Are Engineers Expendable

[Capt Worley PE]

One of the reasons I'm in the power industry is that the defense industry wasn't hiring when I graduated in the Spring of 1990.

I got in the DoD right before the freeze, 6/89. 2/90, they pretty much quit hiring.

 

[rppearso]

Yea auto mechanic is something I have been really thinking about but the problem is its the same story in that field, you go to work for a shop and you end up with about 1/3 of the bill rate, so unless you have the money to set up your own shop your going to be in the same situation as engineering. The only way to get the higher bill rate would be if you were unionized so you could get 2/3 to 80% of your bill rate I think that would be alot more fair but the only way to make that happen is if you were unionized. If I made 80-90% of my bill rate I would not really be concerned about furloughs or lay offs because my bank account would be padded. There is a local contracting outfit in my area that only takes 10% and I applied with them and they said they would get back with me next week so im looking forward to what they say.

 

[Fluvial]

In all seriousness: I think that's part of the problem. We just have this character trait where we are afraid to speak out/up. In other professions, there would be a near riot over what some of these organizations [that profess to represent us] have proposed.

If you're interested, you might consider American Council of Engineering Companies (ACEC) as an alternative to ASCE. The ACEC leads a substantial lobbying effort on both the national and local levels. I personally have been down to our State legislature a few times in concert with other members of ACEC-MS to support or decry certain legislation. ACEC really does try to emphasize the importance of the engineering community without getting all bogged down in the things which ASCE does. Here is a link to their advocacy page.

@ rppearso: Please don't take this as a slam, but if you are focused on making gobs of money, I don't think engineering is going to satisfy you.

 

[MGX]

Yea auto mechanic is something I have been really thinking about but the problem is its the same story in that field, you go to work for a shop and you end up with about 1/3 of the bill rate, so unless you have the money to set up your own shop your going to be in the same situation as engineering. The only way to get the higher bill rate would be if you were unionized so you could get 2/3 to 80% of your bill rate I think that would be alot more fair but the only way to make that happen is if you were unionized. If I made 80-90% of my bill rate I would not really be concerned about furloughs or lay offs because my bank account would be padded. There is a local contracting outfit in my area that only takes 10% and I applied with them and they said they would get back with me next week so im looking forward to what they say.

This is the worst time of year to think of starting an auto repair shop. You'll be living fat in the summer and starving in the winter. Before going back to school I was an auto tech for six years and its full of pitfalls just like engineering or anything else.

If you want to make great money you need to charge 100 hours a week which also means you need to be damned good. Most weeks I could turn in 60-80 but the top guys could do 100. Of course all the money one needs to sink into proprietary tools is sad.

 

[MechGuy]

@ rppearso: Please don't take this as a slam, but if you are focused on making gobs of money, I don't think engineering is going to satisfy you.

I couldn't agree more. rrpearso, in my opinion, you are focusing on the wrong things.

 

[roadwreck]

I don't believe there is "a career" that will make you rich. Yes, some jobs pay more, but if you spend all that you make each month you will never be "rich". Paying off your home, buying a lake house, working for beer money, etc., etc., is possible if you expenditures are in line with your income. You don't have to be working a job making six figures to make that happen, you just have to be smart with the money you already make.

:2cents:

 

[Dexman1349]

Yea auto mechanic is something I have been really thinking about but the problem is its the same story in that field, you go to work for a shop and you end up with about 1/3 of the bill rate, so unless you have the money to set up your own shop your going to be in the same situation as engineering. The only way to get the higher bill rate would be if you were unionized so you could get 2/3 to 80% of your bill rate I think that would be alot more fair but the only way to make that happen is if you were unionized. If I made 80-90% of my bill rate I would not really be concerned about furloughs or lay offs because my bank account would be padded. There is a local contracting outfit in my area that only takes 10% and I applied with them and they said they would get back with me next week so im looking forward to what they say.

Do you understand what your billable rate goes to pay for?

The typical hourly billable rate for production guys are calculated by the following:

Base salary + overhead margin (~2.5x base salary*) + profit (average of 15%)

*depending on your company, this is determined by the overhead backing your company provides. This includes everything from your health benefits to the office rent to your office supplies to your receptionist and on and on and on. Obviously it is in your company's best interest to lower this mulitplier to maximize profits and make your billable rate more competitive.

So if you make $25 gross per hour:

Base salary = $25

overhead = 2.5x $25 = $62.50

profit margin = ($25+$62.50)x0.15 = ~$13

Total = $99.50

So you see when you make $25 per hour after your company billed you out at $100, the company is only making about $13 profit per hour. This is also why you will never see a pay rate of 80% of your billable rate (unless of course you don't want benefits, don't need office supplies, work from home, and don't have anyone handling the business side of your company - including marketing).

