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In a company manufacturing measuring instruments, engineering must permeate every company activity. This paper describes the engineering organization and administration of such a company. Company policies (such as the maintenance of employment stability) affecting the operation of the Engineering Department are outlined and data are given on the relative proportion of engineering and otherfactors in the total cost of the product. The method of handling development projects, planning costs, placing of responsibility, supervision, and engineering are considered. Engineering relationships with other departments are described with particular attention to the method of handling production and testing of first lots of a new product.