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Electronic Equipment Manufacturing

Nature of the Industry  |  Working Conditions  |  Employment  |  Occupations in the Industry
Training and Advancement  |  Job Outlook  |  Earnings

Significant Points

• Rapid technological change and intense competition result in some research and development personnel working extensive overtime to meet deadlines.
• Rapid employment growth is expected in the electronic components and accessories segment of this industry, while employment in several other segments remains stable or declines.
• Professional and related personnel account for about 3 out of 10 workers, reflecting the importance of research and development.
• Employment growth among professional and related occupations is expected to outpace overall industry job growth, while employment of production workers is expected to grow more slowly than the industry workforce.

Nature of the Industry

The electronic equipment manufacturing industry produces computers, television sets, and audio equipment, as well as a wide range of goods used for both commercial and military purposes. In addition, many electronics products or components are incorporated into other industries’ products, such as cars, toys, watches, appliances, and a variety of electronic gadgets. 
Products manufactured in this industry include computers and computer storage devices, such as disk drives, and computer peripheral equipment, such as printers and scanners; calculating and accounting machines, such as automated teller machines (ATMs); communications equipment, such as telephone switching equipment and cellular telephones and pagers; consumer electronics, such as television and stereo sets; and military electronics, such as radar, sonar, missile guidance systems, and electronic warfare equipment. This industry also includes the manufacture of semiconductors—silicon or computer “chips,” or integrated circuits—which constitute the heart of computers and many other advanced electronic products. Two of the most significant types of computer chips are microprocessors, which make up the central processing system of computers, and memory chips, which store information. 

Technological innovation characterizes this industry more than most others and, in fact, drives much of the industry's production. Many new products reflect a convergence of technologies. Such products include WebTV that allows for interactive TV viewing, hand-held devices that permit wireless Internet access, and digital cameras that store images digitally rather than recording them on film. On the horizon are many innovative products, including loudspeakers that can be heard but not seen, computers that can recognize voices, and numerous devices used to capture digitized information, such as bar code scanners and computer chips placed on humans that will eliminate the need for forms of identification and credit cards. 

The electronic equipment manufacturing industry differs from other manufacturing industries in that production workers account for a much lower proportion of all workers. The unusually rapid pace of innovation and technological advancement requires a high proportion of engineering and technical workers to continually develop and produce new products. Likewise, the importance of promoting and selling the products manufactured by the various sectors of this industry requires knowledgeable marketing and sales workers. American companies manufacture and assemble many products abroad because of lower production costs and new trade agreements. However, the growing complexity of some of the most highly technical production processes—in semiconductor and electronic component manufacturing in particular—is leading to increased demand for a more highly skilled workforce in the United States. 

Companies producing intermediate components and finished goods frequently cluster near each other because doing so allows easier access to recent innovations. Electronic products contain many components—and sometimes even major parts, such as integrated circuits—that often are purchased from other manufacturers. As a result of having the skilled workforce that fosters product improvement, some areas of the country have become centers of the electronics industry. The most prominent of these centers is “Silicon Valley,” a concentration of integrated circuit and computer firms in California’s Santa Clara valley, near San Jose. Other emerging centers are in Texas, Massachusetts, and New York. There are, however, electronics manufacturing plants throughout the country. 

To a large extent, electronics manufacturing has become truly global, and it is difficult to characterize many companies and their products as American or foreign. The movement of foreign companies to manufacture some goods in the United States does not change the fact that many products are being designed in one country, manufactured in another, and assembled in a third. Highly sensitive and sophisticated products such as semiconductors and computers are being designed and manufactured in the United States, for example, but it remains likely that other parts of final products, such as the keyboards and outer casings, are made somewhere else and shipped to yet another site for final assembly. 

Although some of the companies in this industry are large, most are actually small. The history of innovation in the industry explains the startup of many small firms. Some companies are involved in design or research and development (R&D), whereas others may simply manufacture components, such as computer chips, under contract for others. Often an engineer or physicist will have an innovative idea and set up a new company to develop the product. Although electronic products can be very sophisticated, it has been possible to manufacture many electronic products or components (not necessarily finished products) with a relatively small investment. Furthermore, investors often are willing to put their money behind new companies in this industry because of its history of large paybacks from some very successful companies. Success always will depend on innovation, and, although investment costs are rising, there should continue to be opportunities to develop good ideas. 

The rapid pace of innovation in electronics technology makes for a constant demand for newer and faster products and applications. This demand puts a greater emphasis on research and development (R&D) than is typical in most manufacturing operations. Being the first firm to market a new or better product usually determines the success or failure of the product and, often, the company. Even for many relatively commonplace items, R&D continues to result in better, cheaper products with more desirable features. For example, a company that develops a new kind of computer chip to be used in many brands of computers can earn millions of dollars in sales until a competitor is able to copy the technology or develop a better chip. Many employees, therefore, are research scientists, engineers, and technicians, whose job it is to continually develop and improve products. 

