Demand for Engineering Graduates in Western Illinois, Southeast Iowa and Northeast Missouri: Assessments and Forecasts

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ABSTRACT

This research is part of a new product planning exercise for a higher education institution. The study forecasts total market demand for general engineers in the Western Illinois, Southeast Iowa, and Northeast Missouri region. Then, it discusses the attraction of a planned, bachelor's degree in general engineering. A deterministic model was utilized to forecast total demand, and a stochastic model was employed to assess the attractiveness of the new product in the marketplace. The methodology of the paper should be of interest to practitioners in higher education.

INTRODUCTION

Reports from engineering trends research studies (see for example, the Bureau of Labor Statistics' Occupational Outlook Handbook, 2006-07) suggest that job opportunities in engineering are on the rise and expected to grow at a rate of 9% to 14% over the years leading up to 2014. To service the growing demand for engineers, organizations such as the Institute of Electrical and Electronics Engineers, Inc. (IEEE) are bringing together representatives from industry, government, and academia to develop an action plan for engineering education (see the planning document for IEEE conference, 2007 at www.ieee.com). In general, the view among engineering professionals is that an engineering career requires a broad education that includes the ability to perform on multidisciplinary teams and communicate effectively (American Society for Engineering Education, 2007; Hannon, 2003).

Realizing the societal need for engineers with a broad knowledge, a higher education institution in Illinois has embarked upon a strategy to offer a bachelors degree program in "general engineering. Briefly, the plan is to prepare graduates to provide cross discipline design solutions for the wide range of demands encountered by today's practicing engineers in consulting offices, manufacturing businesses, industrial companies, and government agencies.

This report provides the background information required to further develop the strategy. Specifically, the report offers two types of information for the decision maker:

1. Analysis of demand for engineers / general engineers, and

2. Analysis of the attractiveness of the general engineering degree in the marketplace.

At a macro level, this report addresses the question, "Would businesses in Western Illinois, Southeast Iowa and Northeast Missouri, hire a general engineering graduate from the focal university?" (See Appendix 1 for a listing of counties in the study area).

THEORETICAL PERSPECTIVE

Planning for a product requires quantitative assessment of present and future demand for the product. Conceptually, market demand for a product at time t is the total volume that would be bought by a defined customer group in a defined geographical area.

Market demand for a product is often categorized into primary demand and secondary demand (Kotler et al. 2007). Primary demand is the total demand for a class of product, for instance, a bachelor's degree in business management, and secondary demand is the demand for a specific brand, for instance, demand for a specific university's bachelor's degree in business management. As translated to the problem at hand, primary demand for engineering graduates at time t ([P.sub.t]) can be expressed as the product of number of businesses ([N.sub.t]) and the average rate of engineering employment in those businesses ([R.sub.t]). Thus,

[P.sub.t] = [N.sub.t] x [R.sub.t] Formula (1)

An explanation of Rt is offered by the theory of purchasing agent's behavior (Douglas, 1975). The theory posits that purchasing agents follow fluctuations in demand and prices of factors of the company's production to optimize purchases. For instance, during times of recession, they delay purchases in anticipation of lower prices. Similarly, during economic upturns, they stock-up to avoid later, costly purchases. …