Traditional factories do make wrong guesses about the future and overhire all the time. Example: https://www.google.com/search?q=Ford+f150+lightning+laid+off...
Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work.
It’s incredible how some engineers assume they understand economics, then proceed to fail on some of its most basic premises. This tends to happen when engineering-style certainty is applied to systems that are driven by incentives and uncertainty.
But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning.
By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations and unwind just as aggressively when those expectations change.
Lines with specialty equipment and tooling can also often be sped up. That can allow for other jobs to be added to all the functions that support the processes involved before and after the specialty equipment.
New employees also often require training and some apprenticeship time, meaning they can get hired ahead of actual demand.
in tech cost of hiring is lower which makes headcount a much easier speculative bet and layoffs a much easier reset when the bet fails.
It's an entirely different cost structure.
My experience with seeing new shifts added is initially with only specific processes, and even with those it is with journeyman level technicians running a small crew to support relieving a bottleneck in production.
Alternatively, manufacturers can outsource until they have enough volume to add a shift, but across the economy the net is just transferring production from one facility to another.
Alas, gone are the days when engineers too required specialized equipment like a desktop computer on the desk that you couldn't move with you. Every evening, you left it at office and went home to live a 100% home life. Alas, gone are those days.
> By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations and unwind just as aggressively when those expectations change.
Software engineers also need
- specialized machinery (at least when they have to upload to some computation cluster or cloud), think for example of the costs for GPU/TPU clusters for AIs at the moment
- tooling: depending on the sector, the license costs for the sector-specific business software can be similar as expensive as specialized machinery
- mental capacity (instead of physical capacity)
> That low marginal cost
Not true. That's how everything falls apart. Scaling software teams isn't simple. There's lots to account for. Do you just assume everyone commit to the same file and let it crash?
The more people, the more work is required to standardize, organize, document and fix gaps. You can say you're already at scale and things "should" be done but they never are. You hire a team into a specific area to find it was a giant hack supported by a part-timer and as you try to fix it the problems keep escalating.
Does anyone know what the typical tool cost is for a factory worker?
(And the tool cost for a factory worker can be zero if you're hiring for a second shift - they would use the same tools as the first shift, just at different times. In contrast, I don't think there are very many places that ask programmers to use the same laptop in shifts.)
It's probably lower. Apart from safety gear like helmets and gloves, everything else is most likely reused across shifts or shared across workers simultaneously (think industrial machines).
So, eventually they recoup the equipment costs, wouldn't get surprised if they even make a profit out of it sometimes.
First thing they do, they write off VAT (20-23% of laptop price). Then at the EOL, they just set the EPP price to the higher market value. And return the cost.
Not that everything has to be about the US, but it's weird to make a claim about the tech market as a whole that doesn't apply to its biggest single region.
The article goes into considerable detail about the EU tech industry. My comment relates to that context.
I also want to note, that EPP isn't the correct term here. For US, EPP would mean Manufacturer Employee Purchase Programs for New Products with a discount. Like, if you work for HP, you can purchase a product it manufactures at a discount price for your personal use.
The EU practice that I was mentioning is called IT Asset Disposition through employer to employee disposal program[0]. I don't believe big companies in the US get involved in employer to employee ITAD for lots of reasons. But in EU, it's a thing, much to my surprise.
[0]: https://www.mddp.pl/disposal-of-used-equipment-by-an-employe...
>The article goes into considerable detail about the EU tech industry. My comment relates to that context.
You know what, that's entirely fair. And I'll also note that American companies can claim depreciation to offset corporate income taxes, so there's some parity there, it's just s different mechanism.
And, (assumption again) the factory boss doesn't have an incentive to increase idle worker numbers, where a dev manager often benefits from being in charge of a larger number of hardly working people.
All of a sudden it is no longer enough with a few shell scripts. No, we need a full kubernetes cluster to run a service used by 10 secretaries.
No, we can't just use PostgreSQL as a queue, we definitely need Apache Kafka for 1 msg per second.
