Hire for Talent, Not Location
When hiring, pick the candidate based on talent, capabilities, and potential, not based on where they physically are located.
Look at the Linux kernel, possibly one of the most important pieces of engineering over the past two decades. Linus works from home coordinating the entire project and none of the people he works with on a daily basis live with him. The project leverages the Internet to get things done, at an amazingly fast pace and with very high quality, every release. Thousands of engineers from all over the world work together to produce Linux.
That's how your company should work, too.
But, you say, "We build hardware, not software!"
That's nice. What's your point?
Engineers working remotely or locally can get the same work done these days. But engineers working remotely may be way better or smarter or more capable or cheaper than the ones you can hire locally.
Overnight shipping is reasonably priced, generally under $100 to ship most things anywhere in the USA, and under $200 generally to ship anywhere in the world. Development tools are going down in price every year, you can now get logic analyzers that operate at 24 MHz for about $200 and analyzers operating at hundreds of MHz for under $500. General purpose oscilloscopes run $1000, at most.
Even if you have to buy each engineer a scope and a logic analyzer, you're still looking at under $2k. Price in a computer and the other tools needed, and you're looking at about $5k per engineer. Figure you ship each person something overnight every week, that's another $5.2k per year. But the buying of a scope and logic analyzer and computer doesn't really matter if the engineer is local or remote, they're going to want that stuff anyway. And the $5k you spend shipping them prototypes every week (if you've got a lean hardware development process, which you probably don't, but that's another post) is probably cheaper than paying for 100 sq feet of office space for a year.
So why do most companies hire locally and never consider any remote engineers?
My impression is that engineering managers want to be kings. They want to sit in their little castles and oversee the minions doing the work inside the castle walls. They want to perch up in the tower and yell down at the minions, telling them what to do and watching them scurry.
So, basically the same reasons open office plans and cubicles exist, managers also feel hiring locally is better than hiring the best.
Don't do that. Engineers don't want to work for kings, they want to work for leaders.