Mergers, buy outs, reorganizations, job cutbacks, and
a volatile stock market. Sound familiar? It should.
It's the same scenario portrayed in the last two DN
100 reports. And the picture hadn't changed all that
much as we tallied the results for this year's Design
News ranking of the Top 100 Original Equipment
Manufacturing (OEM) employers of engineers--with one
Sitting at the top of this year's Top 10 list is Lockheed
Martin with a whopping 50,000 engineers on board. That's
nearly 20,000 more engineers than are working at General
Motors, last year's biggest employer.
Actually, this news should come as little surprise
to Design News readers. We predicted this could
happen last year following the announcement of the merger
of Lockheed, which placed number 10 on the list, and
Martin Marietta, which held the lofty number 2 spot.
However, from a job standpoint, beware. The nation's
largest defense contractor recently announced plans
to eliminate another 15,000 jobs and close 12 plants
and laboratories over the next two years.
But those layoffs might not mean much, at least as
far as the number-one slot goes. Lockheed recently reached
a memorandum of understanding to buy General Electric's
jet-engine-control manufacturing and service business.
The GE unit makes the digital-electronic equipment that
regulates many of GE's commercial and military aircraft
The good and the bad. In spite of
the similarities found in the last three surveys, this
year's results from the country's manufacturing giants
provide some interesting information for engineers.
And, like last year's report, there's good news and
bad. Let's begin this report with the good.
According to The Forbes 500, median profits
per employee rose 61% last year, while sales per employee
increased 24%. In other words, U.S. industry continues
to produce more and earn more.
With one exception, this year's Design News
survey nearly matches the Forbes results. The
Top 100 companies had combined sales of $1.1 trillion
last year, down $302 billion from 1993. The
Top 10, on the other hand, reported sales of $405 billion,
$89 billion more than the previous year.
Jump in jobs. Engineering employment
set a new record in the final quarter of 1994 with 1.9
million engineers on the job, according to the American
Association of Engineering Societies (AAES). As a result,
the unemployment rate for engineering professionals
dropped to 2.6% from its unprecedented high of 4% just
a year ago.
The Design News Top 100 survey reveals a similar
trend. Last year, the Top 100 employers reported they
had 554,764 engineers on the job. This year, the number
has grown to 561,390. The 6,626 jump in jobs is a far
cry from 1994, which recorded a 2,850 decrease in the
This year's top employer is greater than the sum of
its parts. Lockheed Martin's 50,000 engineers compares
with 15,500 for Lockheed and 28,000 for Martin Marietta
last year, a gain of 6,500 engineers. Other Top 100
OEMs that added extensively to the engineering population:
AT&T Bell Laboratories, with 30,000 engineers, up
17,000; Raytheon, with 15,000 engineers, up more than
6,000; and Loral Corp. (13,000 engineers) and Northern
Telecom (5,000 engineers), both up 2,000.
Despite this rosy picture, AAES warns that future trends
in engineering remain uncertain. Early 1995 data suggest
that the size of the workforce has slipped back under
the 1.9 million threshold, and recent layoffs and cutbacks
by organizations like NASA and Lockheed Martin contribute
to the mixed outlook.
The picture appears to be even bleaker for older electrical,
electronics, and computer engineers. Based on a survey
released recently by the Institute of Electrical and
Electronics Engineers (IEEE), nearly 6% of members in
their 50s report they are involuntarily unemployed,
compared to no more the 2% for all other age groups.
Pay improves--sort of. On the salary
side, the Engineering Workforce Commission of AAES has
found that overall salaries of engineers have risen
an average of just 1.2% over the past year. While median
starting salaries are up 1.3% from 1994 levels, salaries
of engineers with 12-23 years of experience are actually
lower than they were a year ago.
Design News readers should be encouraged,
however, since the commission notes that engineers working
in manufacturing industries did well in the past year
(a rise in median income of 5.1%), while their non-manufacturing
counterparts' wages decreased by 4.5%.
