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With the U.S. presidential election entering the home stretch, hyperbole about the decrepit state of American manufacturing has reached a fever pitch.
With deserted, dilapidated factories as their backdrop, Donald Trump and Hillary Clinton talk about lost jobs. They promise to bring them back.
But they won’t – because they can’t.
Long gone is the era when brigades of workers tightened bolts and forged steel. Modern industry is about Big Data, analytics, robotics, 3-D printed prototyping and new interfaces, like augmented reality.
Consultants call it Industry 4.0, and it makes political speechmaking about globalization patently ridiculous.
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You can’t blame politicians for trying. They are forever looking for easy fixes, trying to turn back time. Yet, as Binyamin Appelbaum writes in a recent article in The New York Times Magazine:
“In the years after World War II, factory work created a broadly shared prosperity that helped make the American middle class. … But the value of stuff made in America reached a record high in the first quarter of 2016, even after adjusting for inflation. The present moment, in other words, is the most productive in the nation’s history.”
That’s the hard truth. Businesses in the U.S. still make a lot of stuff. They just need far fewer people. And they will be further incentivized to cut payrolls as digitization and the Internet of Things reach scale.
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| Humans work side-by-side with robots in an automobile manufacturing plant – but eventually the humans will all be gone. |
In 2012, Amazon (AMZN) bought a robotics company called Kiva Systems for $775 million. The online retailer now has 30,000 of that company’s diminutive robot helpers roaming the floors of 13 warehouses. Costs have been cut by an average of 20%, or $22 million per location. Deutsche Bank analysts believe that deploying the robots across all of Amazon’s 110 sites could lead to savings of $2.5 billion.
In 2015, Alcoa (AA) invested $60 million in a Pittsburgh 3-D printing research facility to develop new metal fabrication processes for the labor intensive automotive and aerospace sectors. General Motors (GM) is using 3-D printing for rapid prototyping to drastically reduce the time from the drawing board to market. Again, the goal is to reduce man-hour costs.
General Electric (GE) and Swiss automation giant ABB have made tremendous strides bringing Big Data, predictive analytics, and cutting-edge robotics to factory floors all over the world. The result has been better products and lower payrolls.
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None of this truth will stop politicians from promising to bring back factory jobs that have already been whisked away by digitization and automation. Republican nominee Donald Trump often claims he will bring iPhone factories to U.S. shores.
Perhaps Trump is unaware of how few people those Chinese factories now employ. Or perhaps more importantly, he’s unaware that through the end of last year, Apple’s domestic payroll was already over 66,000.
Stomping out globalization will not bring back manufacturing jobs. Most no longer exist. While that does not make for good sound bites, it is the basis of sound policy.
Best wishes,
Jon Markman
{ 55 comments }
The author pointed out that low cost countries are using automation to produce cheap items. Why are they doing this in low cost countries? The shipping costs should offset the difference. If not, a tariff would help with the currency manipulation!
David is right. Why do we build product in low cost countries? It is to save cost on labor! When labor goes away it makes sense to build it near the consumer. All products vary but labor including overhead is usually less than 20% of the cost, material is about 50% and the rest goes to administrative, technical support, sales and profit. Typical corporations eliminated manufacturing jobs and replaced them with high-paid professional who travel the world top make deals in an attempt to save money. EXCEL spread sheets and PPT presentations have convinced management that profits would increase if labor cost is reduced. In fact, very few go back to analyze their decisions; if they did they would realize that the savings just weren’t there! They added transportation cost and staff to deal with customs duties. Their lead-times and finish goods are usually much larger or if they are lucky they can’t keep up with demand and their profits erode from paying premium travel cost. Then there support costs are much higher, product recalls and replacement costs are a nightmare.
Plus they would reduce the carbon foot print of your process by greatly reducing transit emissions. Let’s get executives off of planes and product out of ocean liners and re-think corporate strategies! It’s time for new spreadsheets and presentation with more complete information!
