Exporting Engineering

I read a recent article in the Wall Street Journal about the increasing trend of automotive manufacturers to export an increasing amount of engineering. Vietnam has become the latest "export du jour". The wall street journal reported that engineers in Vietnam earn approximately $200.00 per month or $2,400 per year. Per the Wall Street Journal "In downtown Hanoi, Nissan has assembled a team of 700 Vietnamese engineers who are designing basic auto parts such as fuel pipes and nozzles at a fraction of the cost of doing the work in the automaker's main engineering facility in Japan."

Recent reports indicate that an average entry level US engineer earns about 20 times what these Vietnamese engineers earn in a year. Granted that the economies of the US and Vietnam are on a different scale, but given the world economy, can the US engineer compete? My experience says absolutely!

There are many hidden costs in outsourcing to developing markets. Management and technical oversight is a key concern and cost that often is neglected. However, when a financial analysis is performed, I am confident that one will find the "overhead" burdens added to the lower direct cost will show at least a cost neutral position. As the emerging market develops, engineering prices in that market will rise as well. As the technical capability develops, oversight costs will decrease, however, the overall burdened cost will remain the same or possible increase. At the same time, US companies will enable foreign entities to compete both economically and technically with the US.

However, there is a more significant cost involved that are missed by the accountants. Loss of engineering capability will put us at the mercy of foreign companies as our industries enable foreign replacements of our engineering work force. Without practice of engineering in the US, eventually the US will lose it's technical edge.

Comments? Please post! All opinions are welcome!