The Design News Top 100 survey adds another
pleasant note to the AAES findings when it comes to
OEMs. Of those companies willing to divulge their pay
scales, 46% revealed that entry-level salaries range
between $30,000 and $40,000 a year, up 9% from last
year. A total of 8% said their starting salaries range
from $40,000 to $45,000, up 3% from 1994. The 1% who
reported that new recruits earn only $25,000 to $30,000
dropped 4% from the previous year.
For those engineers on the job five or more years,
33% of the Top 100 companies reporting said that salaries
range from $40,000 to $50,000 annually, up an average
of only 1% from 1994. However, 18% reported that salaries
for longer-term engineers in the $45,000 to $50,000
pay range increased 5%, while those making only $40,000
to $45,000 dropped 4%. Also making gains, engineers
earning $50,000 to 55,000, up 5%; those in the $55,000
to $60,000 range, up 1%; and those in the over $60,000
range, up 2%.
Firms that reported paying more for both entry-level
engineers and those on the job five or more years also
increased somewhat from last year's survey. If you would
like to start your career at a salary of $45,000 to
$50,000, FMC would be the place to visit. In the $40,000
to $45,000 range, check out DuPont, Ford, Los Alamos
Laboratories, National Semiconductor, Polaroid, Qualcomm,
Sandia National Laboratories, or Teledyne. For those
engineers who have more experience and would like to
make $50,000 to $60,000 a year, the companies to contact
would include Ford, NASA, Sandia, Seagate Technology,
Although the merger mania and downsizing shuffles have
diminished somewhat, they remained active enough to
create some major shakeups again among this year's Design
News Top 10 list. Lockheed Martin aside, it's not
hard to see why AT&T, with 17,000 more engineers
on the job this year, jumped from the number 16 spot
last year to number 3 on this year's list. However,
Chief Executive Robert Allen announced in late September
that the electronics giant will divide itself into three
independent, publicly traded communications companies.
What this means on the job front remains to be seen.
On the downside, Boeing slipped six places from number
4 to number 10. With the exception of Motorola, which
held down the number 9 spot, all other Top 10 club members
merely shuffled up or down one or two slots.
Some equally revealing ups and downs also wove their
way in and out of the remainder of the Top 100 companies.
After sliding from number 4 in 1992 to number 17 last
year, IBM moved up one slot in this year's survey to
number 16. Having recently brought prominent software
maker Lotus Development Corp. into its fold, the computer
giant could once again move into the Top 10 next year.
The biggest move upward, however, is reserved for Silicon
Graphics, leaping from number 75 to number 54. This
advance up the Top 100 ladder was closely followed by
Northern Telecom (46 in 1994 to 28 in 1995) and Tektronix
(93 in 1994 to 75 in 1995), both moving up 18 rungs.
On the down side of the coin, Cooper Industries took
a nose dive from number 33 to number 59, a drop of 26
places. It was followed by Asea Brown Boveri, which
plunged 21 spots, and Ball Aerospace, with an 18-point
Recent news from Wall Street indicates that investors
are increasing their stakes in high-technology companies.
One reason seems to be that the U.S. high-tech industry
is quickly learning to make the most of R&D dollars.
As part of its 1995 Product Development Benchmarking
Study, management consulting firm Pittiglio, Rabin,
Todd & McGrath (PRTM), using its R&D Effectiveness
Index, determined that U.S. industry's overall return
on R&D investment has increased 84% since 1992.
In 1992, the average index was .25, meaning that for
every $1 of R&D investment, companies received a
return of 25 cents in new products. In 1993, that return
rose to 31 cents, and in 1994, to 46 cents. With $100
billion spent on R&D in the U.S. in 1994, those
index figures translate to a $21 billion improvement
This picture becomes even more encouraging considering
that the National Science Foundation has reported that
industry R&D spending has increased only 2% since
1993. "The fact that U.S. companies were still
able to see an increased return of $21 billion shows
that they got much more from the same level of investment,"
says PRTM Managing Director Michael E. McGrath. One
of the major reasons for this, McGrath states: cross-functional
High on the list of companies that make good use of
those R&D dollars are those high-tech firms that
produce electronic marvels. Motorola, which occupies
the ninth spot on the Top 100 list, posted record earnings
in the third quarter of this year.