I always enjoy Jon’s articles. They are filled with futuric insights. Keep up the good work.
That is a hard sell. As you pick things up at the store it says made somewhere other than the USA
Innovation has always been the key to job creation. Nobody is employed building wagons or steam locomotives because innovation based on R&D, i.e. new knowledge, made these old products obsolete.
Government smothers innovation to various degrees with numerous policies. , and that’s the problem. Robotics are innovative too, but government regulations often discourage start ups and allow large companies to survive without active R&D departments. For example, easy money allows big business to buy out their competition there by avoiding expensive R&D. Regulatory costs weed out the small, innovative companies too. Knowledge is what creates new jobs. Any company not creating new knowledge will go like the buggy manufacturers.
Here’s a sound bite for you Jon, without the interest rates for income support and no jobs to depend on, where is the customer base for the future as you see it going to come from. None of what business does, matters if they can’t sell stuff.
But the other sad reality is that those people who were getting paid at factory jobs would use the money to buy things that were made in the factories, creating more factory jobs, getting more factory people salaries that they could use to buy more stuff with and round and round it goes… Robots don’t earn money and thus don’t buy things. So who’s going to buy stuff in the future?? Not everyone can drive a bus or flip burgers or be a waitress. And even those jobs will be robotisized in the future. At Mcdonalds now you are expected to use the automated machines to place your order eliminating even those min. wage jobs. soon robots will be flipping the burgers and self driving cars/buses will replace bus drivers… So if you look at the big picture, Society and industry is shooting itself in the foot and will ultimately cause its own demise as there will be no one left to buy things. Right now society is buying things on credit, everyone is in debt. Once that money runs out then who will be there to buy stuff??.. Robots where touted as supposed to have been there to aleviate mankind from monotonous manual labor allowing us to have more free time and to be productive in other ways, but once they are doing everything and we have no jobs left, they will only make us broke… The only jobs that will be in emand will be robot mechanics, but even that I’m sure they will get robots to fix other robots eventualy… Then welcome to Cyberdyne’s Skynet for real!
Wow! Warrior — There’s a lot of food for thought in your comments! So, go a little deeper in thoughts! — what will the world look like? Will it be the “haves” and the “have-nots”?
Will there be a “service-oriented society”? Will there be a need for more and more taxation so that we can have “Equal Income Distribution? I’d like more clarity, but, I think you are on the right track
Right on, wasteland warrior. The only benefactors in the end will be the owners of the companies making robots by robots but then their will be no consumers, since robots do not consume, to buy their products. Even the one tenth of one percent will be in trouble then. The robots will have no body to make their widgets for because nobody will have money to buy with. Lovely.
That’s the hard truth. Businesses in the U.S. still make a lot of stuff. They just need far fewer people. And they will be further incentivized to cut payrolls as digitization and the Internet of Things reach scale. unquote and thus the dehumanizing of man continues. We will be marginalized by big business and pushed into the dust bin of redundancy. There will be very few cash customers left to buy their products of greed. The masses will gather and overthrow the greed gods and re-establish mankind in a kinder gentler fashion. It has to happen that way unless heliocaptor money becomes a reality.
Gordon, I am as interested in your vision as I am with Warrior’s vision! Please expand your thoughts about —————————————————————————————what will the world look like? Will it be the “haves†and the “have-notsâ€?
Will there be a “service-oriented society� Will there be a need for more and more taxation so that we can have “Equal Income Distribution? I’d like more clarity, but, I think you are on the right track
Your message is mind boggling! We are productive, but what will happen to all those unemployed workers?
