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