Most leading economic countries have strong metal and engineering industries. However, the contribution of the basic metal and engineering industries in Ethiopia to the overall economy is minimal. This indicates that there is a great need from this industry if it has to position itself to a level where it can be a real contributor to the economy. The metal products account the highest value of the total import in the country. Ethiopia has advantages of low labor cost and abundant natural resource. These resources can be advantageous to be competitive to the global market if technological capability is built. Since the country suffers a shortage of foreign currency, currently there is an emphasis to substitute the imports of metal and engineering products manufacturing locally for the coming 5 years. Substituting the spare parts, equipment and machinery imported from abroad through reverse engineering is a significant and prior action to be taken. Therefore, reverse engineering is the most important tool for building technological capabilities in the country. The prior action has to be the metal and engineering industries through technological building and technology transfer.