The product design process includes not only the initial design, but also development work, which ensures that the product functions properly and can be manufactured as inexpensively as possible. When a product is manufactured, the components are assembled, usually by soldering them to a printed circuit board. Often tedious, hand assembly requires both good eyesight and coordination, as many of the parts are very small. However, because of the cost and precision involved, assembly and packaging are becoming highly automated. 

Working Conditions

In general, electronics manufacturing enjoys relatively good working conditions, even for production workers. In contrast to many other manufacturing industries, production workers in this industry usually work in clean and relatively noise-free environments. Computer chips are manufactured in “clean rooms,” in which the air is filtered and workers wear special garments to prevent any dust from getting into the air. A speck of dust will ruin a computer chip. 
In 1999, the rates of work-related injuries and illness per 100 full-time workers were 2.7 per 100 full-time workers in computer and office equipment, 3.1 in communications equipment, 4.1 in electronic components and accessories, 5.7 in household audio and video equipment, and 2.3 in search and navigation equipment. These rates all were lower than the 6.3 average for the private sector. However, some jobs in this industry may have risks. For example, some workers who fabricate integrated circuits and other components may be exposed to potentially hazardous chemicals, and working with small parts may cause eyestrain. 

Most employees work regular 40-hour weeks, but pressure to develop new products ahead of competitors may result in some research and development personnel working extensive overtime to meet deadlines. The competitive nature of the industry makes for an exciting, but sometimes stressful, work environment—especially for those in technical and managerial occupations. 

Employment

Occupations in the Industry

Given the importance of R&D to the industry, it is not surprising that a large proportion—about 3 in 10—of all workers are in professional and related occupations (table 2). About 12 percent of these are engineers—mainly electrical and electronics engineers and computer hardware engineers. These workers develop new products and devise better, more efficient production methods. Engineers may coordinate and lead teams developing new products. Others may work with customers to help them make the best use of the products. Growing numbers of computer systems analysts and computer scientists are being employed throughout the industry as both development and production methods become more computerized. Other professionals include mathematical and physical scientists, and technical writers. 
About 6 percent of workers are engineering technicians, many of whom work closely with engineers. They help develop new products, work in production areas, and sometimes help customers install, maintain, and repair equipment. They also may test new products or processes to make sure everything works correctly. 

Despite the relatively high proportion of professional and technical workers in electronics manufacturing, almost 4 out of 10 employees are production workers. Many are assemblers, who place and solder components on circuit boards, or assemble and connect the various parts of electronic devices. Semiconductor processors initiate and control the many automated steps in the process of manufacturing integrated circuits or computer chips. Electrical and electronic equipment assemblers are responsible for putting together products, such as computers and appliances, telecommunications equipment, and even missile control systems. Assemblers and fabricators must be able to do accurate work at a rapid pace. Some assemblers are highly skilled and require significant experience and training to assemble major components. A skilled assembler may put together an entire subassembly, or even an entire product, especially when products are made in relatively small numbers. Other, less skilled assemblers often work on a production line, attaching one or a few parts and continually repeating the same operation. Increasingly, as production work becomes more automated, assemblers and other production workers monitor the machinery, which actually does the assembly work. Inspectors, testers, sorters, samplers, and weighers use sophisticated testing machinery to ensure that devices operate as designed. 

About 13 percent of workers in the industry are in management, business, and financial operations occupations. In this industry, top management is much more likely to have a technical background than are its counterparts in other industries. This is especially true in smaller companies, which often are founded by engineers, computer scientists, or other technical professionals. 

About 13 percent of workers in this industry hold office and administrative support or sales and related jobs. Sales positions require technical knowledge and abilities and, as a result, engineers and technicians often may find opportunities in sales or sales support. 

Training & Advancement

Workers with different levels of education find employment opportunities in the electronic equipment manufacturing industry. Entry to engineering occupations generally requires at least a bachelor’s degree in engineering, although those with 4-year degrees in physical science or computer science or other technical areas can sometimes qualify as well. Some positions, however, may require a master’s degree or higher, or relevant work experience. Computer systems analysts or scientists usually need a degree in computer science or a related field and, in many cases, they also must have considerable programming experience. Because companies often are founded by professionals with technical backgrounds, opportunities for advancement into executive or managerial positions may arise for experienced workers who keep up with rapid changes in technology and possess the business expertise necessary to succeed in the rapidly changing economy. 
Training for engineering technicians is available from a number of sources. Although most employers prefer graduates of 2-year postsecondary training schools—usually technical institutes or junior colleges—training in the U.S. Armed Forces or through proprietary schools also may meet employer requirements. Engineering technicians, like engineers, should have an aptitude for math and science. Entry-level technicians may begin working with a more experienced technician or engineer. Advancement opportunities for experienced technicians may include supervisory positions or movement into other production and inspection operations. 

Though assembly workers generally need only a high school diploma, assemblers in the electronics industry may need more specialized training or experience than do workers in other manufacturing industries. Precision assembly work can be extremely sophisticated and complex, and some precision assembly jobs may even require formal technical training. A 1-year certificate in semiconductor technology is good preparation for semiconductor processor operator positions; for more highly skilled technician positions, an associate degree in electronics technology or a related field is necessary. Again, advancement opportunities depend not only on work experience, but also on the level of technical training and the ability to keep up with changing technology. 

