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Engineering Lives On In The U.S.: Panel

The need for engineers won't die anytime soon, a panel of vendors said this week. One factor that's helping: the cost differential of salaries here vs. overseas is shrinking.
SANTA CLARA, Calif. — Doomsday scenarios and hysterical predictions about the bulk of electronics engineering jobs moving from the U.S. overseas may be overblown, according to a panel of industry executives here Wednesday (Feb. 8) at DesignCon 2006.

According to Darlene Solomon, vice president and director of Agilent Laboratories and moderator of DesignCon's plenary session, speculation that engineering in an endangered species is similar to other engineering fads of previous years, in which certain type of jobs have been rumored to be leaving the country. U.S. companies are still actively looking engineers in the U.S., particularly those with advanced degrees.

"I would hate to think that engineering was so out of fashion," Solomon said.

According to Ahmad Bahai, chief technology officer at National Semiconductor Corp., the labor cost savings that originally enticed companies to move design and manufacturing activities overseas, notably to India and China, have been decreasing. Bahai said that at one time companies paid one-sixth the cost of a U.S. engineer to employ an Indian engineer. While acknowledging that he did not have the latest data, he said the cost differential is now closer to one-third.

"I am not suggesting it is going to be even anytime soon, but if it gets down to about one-half, it's no longer a no-brainer," Bahai said, referencing the cost and difficulties associated with maintaining offshore design activities.

According to Robert Hum, vice president and general manager of Mentor Graphics Corp.'s Design Verification and Test division, while a significant amount of hardware design and manufacturing has been moved offshore, software design remains alive and well in the U.S.

While unable to pinpoint exactly why U.S. companies seem more reluctant to outsource software design to other parts of the world, Hum suggested that companies want to maintain more direct control over the "intellectual content" provided by software.

"A lot of it has to do with where you think your competitive advantage is," Hum said. "Lower cost is not more important than competitive advantage."

While acknowledging that a lot of engineering work is shifting to places outside the U.S., panelists pointed out that last year Intel Corp. announced it would build a 300-mm fabin Arizona and that Texas Instruments broke ground on a site in Texas for a 300-mm fab of its own. While the cost advantages offered by offshore manufacturing are tempting, panelists said, they don't always outweigh the advantages offered by sticking in the U.S.

"There needs to be some balance," Bahai said. "Nobody believes in globalization for globalization's sake."

Instead, Bahai and other panelists argued, globalizing manufacturing is now seen as a benefit in terms of proximity to customer base as well as access to a wider talent pool.

"If we believe that competition is what makes the Silicon Valley and our economy great, we should welcome further competition from other parts of the world," Bahai said.

Bahai, who is also an associate professor at Stanford University, said he has been bombarded with requests about graduate students from U.S. companies actively searching for engineering talent.

"The idea that engineering is dead [in the U.S.] is hype," Bahai said.

eASIC CEO Ronnie Vasishta, who years ago moved from the U.K. to the U.S. in search of greater engineering opportunities, said young people should continue to pursue an engineering education, but "keep a broad mind" and be willing to travel to other places in the world to work.

When an audience member asked if a foreign company would ever consider establishing a design center in the U.S., the panel — which also included Intel's Jerry Bautista — was unanimous. In fact, they said, this has already happened.

Bautista, director of technical management for Intel Corp.'s microprocessor research lab, noted that globalization has the added advantage of familiarizing companies with the markets into which they are expanding. Intel, he said, was surprised to learn that some PCs in China use a keyed system that allows parents to control access to how children use the PC.

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