China Engineers Its Next Great Leap

Milwaukee Journal-Sentinel ^ | 12/31/03 | John Schmid

[ninenot]

China engineers its next great leap

By JOHN SCHMID
jschmid@journalsentinel.com

Posted: Dec. 30, 2003

Last of a four-part series: Made in China

Beijing - While the United States focuses on China's export prowess and cheap labor, Beijing is investing in a new generation of sophisticated "knowledge workers" to carry the nation to the next stage of its industrial revolution.

Made in China

Photo/Gary Porter

Office towers glow in the night in a view from atop the Di Wang Center, the tallest building in downtown Shenzhen, China. Many of the offices are occupied by China's new generation of "knowledge workers." The country wants to outgrow its reputation for copying things and move toward industrial self-sufficiency.

More photos

The New Industrial Revolution

Manufacturing,
one of the staples of Wisconsin's economy, is being reshaped by forces originating halfway around the world. As China races into a leading role in the global economy, the effect on families, companies and communities here is profound.

THE SERIES:

DEC. 28: More and more companies are turning to China to produce their goods as China becomes "the world's factory floor."

DEC. 29: When China Inc. targets a particular segment of business, its combination of cheap labor and entrepreneurial hustle can virtually dominate an industry overnight.

DEC. 30: We used to build factories to last 100 years. What happens when a huge one doesn't last five?

DEC. 31: China is taking big strides to build beyond its manufacturing base. And in some key areas, the United States already lags.

About the logo

Gary Porter's
Photo Essays

Journal Sentinel photojournalist Gary Porter narrates slide shows of photos taken for this project in China and Wisconsin.
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Graphic: Dam construction: Engineers in high places
Graphic: Education: In China, ranks of educated workers swell
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Dam construction: Engineers in high places

Photo/Gary Porter

Bicycles are the most popular way to get around campus at Tsinghua University in Beijing. Tsinghua, founded in 1911, has a motto: "To act is better than to speak." At Tsinghua, considered by some the Chinese equivalent of the prestigious Massachusetts Institute of Technology, 100% of graduates are placed in jobs. Other top Chinese schools boast similar placement rates.

We're teaching our students to satisfy the needs of the global
economy.

- Zhang Yao Xue,
who runs the nation's university system as director general at the Ministry of Education.

Photo/Gary Porter

Freshman industrial engineering student Betty Cheng of Ecuador works on an experiment in a chemistry lab at the Milwaukee School of Engineering. MSOE reports placing 80% of its graduates in jobs six months after graduation - down from 98% just a few years ago. The University of Wisconsin-Madison also has seen a significant drop in job placement.

The nation's 1,300 schools of higher education are critical to China's grand social engineering plan to lift itself up by first becoming the world's manufacturing base, then its knowledge base.

Already, China has pulled way ahead of the U.S. and the rest of the world by one key measure.

China graduates in excess of three times more engineers - electrical, industrial, bio-chemical, semiconductor, mechanical, even power generation - with bachelor's degrees than the U.S. university system.

"We're not creating enough in math and science and engineering," said Don Davis, chairman and chief executive of Rockwell Automation Inc., a manufacturer that has remade itself into a multinational corporation based on knowledge work. "And in my mind, that's an enormous problem."

A wave of young software experts, industrial engineers and bio-technology graduates has flowed out of China's fast-growing, industrial-strength university system and assumed key posts in China's ascendant society.

The exponential increase in applied-science graduates mirrors the nation's overall export expansion. Around the time that engineering graduates peaked in the U.S. in 1983, China was just getting going on its "Four Modernizations" - a movement launched 25 years ago this month to promote four key sectors of the economy: science and technology; agriculture; industry; and the military.

Today, the result lives up to its original billing as "The Second Revolution."

China consistently has graduated more engineers than the U.S., Japan and Germany combined every year since 1997, according to figures collected by the National Science Foundation in Washington.

In the U.S., the number of engineering graduates has declined almost yearly from 77,572 at its mid-'80s peak to 59,536 in 2000.

If China has more than three times as many industrial-technology graduates, China theoretically also has more than three times as many folks to percolate ideas - or possibly even a three-times better chance of thinking up the next "killer application."