I really get the idea Jon likes the idea that robots are taking all the jobs from human beings. You do not think it is a problem. Well John at some point your analysis will be done by a robot and you will be replaced. Then you will have no means of supporting yourself or your family. Ha Ha !! People need jobs and their families need them to have jobs so that they will not be on welfare. To feel good about themselves and have self worth. Governments need people working so that they can tax them and pay for government services. If millions and millions are on the welfare rolls and nobody has a job how in the hell will the government pay for these benefits ?? Driverless cars and trucks will put many many millions out of job. Tens of millions will be affected such as family members. Then what Jon ?? These corporations, do they not get that if people have no income then they can not be consumers for the corporations and thus not buy there products ? The corporation goes out of business clearly. This reminds me of an old twilight zone episode where everyone is replace at a company by robots and finally the owner is replaced. Actually that was kind of sweet at the end. Jon do you want a world with robot cops and terminators. Because that is exactly what you are going to have. To serve there masters like the Bill Gates of the world. And then when the robots become to smart, they will in the end kill their so called masters. That’s a great future Jon to look forward to.
All good points
At the end of the line there will be:
1. Humanity
2. Automatrons serving Humanity
3. Maintainance robots fixing Automatrons
4. Manufacturer robots including 3D printers making all the necessary parts.
No one (humans) will need money or governments. Everything necessary for the good life will be provided at no cost. Humans will do what they want within the then “set in stone” laws. Crime, etc. will be no longer be necessary to get things, intelligence will guide, schooling (learning) will be the only necessity. Etc.
Sounds great…. we won’t need food or entertainment, people will voluntarily move to less-desirable places on earth so there’s no over-crowding, we won’t need to travel or go on vacations, everything we need will be made by robots, we won’t need raw materials to feed the machines and the machines will modify themselves to make newly-invented products. Utopia!
True, productivity is way up in the US. The problem remains, who will buy? If people here cannot buy back what is produced, there will be glut with severe economic consequences. It can’t all be exported. If we don’t find a way to get money into the hands of a consuming public by retraining for 21st century jobs, bringing our primary and secondary educational system up to the best of European and Asian standards, and massive public work projects to restore our crumbling infrastructure, we are all in for deep trouble. But the potential is there for a way out, because most of us know what is wrong, many sadly at first hand.
David, I can see your point —-“there will be glut with severe economic consequences.” —
but is massive public works projects really the answer? We (in America) seem to be the most “consumer-oriented society” in the whole world. And, “our 20 trillion dollars of debt” is enormous. Sure there are many other “debt-ridden societies” in the world with debt o GDP ratios that are even worse than America’s debt to GDP ratios. So please, tell me how those other countries will become “consumer-oriented”?
I have been saying this for several years in comments on Weiss. Even burger flippers and pizzaristas can now be replaced with robots. As soon as cost analysts find it will positively affect bottom lines, that will happen. Politically motivated minimum wages will speed that day..
Inevitably autonomy and computers will steal manual labor jobs.
But regardless of technology, folks will still need human labor albeit technology enhanced.
America no longer competes with manufactured goods that America needs.
Those jobs that have gone overseas to be manufactured by foreign concerns should come back. Jobs are jobs, regardless of liberal philosophies and projections made by persons that never lifted a shovel.
I don’t buy into this “we have other things to make” crap.
I guess these “doomed to tech” minds are content as America being the leader in the manufacture of weaponry.
Mr. Markman, your article while well intended showes how uninformed you are about mfg. Yes the 3-D printing makes proto-type parts easier to make and saves labor. But if a product go to market, that process is too expensive and lacks the strength in many parts applications. Plastic injection molds and powdered metal casting and many other processes like stamping still dominate the mfg. floors of the world and will for the foreseeable future. The jobs and loss revenue to the Treasury are causing great harm to our economy. Foxcon in China employs 3X the 60k workers that Apple has in the US so talk up the digital impact on mfg. but get yourself better educated before writing as if you are an expert on the subject. I’ve worked in mfg. for over 40 years and KNOW the reality of the industry. Thanks and try to look at the whole picture not just the slant that best fits the WS perspective. Jon
I agree that this article misses the mark. Those jobs that left the US, no matter how they are counted, should not have left the US. We can’t necessarily get them back (now), but the reasons for that happening have to be addressed, so, that future innovative products don’t leave our shores… no matter how many jobs they actually create. For that matter, I would argue that while certain jobs are eliminated, other new types of jobs that didn’t exist, now exist. Of course, they exist overseas… we need to fix that.