The current crop of tech companies cutting staff is going to lead to a large number of dead giants. The staff who services the layoffs will be risk averse, and defensible in a job cut situation. You see this in legacy firms where it takes 10 people to make a change because each person has a small slice of permissions required to effect the change. This pattern is by design as laying of any of the ten people on different teams would kill dozens of critical business processes.
This is not how you make high growth firms.
Software engineers are stupid, often because they think they are very smart (which breeds arrogance). And on top of that, they often have many biases that they often fail to account for (e.g. a preference for neat-and tidy-systems, leading them to get seduced by oversimple neat-and-tidy explanations, e.g. Econ 101).
And with that, VR would like to take the microphone and have a few words…
The economy is screwed, tech is just the scapegoat.
People who already had plenty absorbed the cheap money, until there was basically not enough value left to go around for consumers to be able to carry on the way that was expected.
>this isn’t a tech specific "failure",
Nope, looks like every "market" has become more nonideal, and the more "financialized" they are could be what's making certain markets worse.
Not every job is actually on a "market", some are deep in and others not so much.
In the old days people held on to their jobs for so much longer that it's a really big difference when the actual "job market" in so many areas was virtually insignificant compared to 21st century rambling as the norm.
Regardless of pay, the more your job is part of a market, the more you would be subject to market forces beyond your control.
Markets are "always" irrational except for those times when they are neither in your favor nor against you. If a neutral situation holds for a period of time, that can be negotiated with a more "straightforward" approach than when volatility is the dominating factor. People might think with almost "engineering-style certainty". Once there are wild swings, it can be like a sine wave where half the curve is positive and the lower halves are negative. It still balances out to neutral but you may not know where you are at any one time. Every positive excursion will not last very long and be followed sooner rather than later by a negative equivalent in some way.
With a significant cycle occurring, then the only truly rational, neutral times are those brief zero-crossing events when the market reverses from favorable to unfavorable or back again.
If your only real opportunities occur when the market is in your favor, then you are dependent on the market being irrational which you need, but is about as uncertain as it gets. Opportunities like this can reverse more easily than the mainstream where they more often merely fade.
I would say most engineers. The reason is simple - basic economics is not taught in the public schools, and economics/business is not a required course for an engineering degree.
One of the best classes I ever took was a summer class in accounting.
Dunning Kruger effect, am I right?
We consider we are smart because we can make computers go beep boop so we know about the economy too. I mean, I am part of this too even though I (or we all) know the effect but I guess my point is that there should be an humility if we are wrong.
I can be wrong, I usually am. If someone corrects me, I would try to hopefully learn from that. But let's see how the author of this post responds to the GP's (valid, from what I can tell) critique.
Edit: Looks like they have already responded (before I wrote it but I forgot to see their comment where they said that its not at the scale or frequency we see in tech)
Funny, the person you are agreeing with made the strongest "I know more than you" flex than anyone.
That is, it seems incredible (going back to the GP) that engineers assume they understand economics when they don't. It's somewhat less incredible (applying your formulation) that engineers assume they understand things they don't. While it may still be incredible that engineers are so assumey, at least we no longer need to marvel at their assuminess about economics.
If we go one more step and state it as everyone assuming they understand things they don't, it's no longer incredible at all. What would be incredible is if anyone didn't.
This is more-or-less the rub.
Fortunately we had a kinda-sorta sane monetary policy under the Biden administration once the pandemic started to ebb, but now we've got Mr. Appearances trying to push Jerry Powell to make stupid mistakes.
Manufacturers can't hire beyond the places in production that someone can stand and do something. There needs to be some kind of equipment or process for worker to contribute in some meaningful way, even if it is merely for a projection of increased production (e.g., hiring a second shift for a facility currently running one shift).
What I wonder is if in tech, the "equipment" is a computer that supports everything a developer needs. From there, new things can be added to the existing product.
Manufacturing equipment is generally substantially more expensive than a computer and supporting software, though not always. Might this contribute to the differences, especially for manufacturing that normally runs 24-hour shifts?
From a supply chain management perspective, this does not make sense. The directive should be something like "find the best suppliers on the planet."