Intel Corp. Chairman Andy Grove marveled that the lopsided trend has caused remarkably little debate in the U.S.

"We haven't even articulated the problem," Grove said.

As China becomes a low-wage global manufacturing base, and other so-called "developing countries" compete for the same mass-production work, wealthy societies that prospered as industrial powers - the U.S. foremost among them - find themselves in the throes of a radical restructuring.

Just as the industrial society replaced the agricultural society of the 19th century, the knowledge-based society is edging out the industrial society.

As it evolves, the labor force changes. Creativity and inventiveness drive the economy. In the parlance of the times, "knowledge capital" becomes key.

"This used to take hundreds of years," said labor force expert Paul Strassmann. "Now it's instant and visible."

Planting 'seed corn'

U.S. business leaders call for new education initiative

China's labor force is changing, as well.

"China is catching up, not because of cheap labor, but because they are getting very smart," Strassmann said.

The only realistic public-policy solution is to emulate China and increase spending on education and retraining, Grove and other business leaders argue.

In a major speech in October beamed via satellite to software executives in Washington, Grove issued a strident plea for a new education initiative. Speaking from California, the high-tech pioneer proposed taking 1% to 2% of U.S. agricultural subsidies and spending them instead on university grants.

If anything, statehouse lawmakers are going in the other direction as the pressure of high deficits forces them to cut education budgets. In the last 10 years, Wisconsin has devoted a shrinking share of its tax revenue to university education, said John Stott of the state Legislative Fiscal Bureau.

Stanley V. Jaskolski, dean of Marquette University's College of Engineering, said the U.S. is producing fewer innovators and new ideas - what Jaskolski calls "seed corn."

"We have gotten somewhat complacent," Jaskolski said.

But the "weightless" digital economy leaves little room for complacency.

"We're dealing here with some very powerful forces," said Strassmann, an engineer, consultant, author and former adviser to the U.S. Department of Defense and NASA.

"We're living in the most revolutionary period in human history, ever, in terms of magnitude and speed. Nothing in human history is comparable to the present."

'Symbol manipulators'

As labor force evolves, split in society feared

One of the most colorful descriptions of the modern knowledge worker comes from Robert B. Reich, an economics professor at Brandeis University and former U.S. labor secretary. He calls them "symbol manipulators."

These are educated people who work with speech, numbers and icons, often in abstract ways. They invent markets, niches, products, designs and services. Their ranks include investment bankers, marketers, hedge-fund managers, consultants, merger-and-acquisition lawyers, industrial engineers and software programmers. These people often train themselves to stay ahead of the knowledge curve.

According to Reich, they are the elite who constitute about 20% of the U.S. population. In the last 15 years, they have seen their inflation-adjusted incomes increase 9%.

The other 80% of the work force includes people with more conventional jobs, along with lower-skilled workers who gravitate toward more modest or even minimum wages.

Reich reckons that that 80% has seen its inflation-adjusted income decrease 11% in the past 15 years.

The former U.S. labor secretary, who is finishing a book on post-industrial economies, sees a long-term risk if the split between the top 20% and the bottom 80% widens. The nation could cease to be a single cohesive society, he warns.

Alan Greenspan, who is chairman of the Federal Reserve Board, wants America to move decisively toward "an economy of ideas."

"The economy is becoming increasingly conceptual," Greenspan testified in a July Senate hearing. "I think that's good, not bad, for the economy as a whole. But if you're a maker of stuff, it isn't." The comment triggered a barrage of criticism from congressmen and business groups in states that make "stuff."

But the Chinese, while concentrating for now on making "stuff," likely would have embraced Greenspan's comment.

Western experts note that China for centuries has valued education and culture. The country prides itself on inventing the printing press, paper and rocketry.

China aims to outgrow its reputation for copying things, as it moves toward industrial self-sufficiency and then shows the world that its engineers can innovate with the U.S., Japan and Germany.

Investing in education

China triples college enrollment in five years

Beijing hews to a market-driven education policy, one that unabashedly aligns the curriculum with supply-and-demand economics. It compels its professors regularly to step outside the halls of academia and work directly inside factories, improving the plants' quality and productivity.