Disagree
Of course our productivity is higher, and automation is a factor
However, this does not change the fact that the products we buy are increasingly made outside our borders, frequently with our own raw materials.
The manufacture of electronics, autos, and furniture continues to be “globalized”
Keeping the origin of these products in the USA should be your goal.
Bringing back the factories will make our country less dependent on foreign imports, and will help to bring our trade deficit under control
Saying that these jobs have been “whisked away” and will never return is true globally, but the fact remains that foreign wage structures are not favorable to American industry
Our industry is leaving our shores for countries with lower wages, better tax climates, and less government regulation.
We need to compete with these countries by incentivizing our industry to invest in the robotic plants here, so that we will be the ones making the robots, servicing them and controlling our destiny
All good points, Peter — particularly the quote “Our industry is leaving our shores for countries with lower wages, BETTER tax climates, and LESS government regulation.”.
Listen, I am in the process of buying a house (non-owner-financing) that I will be renting to my daughter and son-in-law. Why? Because, they had been “foreclosed upon” during the 2008 housing crisis!
If you really want to know how Government Regulations are ruling our lives, — try to get non-owner financing these days! Every aspect of your life will be investigated thanks to Dodd-Frank’s NEW FANNIE MAE RULES. This from a guy BARNEY FRANK who couldn’t recognize the HOUSING BUBBLE’s impact on “Fannje-Mae / Freddie Mac” in 2006-2007. Rubber-stamped loan approval, etc., etc.
Sure, it is now forcing people to “jump thru hoops” if they are indeed qualified, and, that’s probably a GOOD THING, but, it is just an example of how flaky goernment entities are!
Wow! Just think of all the taxes those previous employees paid on income as well as the social security taxes that the government has lost. I am guessing that the robots do not pay income nor social security taxes. While corporations do pay taxes on income, they also have accounting methodologies that defer and shelter income from taxes. But there is no replacement for the loss to the social security system while the spending increases on social security benefits. Perhaps a study on the subject may be of interest. Of course, companies may not want such a study conducted for fear the government may tax their robots individually to support what has been lost.
Fred, you brought up a great point ——– social security taxes that the government has lost. Geez. more and more Baby-Boomers are retiring too. And, how about the Pension Plans (public and private) that are on the “verge of collapsing” because of their expectations for an economy that will yield & 7 % or 8 % return on their investments? ———- Ain’t gonna happen with ROBOTS becoming more and more predominant, because they ROBOTS don’t pay into the system.
The robots make a profit for the owner. The profit should be divided into three equal parts:
1. One-third to the owner of the robot,
2. One-third to the government (taxes),
3. One-third to the jobless person as a scholarship to study music, art, or planting trees.
Yes, it is harder and harder to create new domestic US jobs because automation, and outsourcing are destroying domestic US jobs on a vast scale. Microprocessor computer chips are dirt cheap to make, as they are made of silicon, which is sand, which is dirt, and which allows these chips to become dirt-cheap. These computer chips make automation machinery to becoming dirt cheap so as to replace expensive human worker on a ever greater scale. Low wages in less developed countries entice American CEO’s of company to outsource domestic US jobs, and build and move factories to these low wage areas. There are large incentives for the CEO’s of US companies to automate, and to outsource domestic jobs away to save cost, and to increase profits via these means. Looking at another way, there is a lack of incentives for the CEO’s of US companies to exert hard effort to create more US domestic jobs. Without incentives, there is a lack of will to work hard to create new US domestic jobs. Without will there is no chance.