Obviously the profit margin can fluctuate depending on where you sit on the corporate ladder. Most companies build higher profit margins (up to 25%) into their production personnel, and very low profits into their upper management (as low as 1-3%). So if you want to make $80 per hour as a production guy, you need to be billing out at over $320 per hour (15% profit for the company).

I don't want to call you an idiot, but I think your statements are grossly mis-informed. Your statements of wanting to make 80% of your billable rate simply indicates you have never been put into a project management position and have not been introduced to the business side of engineering. If you have questions about how your billable rates are calculated, I would suggest sitting down with your someone in your office who is responsible for determining these rates.

 

[Dexman1349]

IMO, the only truly expendible jobs are related to "Want" based things (entertainment, luxury items, etc). As long as people need a place to live, a place to exchange food & supplies, a place to work, and a means to get from one to the other, engineers will be needed (civil, structural, chemical, electrical, mechanical, etc.).

I'm not saying that ALL of the engineers currently employed are needed (or who are in school). Like all things, if there are too many in the industry to provide the services that are in demand, some will be let go.

 

[rppearso]

Do you understand what your billable rate goes to pay for?
The typical hourly billable rate for production guys are calculated by the following:

Base salary + overhead margin (~2.5x base salary*) + profit (average of 15%)

*depending on your company, this is determined by the overhead backing your company provides. This includes everything from your health benefits to the office rent to your office supplies to your receptionist and on and on and on. Obviously it is in your company's best interest to lower this mulitplier to maximize profits and make your billable rate more competitive.

So if you make $25 gross per hour:

Base salary = $25

overhead = 2.5x $25 = $62.50

profit margin = ($25+$62.50)x0.15 = ~$13

Total = $99.50

So you see when you make $25 per hour after your company billed you out at $100, the company is only making about $13 profit per hour. This is also why you will never see a pay rate of 80% of your billable rate (unless of course you don't want benefits, don't need office supplies, work from home, and don't have anyone handling the business side of your company - including marketing).

Obviously the profit margin can fluctuate depending on where you sit on the corporate ladder. Most companies build higher profit margins (up to 25%) into their production personnel, and very low profits into their upper management (as low as 1-3%). So if you want to make $80 per hour as a production guy, you need to be billing out at over $320 per hour (15% profit for the company).

I don't want to call you an idiot, but I think your statements are grossly mis-informed. Your statements of wanting to make 80% of your billable rate simply indicates you have never been put into a project management position and have not been introduced to the business side of engineering. If you have questions about how your billable rates are calculated, I would suggest sitting down with your someone in your office who is responsible for determining these rates.

When I talked to the outfit that gives out 90% of the bill rate the 10% you pay is strictly for marketing and he said they also cover errors and omission insurance on your PE since they get a bulk rate, there are no benifits you make what you work but its close to 100$ an hour, also a big part of the marketing is done through net working through the members themselves. They dont need office space because they succund you to client companies so the client company supplies your computer and office space, the client ususally owns the building you work in (BP, Conoco, etc) so they are paying for the lights and heat no matter what. I am definitly working to make myself "damn good" that way I can hopefully somewhat write my own ticket, my goal is to become a contractor and be able to work directly for the client through an outfit like the one I applied for or through the E&C but ensure that im on the requred list from the client and basicly give the E&C 0 profit from my services but they would have to have me on the project team because the client can set the personal list. So I understand what you are saying but my goal is to break away from that, that whole office space overhead blah blah is how wal mart worker work and thats exactly what I want to break away from. They dont allow us to bill to downtime anymore anyways without putting us on furlough so why should they be getting anymore than 10% of my bill rate, the fact that they have all these expenses is not really my problem.

As far as money managment I agree the student loan burden I have really hoses up my finances but I can save enough to make balloon payments so I hope to have them paid off by next christmas and have been in ultra cheap skate mode this year and will be next year, then next is to pay off the condo so that I can afford to be unemployed when I jump into contracting, between now and then I have to make sure I have rock star reputation. Also they are not giving me a bump in pay for my PE so im not going to tell anyone I passed but just put it on my resume for other jobs im applying for. If I cant pull this off I will probably be working until im 80 years old to achive my finanical goals.

 

[Fluvial]

they succund you to client companies

Could you explain what this means? I don't know what "succund" means.

So I understand what you are saying but my goal is to break away from that, that whole office space overhead blah blah is how wal mart worker work and thats exactly what I want to break away from.

The fact is that it's not "blah blah blah", it's the nuts and bolts of how profitability works in engineering firms. There are trade-offs to working as a contractor, such as paying your own health insurance and other expenses. No worries, though. You'll find out eventually.