"We're teaching our students to satisfy the needs of the global economy," said Zhang Yao Xue, who runs the nation's university system as director general at the Ministry of Education.

Some 60% of all students are enrolled in science and engineering disciplines, he said.

"This mandate is done by the market," said Zhang, smiling.

Zhang sipped flower tea in a conference room at the ministry while going through a roster of government grants, science foundations, science parks and industry zones.

The goal is "to transfer the research into the market," he explained. "We established 36 schools or institutes for the life sciences, for bio-tech, medicine and agriculture."

The momentum reflects considerable spending on education. China has 17 million students enrolled in its colleges and universities - including graduate and undergraduate, full-time and part-time - up from 5 million students five years ago.

"That's more than the U.S.," Zhang said.

The United States has 15.3 million students enrolled in colleges and universities, both public and private, according to the latest figures from the U.S. Department of Education.

"We also need the knowledge workers," said Zhang, who keeps a post as computer-science professor at Beijing's elite Tsinghua University.

China nearly has caught up with the U.S. on the number of master's and doctoral degrees awarded annually in engineering, according to figures from both governments. China also is making huge strides in other science and technology disciplines. And at U.S. universities, there are more Chinese students earning doctorates than students from any other foreign country, according to the National Science Foundation.

University programs, Zhang explains, routinely are judged by their ability to place graduates into jobs.

Tsinghua, considered by some the Chinese equivalent of the prestigious Massachusetts Institute of Technology, boasts a 100% placement rate for its graduates, school officials said.

It's the same story at the respected Shanghai Jiao Tong University, which places 97% of its students: The other 3% don't get jobs because they go on to earn additional degrees, according to the school's placement center.

At the Milwaukee School of Engineering, about 80% of May's MSOE engineering graduates had landed jobs six months later, said Kenneth McAteer, vice president of operations and a placement associate. A few years ago the placement rate was at 98%, he said. Corporate downsizing has left "a lot of experienced engineers out there who are competing with the college graduates," McAteer said.

The Milwaukee School of Engineering briefly considered a partnership arrangement with Shanghai Jiao Tong University in the mid-'90s. It passed on the chance, however, in order to manage its other sister-university partnerships abroad.

At the University of Wisconsin-Madison, which has the state's largest engineering school, only about half of the December 2002 and May 2003 engineering graduates had job offers by early May. "That's a huge decline," said Sandra Arnn, assistant dean of the university's College of Engineering and director of engineering career services.

Nationally, the placement average in China lies below 100%, but not due to a weak economy. The Ministry of Education said the system grew so quickly that it hiccuped in absorbing all its graduates. Beijing, however, says the numbers are part of its plan: The government is creating incentives to send its newly minted engineers into the poor western provinces to help invigorate industry there - a sort of reverse labor migration.

The global impact of China's universities will surprise anyone who associates authoritarian one-party states with academic suppression or who remembers the "lost generation" that endured Mao Tse-tung's repressions of the 1960s.

The Communist Party elevates technocrats into the highest possible positions.

The new president, Hu Jintao, studied hydraulic engineering; his predecessor, Jiang Zemin, graduated as an electrical machinery engineer. Premier Wen Jiabao launched his career as a post-graduate geologist; his predecessor, Zhu Rongji, trained as an electric-power engineer.

The wonkish elite makes no small plans. As they build an industrial superpower, Beijing brushed off protests from the international community and environmental groups over the construction of the giant Three Gorges Dam - a project that gouges a lengthy section of the Yangtze River valley, flooding cities and displacing 2 million people in the process. Dubbed the biggest public-works project since the Great Wall, the Three Gorges, when complete, will provide hydroelectric power to help fuel the industrial revolution.

Far from eschewing academia, China has created what can be called an "Educational-Industrial Complex."

"The links between the professors and the enterprises are very strong now," said Zhang at the Ministry of Education.

Lucent Technologies, Microsoft, IBM, Texas Instruments, Hewlett-Packard and a host of multinational companies work directly with the universities to develop talent and incubate new technologies.

