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Topic Title: The Effect of the Credit Crunch on Engineering
Topic Summary: Has the credit crunch affected you?
Created On: 13 November 2008 05:12 PM
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 13 November 2008 05:12 PM
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DavidLenaghan

Posts: 182
Joined: 16 January 2002

Dear all,

Having recently heard about British Telecom wanting to shed 10000 jobs before March 2009 I am left wondering what the effect of a prolonged recession will be over the next 18 to 24 months.

http://news.bbc.co.uk/1/hi/business/7726174.stm

Here are my predictions.

    Increases in late payment of invoices.

    Companies stop or drastically reduce recruitment.

    Unemployment goes up.

    Research and training budgets are cut.

    More university students opt to do further education such as PhD and MSc.

    Demand for electricity and gas goes down.



I don't think it is all bad news though.


    Less CO2 will be generated when economies contract and large numbers of businesses go out of business.

    With house prices falling it will mean that people with modest income can afford to get on the first rung of the property ladder without taking out a ridiculously large mortgage.

    With interest rates going down those with a variable rate should be better of when they see reduced monthly payments.


Any other thoughts from anyone?

-------------------------
David Lenaghan
 13 November 2008 05:22 PM
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Avatar for OMS.
OMS

Posts: 19545
Joined: 23 March 2004

Less CO2 will be generated when economies contract and large numbers of businesses go out of business.


But less money to expend on renewables and passive solutions so the same emmission producing technology exists for longer ie people won't change an old inefficient boiler for a more efficient one or even for a heat pump for example.

When you are on the breadline you are not going to invest in aspirational toys like domestic windmills or solar collectors.

You are also more likley to keep the old oil burner instaed of changing for a newer more efficient car



Regards

OMS

-------------------------
Failure is always an option
 13 November 2008 06:01 PM
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mbirdi

Posts: 1907
Joined: 13 June 2005

Originally posted by: DavidLenaghan
More university students opt to do further education such as PhD and MSc.

This might have been so in the past when education was free, but I can't see debt-ridden graduates wanting to worsen their situation by undertaking further studies.

On the other hand Scotland, with their free education system might be booming.

Edited: 13 November 2008 at 06:03 PM by mbirdi
 17 November 2008 11:58 AM
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sjeapes

Posts: 12
Joined: 15 November 2002

Originally posted by: DavidLenaghan

With house prices falling it will mean that people with modest income can afford to get on the first rung of the property ladder without taking out a ridiculously large mortgage.

With interest rates going down those with a variable rate should be better of when they see reduced monthly payments.


The problem is that at the moment banks are only offering lower rates to people with 25% or greater equity in their home.
House prices are still high compared to income so most first time buyers won't have this size of deposit and won't get a cheap mortgage.
 18 November 2008 03:33 PM
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saridgway

Posts: 148
Joined: 07 May 2002

Originally posted by: DavidLenaghan
Any other thoughts from anyone?


A big concern is yet more depletion of pension schemes and investments - particularly for those close to retirement and not fortunate enough to be in final salary schemes.

Looking on the brighter side, maybe companies (and individuals for that matter, despite best efforts of banks to persuade them otherwise) will have learned that having "inefficient cash" isn't such a bad thing.
(With interest rates at present levels, even companies with "mountains" of cash would still "need engineers"!).

I agree with the point made by OMS above regarding renewables. If I had plenty of cash to spend I might well be considering solar water heating, PV, heat pumps and the like. But in present circumstances it is out of the question.

Here in the northwest, there are some engineering companies still doing well, but in employment terms they represent mere vestiges of what we had a couple of decades ago. The universities seem to be booming though - particularly life sciences (and they still seem to have decent pension schemes!). So I wouldn't be surprised if young people with aspirations for involvement in cutting edge technology opted to stay in university - particularly in areas of research where financial support is available. I see Obama wants to put more into science research - so that might help counteract any negative effects of the so called crunch.

Now, I'm no economist, but I wonder how other people feel about the measures being adopted by governments to solve the current problems. If the fuse kept on blowing in your TV, would you fit a bigger fuse?

-------------------------
Steve Ridgway MIET

Edited: 19 November 2008 at 12:11 PM by saridgway
 19 November 2008 12:50 PM
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iie630326

Posts: 62
Joined: 03 May 2006

Originally posted by: saridgway

If the fuse kept on blowing in your TV, would you fit a bigger fuse?


I did do this once, accidently! The TV was beyond economic repair.

It was many years before the economic situation improved so I could buy another one

-------------------------

Yours

Robert Miles, BSc(Hons), IEng, MIET
 20 November 2008 02:59 PM
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jencam

Posts: 608
Joined: 06 May 2007

Originally posted by: DavidLenaghan

Research and training budgets are cut.


There is an economic theory that this is absolutely criminal to do in a time of a recession. The theory states that an ingredient of a recession is lack of demand for existing products and services, and the best way to end the recession is to create new goods that everybody wants to buy. This of course requires more investment in R&D. Cutting R&D budgets may be tempting and considered conventional industrial practice in a time of recession, but companies that fail to innovate almost always lose sales and market share.