One of the reasons for the lack of will of the US “captains of industry” to create new US domestic jobs is there is a lack of incentives for them to work hard to create new domestic jobs, because the massive tax-cuts-for-the-rich of Trickle-Down economics (aka Supply Side economics, and Reganomics,) in retrospect, is based on the same false ideology of Marxism of “to each according to his wants (, and not whether he is deserving, or not deserving” so that in Trickle-Down economics there is “massive tax cuts to the super-rich, thats not based on whether they deserve the cuts, or not.” Similar to Marxism, the super-rich captains of US industry are receiving tax cut money even if they don’t do any work to increase domestic new jobs. Similar to the former Soviet Union, this incentive robbing Marxism ideology results in weak economies. When the super-rich captains of US industry get massive tax cuts without having to create new domestic new jobs, there is little incentive for they to do so. A merit based tax cut system for the super-rich will go a long way to incentivize them to create new jobs. Otherwise, they are just going make the excuse that it is too hard for them to do anything. That is, those contributing to creating more net new domestic jobs will get more tax cuts, while those not contributing will get less to less tax cuts. Such merit based tax cuts system will even allow tax credits be given to those working hard to create more domestic jobs, as the money saved by not giving money to those not contributing to creating more domestic jobs can be used to increase the rewards to those contributing and working hard.
Where these is a will, there is a way to creating more domestic jobs. Where there are incentives, there are will. Where there is a lack of incentives, there is a lack of will. There should be some kind of “Nobel Prize” for job creation, so that university professors come off pushing false Marxism like supply side, and trickle down economics, where this incentive robbing ideology is promoted by giving massive tax cuts to the super-rich captains of industry even when they destroy massive numbers of domestic jobs. These should be contests and rewards for people coming up with ideas for creating more domestic jobs. For example, a hundred-thousand new jobs ought to be created to create Internet-2.0 to create a new Internet with robust build-in security and safety features. Internet 2.0 had been proposed years ago, and the free market go go years could not “get around” to get it started, as safety is not usually a priority of the free market, as shown by the lack of robust safety investments in nuclear reactors. For example, domestic jobs can be increased by reducing class room size of schools, specially those in troubled schools. Class room size of 30 (or more) should be reduced to 12, which is the size mentioned in the Bible. This will increase the number of domestic jobs for teachers two to three times. Of course, new construction jobs will greatly increase domestic jobs via infrastructure building. There was a promise of the new biotech age which will create a lot of new domestic jobs, as the FDA new drug approval process needs many drug development trials and development to be done domestically some point in time. The promise of the new biotech age has been slow in developing, as many of the small biotech companies lack the funds to carry out large trials needed for statistical accuracy, so they limp along with small trials. Interest rates for Main Streeters are too high, so that a drastic reduction of interest rates for Main Street will increase consumer demand to increase business activity. Banks pay Main Street saving account depositors a quarter percent interest, or less, while banks charge Main Street borrowers 3.5% for mortgage, 6% to 12% for student loans, 15% to 23% for credit card loans, and up to 25% for credit card cash advances. These are loan sharking markups of 1,400% to 10,000%. Historically, mortgage rates were 6% to 8% when banks pay Main Street savers 3% to 5%, for a bank markup of around 100% instead of the now 1,400%. Banks have become loan sharks, and it is sad that some of them still further ripping of Main Street by for example creating false accounts. Incentives are needed to speed up the development, and FDA process. There are endless ways to create new domestic jobs, if there are incentives are created for people to do so.
It is politicians who have created the conditions ric speaks of. They know who butters their bread, and naturally want more of the same. Now, a non-professional politician wants to create term limits and reduce the politicians’ power to harm the rest of us for the benefit of the few. No wonder Republican politicians have turned against him.