In nominally communist China, even academics celebrate capitalist success. Tsinghua University incubates many of the technology companies now listed on the Shanghai Stock Exchange.

"Mathematics and physical fundamentals for Tsinghua are much stronger than in other nations," said Zhang Lin, dean of the university's information technology department. "We have a solid foundation in theory. It's our duty to contribute to the economics of the nation."

Zhang's department, with 500 master's students and 300 doctoral candidates, has hatched the Chinese standard for flat-screen televisions, software for anti-terrorist facial-recognition, and speech-recognition programs.

Across campus, Su Wu runs Tsinghua's department of industrial engineering. Three years ago, only 30 Chinese universities offered such a discipline; now, 109 do.

"China wants to become a global manufacturing center," the professor said. "This is one of our goals."

Rockwell Chief Financial Officer Mike Bless is well aware of that commitment. "It's one of the few nations in which industrial automation is one of the accepted areas of major study," Bless said.

Rockwell reinvents itself

Milwaukee company moves toward 'knowledge work'

The big questions for the world's advanced economies is: Can China innovate? Will it match American ingenuity?

Rockwell's Don Davis, who earned his mechanical engineering degree from Texas A&M University, believes Chinese entrepreneurs are inherently innovative. The Milwaukee-based company works directly with Tsinghua, Shanghai Jiao Tong and the nation's 16 most cutting-edge universities. It develops talent, ideas and technologies, and it hires the cream of the crop.

Those partnerships, which Rockwell carefully cultivates from a central office in Beijing, have helped Rockwell reinvent itself. A decade ago, Rockwell's automation business manufactured industrial equipment hardware - it made "stuff." Today, CEO Davis says half of Rockwell's 21,000 employees are knowledge workers: engineers who consult and develop manufacturing solutions.

"The labor content in our products is very low," Davis said.

Rockwell maintains a corps of Chinese-educated engineers all over China. Its Chinese operations fit perfectly into the new structure: Up to 60% of Rockwell's 330 full-time staff do technical or engineering work, said Scott Summerville, head of Rockwell's Asian operations. Rockwell entered China in 1986 and has 11 facilities in nine cities.

"One thing you can say about China is that change is incessant, and it's rapid, and it's deep," said Michael Byrnes, Rockwell Automation's chief representative in China.

U.S. is 'comfortable'

China continues to build factories, ports, schools

Those peering into the crystal ball see two views of a brave new post-industrial future. The owlish Greenspan is among the optimists.

In a separate House hearing in July, angry congressmen lashed out at Greenspan's free-market views at a time when the U.S. was bleeding manufacturing jobs. Won't the nation's economic security be compromised if its manufacturing base corrodes, the lawmakers demanded to know.

Greenspan's answer: It doesn't matter, as long as Americans can import whatever they need.

"If there is no concern about access to foreign producers of manufactured goods, then I think you can argue it does not really matter whether or not you produce them or not," he said. "The main issue here is the question of the security of supply of those essential types of goods, which will always be required by human beings - food, clothing, shelter and the like."

Labor economist Joel Popkin is less sanguine. In a report last summer commissioned by the National Association of Manufacturers in Washington, Popkin concluded:

"If the U.S. manufacturing base continues to shrink at its present rate and the critical mass is lost, the manufacturing innovation process will shift to other global centers. Once that happens, a decline in U.S. living standards in the future is virtually assured."

China, for its part, continues to evolve, building new factories, new ports and new universities.

"We've gotten comfortable," said Marquette's Jaskolski, a former member of the National Science Board, which monitors national education. "We're importing the techie stuff. We're no longer generating enough of it on our own."

"Do I think we can take this back?" he asked. "Absolutely, I think we can take this back. But it's a long, hard road, and we've got to be committed."

Rick Romell of the Journal Sentinel staff contributed to this report.

From the Dec. 31, 2003 editions of the Milwaukee Journal Sentinel

[ninenot]

Rockwell/A-B actually does support E-schools over here, principally Milwaukee School of Engineering, and Marquette U's E-school.

Davis was the National Sales Manager for A-B before Rockwell sucked them up--and he rose to his present position based on his successes in sales. A-B's hiring practice was always to hire BSEng'g types for sales, and back in the olden days, an ME was just fine, because A-B's product was, after all, mechanical as well as electrical: big, clunky, red/green switches.

