Offshoring and Layoffs: How About A Little Decency?

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"Offshoring," or the movement of U.S. engineering and technical jobs overseas, is striking a raw nerve, sparking political debate and concerns over the future of the U.S. economy and basic R&D. The IT and telecommunications sector, where the U.S. jobless rate continues to hover at 7 percent, has been first and hardest hit. The Communication Workers of America reckon that 400,000 U.S. jobs have moved offshore. According to Cambridge Mass., based Giga Information, 200 of the Fortune 500 shipped nearly $7.7 billion worth of IT work overseas last year. Although there are no firm statistics right now, more chemical process design, R&D and engineering jobs also appear to be moving abroad. 

The economic reasons for offshoring, outsourcing, or "lower-cost arbitrage," whatever you choose to call the trend, are compelling. But they're compelling only in the short term. And, whether they're eliminating positions or moving them offshore, many U.S. companies are "clearing the decks" in an extremely degrading way. We read, for example, of IT companies giving senior engineers just enough notice to allow them to train their less-costly replacements, here on H-1 B or L-1 visas. One chemical company reportedly laid off 17 people last month, asking those who were "off" that day to come in, then gave them all of 30 minutes to get their things and leave.

Police cars have become a fixed presence in company parking lots during U.S. layoffs, just in case anyone decides to "go postal." Given the way that layoffs are handled, it's a wonder that more people don't! Suicides and severe depressions have resulted, in some extreme cases.

Xenophobic or knee-jerk responses would be counterproductive. We're living in a global economy, and, if researchers and engineers in Russia or India can most effectively solve a technical problem, why shouldn't they? Ph.D. engineers in Russia earn one-tenth what their American peers do. In many parts of the world today, trained professionals employed by national institutes routinely "moonlight," driving cabs or whatever they can to make ends meet. Surely they deserve more professional opportunities to use their talents.

More U.S. chemical companies are planning to tap that underutilized labor pool. Earlier this month, for example, Raymond LeBoeuf, CEO of Pittsburgh-based PPG Industries, said that he sees his company "bringing new research to market","research that, he says, will be increasingly carried out in the former Soviet Union, India and China.

Burger flippers of innovation?

Over the last few weeks, Eastman, Pfizer, Ashland and BASF have all downsized. The latest preliminary figures from the U.S. Bureau of Labor Statistics show that 66,000 chemical processing jobs were eliminated between September 2000 and September 2003. How many of these jobs moved offshore, and how many simply disappeared?

No one is currently tracking these data, or documenting the whole offshoring trend, but they should be, according to Ron Hira, chair of the Institute of Electrical and Electronics Engineers' R&D Policy Committee, who also testified before the House in June. He suggests that financial and tax incentives be offered to companies that keep high-wage manufacturing jobs in the U.S., and that H-1B and L-1 visa programs be scrutinized to prevent U.S. firms from abusing them.

Regulators are starting to take notice. In June, Washington state's governor signed a bill that would provide the state's aerospace industry with $3 billion in tax breaks over 20 years for staffing locally. Nationally, the General Accounting Office has promised to study the issue in greater depth.

It will be critical for chemical processing professionals to follow developments closely. Make sure that legislators hear your voices.

In the meantime, support downsized peers as much as you can. They face an uphill battle in a market where few companies are hiring and those who are can't even read all the resumes they get. They will also lose a substantial amount of earning power during, and after, their job search (For detailed analyses, see University of California economist Lori Kletzer's Web site, econ.ucsc.edu/Faculty/facLkletz.shtml.).

As the U.S. job market continues to change, some colleges such as Georgia Tech plan to limit chemical engineering enrollments to ensure quality and guarantee that more graduates can find jobs. If you're over 50 and downsized, you'll have to work harder to project an energetic, "team player" image, says Betty Feehan, head of AIChE's soon-to-be disbanded career services office. Examine your legacy, and show how you can solve problems in another process, company, or industry. Don't be afraid to "cold call," Feehan advises. And, if you've been lucky enough to keep your job and receive such a call, don't hide behind voice mail. You may be on the other end of the line one day.

By Agnes Shanley, Managing Editor

 

Strategic offshoring makes sense, but wholesale offshoring would see U.S. engineers and scientists become mere marketers and implementers, "burger flippers" of innovation. Given the rise in corporate espionage and trade secret theft, and lax intellectual property protection, the practice could also compromise technology, as John Palatiello, administrator of the Council on Federal Procurement of Architectural and Engineer Services, testified before the U.S. House of Representatives last June.
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