Job Outlook

Expected employment growth varies by industry segment (table 5). Demand for computers should remain relatively strong worldwide, yet, employment is expected to decline due to the introduction of new technology and automated manufacturing processes. This trend also should be seen in household audio and video equipment. Employment in search and navigation equipment is expected to decrease due to technology, which is automating the production of increasingly sophisticated equipment. In addition, labor-intensive manufacturing, assembly, and packaging operations still are being moved to low-wage countries in the Far East or to Mexico, when cost effective, although this strategy grows less attractive as the technical demands of manufacturing become more complex. However, the need for manufacturing to be located near the research site will help to moderate the tendency to move abroad for many segments of this industry.

Employment in electronic components and accessories, on the other hand, is expected to grow faster than the average over the projection period, more than offsetting expected declines in other segments. Despite a recent slowdown, the market for semiconductors has been growing tremendously and, as a result, the need for skilled labor has been increasing worldwide. As chips become smaller and more powerful, and production processes more sophisticated, the size of the U.S. market, coupled with the need for a strong infrastructure and highly skilled workforce, has shifted focus back to the United States in this segment of the industry.
 

Table 5. Projected employment change in electronics manufacturing by industry segment, 2000-10
Industry segment	Percent change
Total, electronic equipment manufacturing	6.7
Communications equipment	5.0
Computer and office equipment	-3.2
Household audio and video equipment	-3.3
Search and navigation equipment	-9.3

Demand for communications equipment, such as cellular phones, should result in employment growth in this segment. Ownership of cellular phones has grown quickly in recent years; continuing improvements in quality and services should lead to even greater growth between 2000 and 2010. As cellular phones increasingly use digital technology, they will allow users to browse the Internet away from their desks. In addition, a substantial increase in band speeds for these phones will increase their attractiveness to businesses that have relied on desktop personal computers with their much faster speeds. However, there are some concerns as to whether or not these “wireless” applications will be able to replace conventional computers and office equipment. Also, demand for high-speed Internet access and other forms of Internet connectivity, such as routers, should result in an increase in employment in communications equipment.

Employment growth among professional and related occupations is expected to outpace industry growth. Employment of production occupations is expected to grow more slowly than that of the industry as a whole, as more jobs are lost to technological innovation. However, the numbers of semiconductor processors will grow faster than the industry average. Highly skilled technical personnel should be able to take advantage of the increasingly sophisticated level of manufacturing technology as industries become more integrated and development and manufacturing processes more advanced. Overall, employment of office and administrative support occupations also is expected to grow more slowly than the average.

The electronics industry is characterized by rapid technological advances and has grown faster than most other industries over the past 30 years, although rising capital costs and the rapid pace of innovation continue to pose challenges. Certain segments and individual companies often are subject to problems. For example, the computer industry occasionally undergoes severe downturns, and individual companies can run into trouble—even those in segments of the industry doing well—because they have not kept up with the latest technological developments or because they have erred in deciding which products to manufacture. Such uncertainties can be expected to continue. In addition, the intensity of foreign competition and the future role of imports remain difficult to project. Import competition has wiped out major parts of the domestic consumer electronics industry, and future effects of import competition are dependent on trade policies and market forces. The industry is likely to continue to encounter strong competition from imported electronic goods and components from countries throughout Asia and Europe.

As defense expenditures are expected to increase, sales of military electronics, an important segment of the industry, will likely pick up. Furthermore, firms will continue developing new products, creating large new markets as they have in the past. Smaller, more powerful computer chips are continually being developed and incorporated into an even wider array of products, and the semiconductor content of all electronic products will continue to increase. The growth of digital technology, artificial intelligence, and multimedia applications will continue to create new opportunities. Future developments will lead to a much greater convergence of products and technologies with the expansion of the Internet and demand for global information networking.

Earnings

Earnings in selected occupations in several components of the electronic equipment manufacturing in 2000 appear in table 4.
 

Table 4. Median hourly earnings of the largest occupations in electronic equipment manufacturing, 2000.
Occupation	Computer and office equipment	Household audio and video equipment	Communications equipment	Electronic components and accessories
Engineering managers	$51.67	$43.21	$46.21	$47.57
Computer hardware engineers	36.41	27.35	36.34	32.59
Industrial production managers	36.06	29.62	34.87	34.21
Computer software engineers, systems software	35.87	33.29	35.20	36.81
Computer software engineers, applications	35.72	31.62	33.82	34.93
Electronics engineers, except computer	33.61	30.10	31.37	30.72
Computer programmers	33.24	27.67	27.65	30.75
Electrical and electronic engineering technicians	19.52	17.26	16.95	17.07
Inspectors, testers, sorters, samplers, and weighers	13.36	11.41	12.73	11.55
Electrical and electronic equipment assemblers	11.68	10.32	10.23	9.93
Team assemblers	10.36	8.71	9.45	9.66

Source: Career Guide to Industries, Bureau of Labor Statistics

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