Rock/A-B saw the control future (they should get credit) as moving toward chip-controlled (good old ladder-logic, etc.) and Davis & Co. were instrumental in creating the "A-B Factory Pyramid," which was implemented with a bunch of AB controls at the ground-level, tied to DEC micros, all run by a DEC mid-frame box at the top. A version of this was put in place at the Caterpillar track-plant, which was successful--there are damn near no human beings making track at Cat any more.

Cincinnatti Milacron has also used the concept; you can see an operating version at the Bemis Plastics plant in Sheboygan Falls, where those plastic patio chairs are made like popcorn, and there are only about 12 human beings around. It's a massive plant.

While all these goodies have reduced the requirement for both direct and indirect factory labor, what's really happening in PRC is that all the capital the USA invested in getting to this point is being HANDED to PRC when a US transnational opens a plant over there--by requirement of PRC, of course.

It's well-known that Ford was told: you can open a plant here. WE (PRC) will build it with you, 50-50 on the cost. WE will supply and control the labor. AND--at the end of five years, WE own ALL the technology you bring in.

It's up to you to figure out why the hell Ford (or anyone else for that matter) would live with those terms...

[fakecanuck]

It's unfortunate that in North America many engineering and computer science, math and science students are labeled as geeky. This certainly dissuades many high school kids from thinking about taking them up at universities or colleges. Also, the amount of school works an engineering student has to do each week for four to five years is tremendous. I remember I had to spent most of my weekend doing my engineering lab works and assignments while my Arts roommate was busy playing guitars. It was certainly no fun doing all these. Many kids opt for easier careers.

[A. Pole]

AND--at the end of five years, WE own ALL the technology you bring in. It's up to you to figure out why the hell Ford (or anyone else for that matter) would live with those terms...

Maybe the phrase "at the end of five years" is the key - CEOs will be able to retire comfortably in five years or move to the next corporation with an impressive resume?

What the time horizon for the "free market"? One year, a quarter? Probably much shorter than 20 year plans in the Communist China. Does free market has any plans? Does free market care for the people or the national interests?

[Dialup Llama]

>I remember I had to spent most of my weekend doing my engineering lab works and assignments while my Arts roommate was busy playing guitars. It was certainly no fun doing all these. Many kids opt for easier careers.

Anyone who takes their art career seriously will be doing a similar level of work. In particular, architecture and design students at a good school have levels of work like this.

The issue is not one of lazy American students who are afraid of hard work. That is boss speak: that's Andy Grove's stump speech. The issue is that students realize the engineering/programming careers are not a beneficial as what is touted. They opt for things like the medical area etc...

[Paul Ross]

Does free market have any [Long-term] plans? Does free market care for the people or the national interests?

Short answer is: No. The Cato-proponents of Free Trade could care less about national interests. In their libertarian bent, the individual is the all and be-all. The destruction of the nation...and its portents for the very individuals comprising that nation (whose Liberty Cato purporsts to be affirming) don't enter into their calculations.

[ex-snook]

"According to Reich, they are the elite who constitute about 20% of the U.S. population. In the last 15 years, they have seen their inflation-adjusted incomes increase 9%.

The other 80% of the work force includes people with more conventional jobs, along with lower-skilled workers who gravitate toward more modest or even minimum wages.

Reich reckons that that 80% has seen its inflation-adjusted income decrease 11% in the past 15 years.

Very telling - the Ghost of Elections Coming.

We are a political economy not an economic text book economy. People vote and they vote with their pocketbooks.

Voters need Republican and Corporate patriotism in the war on American jobs or we will become socialist at an even greater speed than Bush is driving.

God Bless Us, Everyone.

[RiflemanSharpe]

According to Reich, they are the elite who constitute about 20% of the U.S. population. In the last 15 years, they have seen their inflation-adjusted incomes increase 9%.
The other 80% of the work force includes people with more conventional jobs, along with lower-skilled workers who gravitate toward more modest or even minimum wages.

Reich reckons that that 80% has seen its inflation-adjusted income decrease 11% in the past 15 years.