 

[rppearso]

Could you explain what this means? I don't know what "succund" means.


The fact is that it's not "blah blah blah", it's the nuts and bolts of how profitability works in engineering firms. There are trade-offs to working as a contractor, such as paying your own health insurance and other expenses. No worries, though. You'll find out eventually.

Succunded means that you work for company XYZ but you are on an exclusive AFE for a specific client and can not be pulled by company XYZ for other things, basicly you have a client email, buisness card everything, you just get a pay check through XYZ. That is pretty much how the company I applied for operates because they dont maintain office space but contractors have to be part of a "company" in order to get client work for liability reasons (ie the client company does not like giving Joe a special contract as an individual anymore because they have been sued for direct hire retirement benifits becuase the contractor could prove they were basic a client employee.

As far as health insurance and all that even if I paid for my own health insurance its not going to cost me 60$/hr for insurance, they cut out the 401K matching, education benifits and all downtime so health insurance is the only thing left which is not worth (60$/hr * 8hrs/day * 20 days/month) thats alot of money lol. I have heard that E&C's have had to cut there bill rate to remain competitive but they could still give me a 50% raise and still be making money off me.

 

[Fluvial]

Well, thanks for that explanation of 'succund'. I couldn't find that word in the dictionary.

 

[IlPadrino]

Could you explain what this means? I don't know what "succund" means.

He/she doesn't know how it's spelled... try secund! It's from the latin secundus which means "following".

 

[IlPadrino]

Agreed, where on earth did you go or how long did you stay in school to spend 140k?

Have you seen what tuition costs these days? Top-tier private schools are around $50k a year! My alma mater now costs $35k/year for tuition, $6k/year for housing, and $5k/year for meals.

Thank god for the new GI Bill that I can transfer to my kid!

 

[intech]

There is no way on earth that any company charges only 10%. "Cost" for any individual employee is more than 10%, not even including fixed overhead or profit. The employer portion of Social Security alone is over 7%. Add on fed and state unemployment, worker's comp, general liability insurance, payroll expenses, etc.

I think they're lying to you. Or they're operating at a loss, and what are the chances of that happening?

Believe me, I've been in the engineering businees for 32 years, the last 9 of which I've owned my own stafiing company. I know exactly what the costs are.

By the way, I think he's trying to say "seconded." Spelling is a little off (thoes?)

 

[IlPadrino]

By the way, I think he's trying to say "seconded." Spelling is a little off (thoes?)

No... he means secunded. I assume he's suggesting the using company pays most of the overhead expenses.

 

[rppearso]

No... he means secunded. I assume he's suggesting the using company pays most of the overhead expenses.

Yes this is correct. As far as unemployment and federal taxes you are required to file your own taxes and carry your own liability insurance, the only thing they carry is errors and omissions and marketing, your basicly acting as an individual contractor but because the client companies no longer give out individual contracts to Joe you have to be apart of a "contracting outfit", its basicly employee owned and ran. Also there are no state taxes where I am at.

Even if they took 17% thats way better than 66% which is what im getting shafted with now, if this were splitting hairs over a few percent I would not have even posted this but I think alot people are geting royally ripped off and the entire field of engineering lacks alot of respect. Since one of you is in the military here, the military does not even recognize engineering degrees as professionals (ie get to skip basic and OCS and start off as a capt like doctors and JAG do, even if you have a PE, masters or PhD in engineering you still wont get a direct commission to capt like docs and JAG get. When I was in the gaurd for 2 years I was treated as any rank and file private and that did not sit well with me hence the 2 year part. The profession does not really command any respect anymore, it really is very sad.

 

[benbo]

Have you seen what tuition costs these days? Top-tier private schools are around $50k a year! My alma mater now costs $35k/year for tuition, $6k/year for housing, and $5k/year for meals.
Thank god for the new GI Bill that I can transfer to my kid!

It's certainly possible, even easy to spend that much, but certainly not necessary for an engineering degree. I wouldn't go to a place like that unless I had significant aid in the form of grants and scholarships.

In California you can get an engineering degree with a lot of panache at instate flagships like Berkeley or UCLA for a lot less money (at least for the time being although the news sort of shows that may change). And you can get a reasonable degree at any state school.

 

[roadwreck]

Have you seen what tuition costs these days? Top-tier private schools are around $50k a year! My alma mater now costs $35k/year for tuition, $6k/year for housing, and $5k/year for meals.
Thank god for the new GI Bill that I can transfer to my kid!

Simple solution, go to a state school. Even out-of-state costs aren't going to run you up to $140k.

 

[rppearso]

Simple solution, go to a state school. Even out-of-state costs aren't going to run you up to $140k.

Actually they do after 5 years including room/board and books, in state and out of state is a significant differernce.