One product that sold well in the early 1990s recession was game consoles.

More university students opt to do further education such as PhD and MSc.


A recession could invoke a sea change in attitudes towards education because it is likely that the differential will narrow between people with good qualifications and those without when it comes to careers and earning money. I can see a decline in the number of people studying degrees and an increase in self education in topics that are useful but not necessarily featured in existing institutionalised education. People will increasingly question the point of paying thousands of pounds on the overheads of universities for an education that is third rate and out of date, when they can get all the information and knowledge they need off the internet. I also suspect there will be a revival of traditional craft skills.

Demand for electricity and gas goes down.


Not necessarily. Average domestic utility bills rise (adjusted for inflation) in times of higher unemployment.
 25 November 2008 10:46 AM
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mstaple

Posts: 324
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The credit crunch has affected me as I'm going to be redundant next year.

Our manufacturing site, which has been here over 100 years, is shutting down completely so I need a new job.

Unfortunately it seems every other manufacturing plant in the area is also either shutting down or reducing head count.

I'm now worried that there will be no jobs for engineers locally or in fact nationaly.

It's about time we stopped shutting down manufacturing to make way for housing and instead try to make this an attractive country for companies to work in.

At the moment I think the outlook is very poor.
 25 November 2008 01:02 PM
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hbuckeldee

Posts: 3
Joined: 25 July 2008

Over a 30 year career my job has been made redundant 5 times, and I have had at least 3 changes in direction. I think you have to accept that nothing stays the same for long, and life would be boring if it did.
I was out of real work during the last recession for 3 years. I decided to take a F.E. teacher training course, which I almost completed before someone offered me a job back in industry. Fifteen years later I have not regretted going back into industry, despite being made redundant a few times.
Funny thing is my current company has more work than it can handle. So what recession.
 30 November 2008 05:48 PM
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kptibbetts

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Personally I have lost several thousand pounds in ivestments and in the property we own. But for me, the recession/credit crunch has not had a major impact as I still have a job, I feel for those who have lost their jobs through no fault of their own.
My predictions?

1. As interest rates fall people in jobs will spend again as returns on savings held in banks etc. will be very small.
2. As conventional savings rates fall people will start to look more at the stock market again so FTSE could makes small recovery mid 2009?
3. Coffee shops and low price shops continue to do well. Towns and cities are still busy, people are just spending a little less.
4. In developed economies our group emotions and state of mind will go down then up then stabilise if no more major problems. I suspect our confidence and spending will reflect this mood swing as we adapt.
5. There will be a pent up demand for big ticket items like cars so when people adapt they will buy again and the market will then boom for a time before returning to stability.
6. The strength of banking/finance has inflated the value of the £ for years, maybe manufacturing in UK can take advantage of the low £ in some markets, e.g. defence, education, electronics, components.
7. UK Population could reduce as people go where the money is and people think twice before having many children. (as long as govt does not change the benefits to compensate)
8.Lower polution through lower consumption generally.
9. Those with fixed rate savings should make some real gains as inflation falls.
10. Others have predicted worldwide unrest, agression, mass migrations. I hope the world economies dont degenerate to this.
11. Maybe society becomes less materialistic and the whole world moves on....
 30 November 2008 05:56 PM
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TeesdaleSpark

Posts: 660
Joined: 12 November 2004

The international company I work for has stopped any training but this doesn't affect me as I never got any anyway. They have also asked people to work unpaid overtime which I am reluctant to do as during the good times my unpaid overtime went unrewarded when it came to pay rise time.
 04 December 2008 04:06 PM
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jencam

Posts: 608
Joined: 06 May 2007

Would your company be interested in paying its employees partially in a local currency rather than making them redundant? What I mean is something like paying them 90% of their salary in Sterling and 10% in a local currency. If the recession worsens then the company could give its employees the option of being paid a higher proportion of their salary in a local currency rather than being fired.

Local currencies currently exist in Totnes and Lewes.

http://totnes.transitionnetwork.org
http://en.wikipedia.org/wiki/Totnes_pound
http://thelewespound.org
 06 December 2008 05:03 PM
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saridgway

Posts: 148
Joined: 07 May 2002

Originally posted by: iie630326

Originally posted by: saridgway



If the fuse kept on blowing in your TV, would you fit a bigger fuse?




I did do this once, accidently! The TV was beyond economic repair.


So did I, back in the early 1980s. In fact that was probably what brought the analogy to mind. In my case, the victim was not a TV but a miniMoog synthesizer. I was more fortunate in that I was able to repair the resultant damage without too much difficulty or expense (analogue technology, through-hole components, even circuit diagrams in the Owner's Manual!).