Ric, you’ve addressed some real gems of wisdom above, but, there’s also some things that confuse me! ——(1) Compared to ROBOTS –the human worker is indeed expensive because they have families to feed, clothe, and, shelter from nature’s elements, (2) You mention that “a merit based tax cut system for the super-rich will go a long way to provide incentives and create new jobs”, This sounds a lot like Regan’s “supply-side economics” and yet you seem to be critical of that theory.. which do you support —- “supply side economics” or Marxism? ————————————————- (3) You also mention —” those contributing to creating more net new domestic jobs will get more tax cuts, while those not contributing will get less to less tax cuts. Such “MERIT BASED TAX CUTS” system will even allow tax credits be given to those working hard to create more domestic jobs, as the money saved by NOT giving money to those NOT contributing to creating more domestic jobs can be used to increase the rewards to those contributing and working hard. —–IF you are advocating for a modified version of “Supply-Side Economics”, then you may be onto something there that may work??? ———-(4) Finally, you mention “a new biotech age which will create a lot of new domestic jobs, as the FDA new drug approval process needs many drug development trials and development to be done domestically” ———- boy, I believe that (while these drugs have the potential to increase longevity), many, many times, their new drugs are simply too expensive for most ordinary citizens;. Of course, there are a lot of issues that drug companies must deal with — such as governmental drug regulations, and many legal issues and expenses, but the fact remains that (in reality) there is a threshold for most people that cannot be overlooked.
While it’s true that the factories employing thousands of people aren’t coming back, globalization is still a catastrophe for the typical American and must be crushed. And the “consultants” and Silicon Valley can take their gobbledegook (what the bleep is “Industry 4.0”) and shove it.
What really needs to be crushed is politicians telling everyone how to live their lives. All the laws, rules and regulations raise costs, which hurts people also. Are YOU comfortable with everything you have to put up with to satisfy the politicians and bureaucrats? Yes, to some degree they protect people, but those who want to take advantage of us ALWAYS find ways to do so anyway, often harming us even more. So they might spend time behind bars – just a price of doing business. It might have something to do with why we have more people in prison than anyone else – even China or India. I think Trump is a clown, and maybe should be in prison, but I DREAD having Clinton in the White House. She is even more dangerous to our freedoms than Obama.
Innovation and frictionless access to capital is the key to job creation. Govt is constricting both.
Govt meddling, causing high minimum wages and artificially low rates has accelerated the adoption of robots.
The common problem is govt largess. The first country to solve this problem will win both jobs and properity.
Thanks, Jon. This is the most insightful message I have received from Weiss. Where were your critics and their narrow sympathies when millions of farm labors were displace by improved farm machinery? As a victim of union wages, which I indirectly must pay, I welcome the automation of union jobs. Ultimately, we all benefit from automation. That is as much a fact of life as death and taxes. Automation is a threat only to the unadaptable.
I don’t agree that work at factory jobs overseas are dominated by robots. They are dominated by cheap labor. For one thing, there would be no incentive for foreign countries to invite us to build factories on their soil if no tangible jobs were created. Especially if taxes are lower in these countries. If no jobs are created and very little taxes collected in and by these US factories, there are no reasons to have US in their countries.
Seems China is doing better than the US. Hmmm. Yes, bringing manufacturing back home will restore employment. You’ve been looking out for Wallstreet too long. We must make every effort to restore employment to legal US citizens. Anything else is unconscionable. Oh, unconscionable is Clinton’s world, isn’t it.
Someone has to design, manufacture, operate and repair those machines. Those are the jobs we want. If we don’t get them some other country will.
Even “Thinking jobs” and technical jobs are going to be taken over by computers and robots as the boom in the advancement of AI (artificial intelligence) becomes a boom in the years to come. Already they are talking about working successfully with AI that decides court cases instead of judges and lawyers, (which might not be a bad thing!) and AI being used to diagnose medical problems…Autonomous Robots are being use to patrol areas in and factories in China, they are toying with AI capable robots and weaponizing them with tazers, (I’m sure guns will be next once they get the thinking right)… and once robots are building robots then there is no end to it until we humans will be reduced to an illogical inconvenience to the much more superior “Thinking Machines” as predicted in the Terminator series…The world of Skynet, here we come!