Very telling - the Ghost of Elections Coming.

We are a political economy not an economic text book economy. People vote and they vote with their pocketbooks.

Voters need Republican and Corporate patriotism in the war on American jobs or we will become socialist at an even greater speed than Bush is driving.

God Bless Us, Everyone.


Well said.

[RussianConservative]

As I say before, so I say again and again: America is on verge of enjoying own personal Communist Experience, one factory closing at time. There is but one true rule political and one corrolary to it: Poor peoples vote left, dirt poor people vote Communist.

I feel like idiot savant or some guy with dirty hair and sign that world is ending...that no one listen to. Look, US and Russia at odds on many thing, and equal on others. But this China become strong does not help Russia any in long run...only threat. For now Russia sell navy weapons to China to keep aim at America and not north...but sooner or later, US collapse at this rate and then China not feel threat and take Taiwan...then where next? No, this is bad for all and American greed will bring next world war and maybe Chinese age...something no one want but can't stop US from not just committing suicide but strapping bomb vast and taking others as collateral.

Are average America so stupid not to see own future written on walls?

[RiflemanSharpe]

I to am surprised the people do not see this. The politicians, I am convinced do not care.

[RussianConservative]

I work IT, am former combat officer, work out incesently and weigh some 93kg of muscle and bone...so if some idiot who not even know value pie want to talk shiete to me about doing computers...they welcome to start what I finish....hehehehe

[RussianConservative]

By the way, in Russia engineer degree in very high demand and many students go that way...if US IT collapse and you not want to live in Communist state or learn punjab or some such, come over to Russia, engineers always prized and it now start to compete with India too.

[RussianConservative]

Hay, not say that with straight face...why look at Switzerland...they have much money and they are world power...

[Alamo-Girl]

Thanks for the ping!

[RiflemanSharpe]

By the way, in Russia engineer degree in very high demand and many students go that way...if US IT collapse and you not want to live in Communist state or learn punjab or some such, come over to Russia, engineers always prized and it now start to compete with India too.

The capablity to design and manufactor a thing will always have value. With out a strong manufactoring base and the engineering to back it up a country can not stay a world power.

[RussianConservative]

Hay, not say that with straight face...why look at Switzerland...they have much money and they are world power...

[A. Pole]

I feel like idiot savant or some guy with dirty hair and sign that world is ending...that no one listen to.

"There is an evil which I have seen under the sun, as an error which proceedeth from the ruler:
Folly is set in great dignity, and the rich sit in low place.
I have seen servants upon horses, and princes walking as servants upon the earth.
He that diggeth a pit shall fall into it; and whoso breaketh an hedge, a serpent shall bite him." (Eccl:10:5-8)

"This wisdom have I seen also under the sun, and it seemed great unto me:
There was a little city, and few men within it; and there came a great king against it, and besieged it, and built great bulwarks against it:
Now there was found in it a poor wise man, and he by his wisdom delivered the city; yet no man remembered that same poor man.
Then said I, Wisdom is better than strength: nevertheless the poor man's wisdom is despised, and his words are not heard.
The words of wise men are heard in quiet more than the cry of him that ruleth among fools.
Wisdom is better than weapons of war: but one sinner destroyeth much good."(Eccl:9:13-18)

[RussianConservative]

Russia has new policies to make Russian industry first. All import cars have huge tarrifs...and guess what, Ford, Jeep, Honda, BMW, Mercadies, Sabb, GM, etc all open factories in Russia...amazing, I know. /sarcasm

[RussianConservative]

Amen, happy New Year.

[RiflemanSharpe]

Russia has new policies to make Russian industry first. All import cars have huge tarrifs...and guess what, Ford, Jeep, Honda, BMW, Mercadies, Sabb, GM, etc all open factories in Russia...amazing, I know. /sarcasm

But, according to the free traitors this should not happen. How dare they not cut their country's throat with cheap Chicom good. (Sarcasm Off)

[RightWhale]

Demand American made.

Demand that Americans go to school and demand they study the hard subjects. America is about to get overwhelmed and there isn't a darned thing they can do about it except go to school and try to keep up.