Education: The West Moves to the East for Engineers, Part 1

More engineering jobs are moving to Asia

Siemens' decision to turn east for engineering know-how represented a big gamble for a company that has relied on the ingenuity of its German engineers for more than 150 years. It also reflected one of Germany's biggest economic challenges ever: The erosion of its dominance in engineering, long the lifeblood of the world's third-largest industrialized economy and a source of cultural pride.

• For years, Germany, like many other countries, has lost manufacturing jobs to China and other low-wage countries in Asia and Eastern Europe; however, its engineering sector was a safe haven, one of the few areas where the country could hold its own globally.
• Highly paid German engineers proved their worth with a steady stream of innovations, including the world's fastest train, designed by Siemens and ThyssenKrupp AG.
• Now engineering jobs are beginning to move abroad as well. "If the Chinese can produce high tech at low cost, one has to consider where that's going to lead," said Siemens Chief Executive Heinrich von Pierer, who in May, 2003, announced plans to hire 1,000 Chinese engineers this year and invest about $1.23 billion in China.
• Germany's predicament shows how the flow of increasingly sophisticated jobs into low-wage markets is reshaping economies around the world, and the biggest winner (China) is not merely taking away existing work from industrialized nations, but is also creating thousands of new jobs.
• Germany's preeminence in engineering is being threatened by several stubborn problems; the most obvious is high labor costs.
• Chinese engineers were earning about a fifth of the typical salary for a German engineer and work up to 25 hours a week more.
• At an average age of 32, they are about a decade younger, and turning out to be just as good.
• "We've reached a level of maturity comparable to Germany, where they've been developing mobile phones for more than a decade," said Beijing-based Wolfgang Klebsch, the head of Siemens' research and development in China.

  A lagging German education system also is contributing to the engineering decline

• German high-school students rank below average in math and science compared with 31 other countries, according to a recent (2003) study by the Paris-based Organization for Economic Cooperation and Development.
• The nation's universities, once famous for their Nobel prize winners, are now overcrowded and underfunded, and the number of engineering graduates has declined by almost a third since 1995, to about 36,000 a year.
• Moreover, 14% of Ph.D. graduates in engineering and science head for the U.S. every year in search of better opportunities, according to the German Scholars Association.
• Beginning with the development of the gasoline engine and X-ray technology in the 19th century, engineering innovations have nourished Germany's economy and fueled exports ranging from Mercedes-Benz sedans to Leica cameras.
• The country's engineering prowess grew out of a robust education system that produced more high-school graduates in the 19th century than the rest of Europe combined.
• Its guild system, under which budding tradesmen became apprentices at an early age, also promoted ingenuity.
• Today, engineering remains crucial to Germany's manufacturing sector which accounts for a quarter of the nation's gross domestic product, a higher share than any other major industrialized nation.
• Engineering is also at the core of the country's Mittelstand, the 3.3 million small and medium-size businesses that make up 60% of the economy.
• Germany's exploding deficit and stagnant growth forced Mr. Schroeder to trim federal support in 2003 for research and development.
• Companies also are investing less. Corporate spending on research and development, which accounts for two-thirds of the total for the country, fell slightly last year, according to German industry trade groups, and a recent survey found that companies plan to invest even less in 2005.

  China, meanwhile, is marching in the opposite direction

• In recent years, the Chinese government has moved aggressively to improve technical education, both to serve the booming economy and to make the country less reliant on foreigners.
• The result is that China's universities crank out more than 300,000 engineers annually; almost ten times the number in Germany.
• Siemens, which makes everything from power turbines to kitchen stoves, has had a relationship with China since the 19th century.
• In 1879, the company delivered a generator to power the lights in Shanghai Harbor.
• In 1899, it built China's first tram line in Beijing.
• Its activities were limited after the Communists took power.
• When the Chinese government cracked the door open to foreign investment in the late 1970s, Siemens was one of the first companies to take advantage of the opening.
• It wasn't long before Siemens was producing components for telecommunications infrastructure, switching gear, etc.