I find that with all these free trade deals that jobs still are going overseas in my industry. I am also finding more and more of our food [e.g in Walmart] comes from China and Asia. I am not sure what items made in USA is providing the maximum production in 2016. Burgers? Most labels on items I see are out of USA. Certainly my sons have a hard time getting much more than minimum pay. These free trade agreements seem to export jobs. Automation does not help. It is a Industrial Revolution but governments do not see to help those being displaced with employment but soul crushing dole with controls.
its allready happening now low growth high unemployment , you cant have growth when people dont have spare cash to spend , whats next war .
Although I don’t disagree with Jon’s major points, let’s not panic yet. Anyone ever consider McNeil IP LLC, a USA company whose CEO decided to take on the challenges of foreign competition in making what are relatively simple products: floor mats, floor liners, mud flaps, window air/water deflectors, etc. for automotive vehicles, using factories, equipment, materials and employees entirely based in USA. You have probably encountered or purchased some of their products which are sold under the WeatherTech brand name. And he advertises profusely in all the popular automotive magazines sold in USA. I have purchased some of their products and some from OEM European suppliers, and his products are in several cases definitely superior. So, if he can do that in today’s environment, imagine what might be done if other entrepreneurs began to think similarly and if USA government regulations and tax laws became more favorable to doing manufacturing businesses in USA. Some companies are already thinking about moving some of their production back to USA due to rising labor costs in other countries, and the costs and logistics of transportation.
Also, no one has mentioned the building and construction industries, skilled trades, and especially the skilled technicians that are and will continue to be needed even if all the common products we buy are made by robots, unless they become so inexpensive that no one ever repairs them.
If you have ever visited Germany, you might have noted how they blend a huge amount of world-leading technologies and mechanization with highly skilled labor and skilled trades including classical trades that are all but gone in USA. How have they made that work, and kept their economy going as well as absorbing the huge economic load from reunion with former East Germany? They, too, might be a model to learn from. Or the Swiss. Or the Norwegians.
Interesting discussion but in our dysfunctional political situation, does anyone think improved policies with get accomplished any time soon? If something does not intervene, “A Black Swan”, don’t you think we are continuing a further death spiral toward violent unrest?
Unfortunately for my children and grandchildren, I can’t see any favorable Black Swans on the horizon. Martin W. and Larry E. have both written recently on highly probable Black Swan situations – war, world violent unrest, economic and bank collapse, etc. To these I will add a pandemic spreading in our highly connected World; and, with the Tech focus of this column, shutting down the nodes and infrastructure of the Internet through hacking.
Continuing the Tech thought, what would we do if the Internet dissolved, the Cloud disappeared, and the robots all shut down? Would jobs, a middle class, productive work return? Would YOU give up Facebook to save our society? Maybe a Positive Black Swan event after all!
Just a thought!
Thank you Jon for putting forth a very insightful article, technology will continue to change the face of society whether people want it to or not. Although, having read the comments so far, I’m a little disappointed with the wish to revert to the past as a path forward. It is true that what boosted the 3D printing industry was the manufacturing of proto type parts, but they have moved far beyond that now. If you would have told me in the 1990’s that a printer could produce a carbon fiber part with the strength of aluminum or a titanium bone replacement, I would not have believed it but they presently can. So I have no trouble believing that 10 years from now printers will be producing high stress parts of all kinds if innovated young minds are put to the problem, they will figure it out.
As for the social impacts caused by the shift in production methods, those same creative minds will work that out as well provided we don’t saddle them with a modern version of the Smoot-Hawley Tariff Act. I know this from my own family history, starting with my great-grandfather as a harness maker to the Czar in Germany to myself leaving the rust belt to pursue a career in electronics. Each generation had to adjust to changes in the industrial revolution (I don’t see a lot of harness makers anymore) and ironically, my grand-father worked at Fisher Body which was instrumental in replacing the horse as transportation. So when I speak with young people about how I solved problems in the manufacturing environment, it is not so they will do it the same way but rather improve on those solutions. Instead of more restrictions and regulations, we must ensure the next generations are free to solve their own problems.
Here’s the ubiquitous question I see in the comments:
Who will be buying the robotic-manufactured stuff if people don’t have jobs and income?
