Does anyone have any speculation about why this is happening?
What I'm about to say is not speculation. It's the truth -
Certain companies have convinced themselves that not only can they move manufacturing to China, they can also move product development engineering (including, shockingly to me, electrical engineering).
A CEO of a company I worked for told a packed audience of software, electrical, and mechanical engineers (many of us in the industry for 20+ years) that China produces over a million "qualified", "well trained" engineers a year. He told us it'd be crazy for him not to move engineering overseas, since that's where the "talent" is. You could have heard a pin drop. That's how shocked we were.
Anyone who's studied China carefully will know that the Chinese Academy of Science (CAS) is struggling for credibility. You will also know that the Chinese university system that pumps out thousands of "qualified", "well trained" PhD degreed engineers has a serious problem. 98 percent of the PhD thesis are either straight rip-offs of Western thesis, or contend things that are not reproducible by any known means.
The company I worked for generates north of 3 billion dollars a year and has a sky high stock valuation. They acquire high-tech companies, gut them, send the remaining manufacturing and engineering to China, and leave small staffs of engineers in the US to keep existing products alive.
In the case of the original company I worked for, pre-acquisition we numbered 4,500+ employees and 900+ engineers (mechanical, electrical, software) world wide and were number one in four market segments and successfully competed against two other equally sized US companies. We generated over a billion dollars a year in revenue. Four years after the acquisition, there are less than 800 employees with fewer than 150 engineers, and that's after a huge build-up in it's China engineering and manufacturing operations. Revenues in the original company have fallen by 50 percent, and the take-over company hides this fact through acquiring other companies and puts them under the original companies "umbrella" operations.
These kinds of take-over companies are called asset strippers, or in Wall Street parlance; roll-up companies. They can be worse than private equity firms.
Here is an example of how electrical engineering jobs are lost to China. The company later acquired a highly specialized electronics firm. Their products require a very careful manufacturing technique, overseen by electrical engineers, to meet very high product design specs. Within 6 months, the company had taken the process to China and tried to train four different Chinese companies before they found one that might eventually meet the specs. The US-based staff were immediately terminated and the Chinese built products, even today, can not meet the original design specifications. In "normal" times, this might be considered treasonous activity on the part of the company as defense contractors used to rely on the technologies to "keep America safe." Knowing that engineering and manufacturing were shifted to China, defense contractors had no choice but to buy from someone else. The irony was that the President of the company that moved these operations to China claimed on national media that defense contractor sales had dropped dramatically and, therefore, he needed to lay off even more engineers as a result.
In another case, the company moved certain electrical re-engineering functions to it's China operations. In the US it took only 5 employees to keep the operations functioning correctly. I recently learned that they had hired 37 Chinese to implement the electrical re-engineering function and were intending on hiring more. The reason? The Chinese could _not_ do the job. The 5 US-based engineers had been laid off and there is no "going back."
As to why a company would gut it's US engineering operations and hire in China when the Chinese are clearly incapable of doing the job, all I can say is take a very close look at the stock option sales on the NYSE for corporate officers. The companies may look like they're doing well on the outside, but on the inside there is nothing left but a hollow shell. Yes, reality will set in. Eventually. But until then, certain corporate officers are able to sell their options at HUGE valuation increases and it won't matter to them when the House of Cards comes tumbling down. All they feel they need to do is acquire more companies to keep their scheme going and to keep themselves in stock option sales of hundreds of millions of dollars a year.
True story.