The above isn't entirely irrelevant in the context of this thread. One small electronics design and manufacturing company based not far from here and apparently doing quite well at the moment still uses mainly analogue technology and (according to their web site) only through-hole components. No doubt their success is due to a variety of factors (customers with cash, niche products, solid reputation built over decades etc.), but I'd like to think that one factor is that they make stuff that can actually be (economically) mended!

Judging by the rate at which we chuck things away at present, you wouldn't think there was a credit crunch - but if it goes on for a while maybe we'll see more "make do and mend"?

-------------------------
Steve Ridgway MIET

Edited: 07 December 2008 at 11:14 AM by saridgway
 08 December 2008 01:21 PM
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amillar

Posts: 1918
Joined: 28 May 2002

Originally posted by: saridgway
The above isn't entirely irrelevant in the context of this thread. One small electronics design and manufacturing company based not far from here and apparently doing quite well at the moment still uses mainly analogue technology and (according to their web site) only through-hole components. No doubt their success is due to a variety of factors (customers with cash, niche products, solid reputation built over decades etc.), but I'd like to think that one factor is that they make stuff that can actually be (economically) mended!

As it happens we are just in the process of replacing our analogue (indeed transistor) through-hole technology with digital SM, partly because we just can't buy the bits any more. At the moment pretty much everything we've made for the last thirty years or so is still out there working using its original PCBs, it will be interesting to see what happens now.

-------------------------
Andy Millar CEng MIET CMgr MCMI

http://www.linkedin.com/in/millarandy

"The aim of argument, or of discussion, should not be victory, but progress." Joseph Joubert
 08 December 2008 03:13 PM
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saridgway

Posts: 148
Joined: 07 May 2002

Andy,

Good point. It's a pain for small manufacturers without SMT facilities that so many components are only produced in SM packages these days. That's "progress", I guess.

-------------------------
Steve Ridgway MIET
 09 December 2008 08:34 PM
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sbdesign

Posts: 59
Joined: 08 November 2007

Assemblies with SMD can be more expensive to repair if the smaller SMD packages are chosen, but the larger packages are much less troublesome. For example, two pad components which are approx. 1206 size or larger seem to be about as difficult to remove as quarter watt through hole components. Fine pitch ICs can slow down development, assembly and repairs. I'd expect that the failure rate during pick/place/reflow would be higher with fine pitch devices, due to being more difficult to align/paste/inspect etc. There's also the fact that with fine pitch devices, solder blobs and other conductive contaminants (water, dust, corrosion etc.) are more likely to cause pad to pad shorts or leakage... i.e. reliability reduced?

On the subject of the bank problems, there was the old joke about paying people to dig holes and then fill them in to demonstrate the false economy of spending for spending's sake.

Edited: 09 December 2008 at 08:46 PM by sbdesign
 14 March 2009 05:40 PM
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DavidLenaghan

Posts: 182
Joined: 16 January 2002

Thanks for all the comments. It is good to see that I have stimulated some debate on this. One thing not directly commented on is the rate of unemployment going up. There seems to be some interesting trends here. In the finance area of the city it seems to be the case that those with highly developed matchs skills who have found themselves unemployed are moving towards teaching. I saw it reported on the BBC recently that there is a shortage of Maths teachers and professionals are being fast tracked through PGCEs in 6 months rather than a year as it normally takes. Is there anyone reading this forum that has taken this path?

Will we see a large injection of professionals from the city into the teaching community over the next year?

Will this have a positive or negative effect on science and technology education in schools?

Personally I think it has to be a good thing but I can see that there will be some friction between teachers who have been teaching for many years and know-it-alls from the city coming through. On the other side of the coin there will be a bit of a culture shock for those in the city who are used to operating in a particular way who will find that the classroom is quite a tough environment to operate in.

Anyway let the discussion continue......

-------------------------
David Lenaghan
 16 March 2009 02:50 PM
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mstaple

Posts: 324
Joined: 23 July 2004

I think there is a large lag in the system between company x announcing they are making redundancies and actually implementing those redundancies so a lot of people are still employed. There is also a large reduction in vacancies (anyone notice the job pages have declined in our magazine) so unemployment is yet to peak I think.

I think there will be a rise in the number of professionals within teaching but only to ride out the storm. In the long run I can't see the poor salary and behaviour of children/parents keeping professionals in the job once other opportunities start appearing again.

Temporarily it may be a good thing for teaching (if they are trained properly) but the mass exodus may be more damaging later.
 17 March 2009 12:39 PM
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sbdesign

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A related article is in the Engineer magazine.

http://www.theengineer.co.uk/A.../Industrial+action.htm
 01 April 2009 09:26 PM
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sbdesign

Posts: 59
Joined: 08 November 2007

Although they relate to more than just the current credit crunch, these two articles in The Engineer magazine highlight a part of the problem for engineering.

http://www.theengineer.co.uk/A...&dep=webops&dte=010409

http://www.theengineer.co.uk/A...7+engineering+plea.htm


The report suggests that government utilisation of the country's engineering base would give Britain smarter solutions for problems such as energy security, climate change and the economic downturn.
Statistics

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