Not to be outdone, rival Texas Instruments, number
20 on the Top 100 tally, reported a 55% rise in net
income for the third quarter. TI's results continue
to be driven by its semiconductor business, which accounts
for about three quarters of its revenue and more than
90% of its profit. Moreover, William Aylesworth, TI's
chief financial officer, predicts that sales for its
key chips will continue to grow, faster than the semiconductor
business as a whole next year.
Intel, the number 19 company on the Top 100 chart,
could be raking in the highest corporate profits in
the world within several years, according to The
Wall Street Journal. Intel Chairman Gordon Moore
thinks he knows why. Moore is famous in the industry
for his observation that the performance of microchips
doubles every 18 months with no increase in price. "Moore's
law" continues to drive down the cost of technology,
spreading the use of products that were once affordable
by only a few. "It looks like we will stay on the
same trend we've been on for another decade," Moore
Hewlett-Packard, already among the fastest-growing
companies and number 4 on the Top 100 list, should also
benefit from this surge in sales. Its revenues have
exploded from $6.5 billion in 1985 to $25 billion in
1994. Richard Sevcik, general manager of H-P's systems
technology group, forecasts that consumers and workers
will, by the next decade, each own three or four sub-$100
electronic devices for work. What does this rosy picture
portray for engineering opportunities? According to
the Top 100 survey, it's "very good" at HP,
Motorola, and TI, and "good" at Intel. Even
IBM says its hiring outlook is "good," as
does Apple Computer. On a more subdued note, job prospects
at Unisys are only "average," and Digital
Equipment's are "fair."
Automotive slips a gear. Last year
at this time, the automotive industry seemed poised
to set an all-time annual sales record in 1995 of more
than 16 million units. However, after a brisk start
for the 1995 model year, summer sales sagged. Even many
incentives to get cars off the dealers' lots late last
summer failed to spur much buyer interest. As a result,
analysts say the Big Three automakers are expected to
post sharply lower combined earnings of about $1.9 billion
for the third quarter, down from the year-earlier $2.3
billion. With the '96 models already at the dealers,
it appears that '95 sales will fall below the 15-million-plus
range of last year.
Looking ahead, if the economy continues to grow at
a steady pace, and '96 models like the all-new Ford
Taurus strike the buyer's fancy, automotive sales could
shoot up again. Even General Motors might set its sights
higher following J.D. Power & Associates' recent
announcement in its Initial Quality Study that GM builds
"the most defect-free cars of the Big Three."
Ford's formerly stellar quality numbers have deteriorated,
the report also notes.
What does this mean from the standpoint of jobs for
engineers? For one thing, if sales continue to sag,
don't look for hiring flags to be in abundance at any
of the Big Three companies. And it seems doubtful that
GM's quality coup over Ford will translate into engineering
jobs. In fact, by the end of this decade, GM plans to
cut about 25% from the cost of developing new vehicles.
The reduction, according to Arvin Mueller, GM's vice
president and group executive for North American vehicle
development and technical operations, should enable
the company to eliminate about 5,000 of the 30,000 engineers
working on vehicle development. This applies to jobs
at both the automaker and at contract engineering companies
that GM hires.
If there is any consolation, at least for engineers
working in the auto industry, consumer satisfaction
with American cars and vans has grown since last year,
while satisfaction with Japanese auto brands has declined.
This word comes from the American Society for Quality
Control in its most recent Customer Satisfaction Index.
Ironically, the proclamation came at just about the
same time that Honda announced it had produced its one
millionth Civic in the U.S. Still, the quality report
could turn buyers away from foreign brands and back
to U.S. models.
A mixed bag. You already know how