Answer: Anyone who is selling all that robotically-manufactured stuff online.
I’d spend more time explaining, but I need to get to work on my website, blog, social media, and email and get busy selling. Gotta make a living!
I have worked in industry all my life. On the assembly line, physically forging iron, in Industrial Design, making tooling for automotive industry, designing sophisticated target tracking systems. I have my name on a handful of patents, and I managed million dollar projects. Presently, the foremost robotic manufacture company I apprenticed with, KUKA in Germany, is in the process of being acquired by a Chinese company. Ironic. I understand the implication of outsourcing. All told, I have a thorough understanding of what makes a maker society. Robotic assembly and assistance and artificial intelligence have been around for decades in various degree of sophistication and they have taken over some manual labor tasks. So, that’s nothing new. However, there are so many processes, designs, systems and products that will require manufacturing skills and customization that do not lend themselves to automation. And the market for and need for individualized and narrowly customized products and services will increase the demand of highly skilled workers and engineering, in many ways counterbalancing jobs lost to automation. My verdict: no way we should accede to the myth of major loss of manufacturing jobs in the US, if we are smart. Gotta be skilled and flexible and imaginative. Always. And we will prosper.
Interesting discussion. All your points bring up more points for discussion I agree with the gentleman from Germany……that there will always be need for skilled workers….some jobs can’t be done by automation and some people will pay many times the Big Box retail price for something thats…..hand or custom made. The problem with this is that this is a small market.
I was middle class….now I am peasant class. After college I earned money in industrial sales and was earning in the $50s. I bought a large house expecting to earn more and retire early. In 1993, IBM and other companies discovered how to increase their bottom line. IBM called in workers….” good news…..you have a job….bad news you are making 50% less”….In my area of NY where IBM is located, house prices dropped $30,000…as people put their house on the market and moved out. On the street where I lived I was the only non IBM executive. All the other people were either retired IBMers or working at IBM. The people on one side of me moved to NC. There, they could continue to draw their VP pay-levels. The people on the other side of me had moved to NY ( IBM HQ)…to work in the plant but refused the 50% pay cut. They moved back to their home state. Other companies took up the same idea….” good news bad news…50% pay cut”…Soon no one offered 401k, health insurance….no one offered time and 1/2 if you worked > 40 hrs per week ( the standard work week is 30-35 hrs, with NO OT pay)….Its pretty bleak in my neck of the woods in NY. Drive down rte 9 ( Tarrytown to REd hook)……you will see FOR SALE or FOR LEASE at every strip mall on the rte…There is NO strip mall that is 100% filled. Every lot of land has a for sale sign on it and or a build to suit sign on it…….And this is BEFORE the Hammer falls on the economy!.
In 2000-2002 I was working at a factory that made manufacturing tools worth from $25,000 to $600,000. Big companies were buying these tools. But we were shipping them and installing them in Mexico, even Russia. Few were up grading their US manufacturing companies.
The area now is known for ” cheap labor” because retail companies moved in and pay $9 per hour with no benefits. Sears employees told me they used to make around $40,000, working full time, with benefits and 401k. I worked there 2 years and as I was there the employees got letters….no more company sponsored 401k, no more health insurance. Salaries of FULL TIME employees dropped to $25000. You can’t afford an apartment in NY on that let a lone a house. I left Sears after 2 years in 2011, having earned $18000/yr, working PT…..Try to live on that……$18000.
What I see is that automation will continue to take away jobs. People who used to earn good salaries ( IBM factory workers used to earn $50,000….not bad, but try and live on half of that $25000…you can’t)…are now making slave wages. They can hardly afford necessities…let alone manufactured goods that spur the economy.
With workers making serf wages, you will have automation making some things and handmade items going to the rich. We are back to feudal days.
The only up side that I can think of is if we go to space.
Back in the Apollo Program days…1964-1971…..400,000 Americans had good paying ( for the time) technical jobs. Nasa even came to my HS( in the 1960s) and put on a demonstration of some technology and pushed the 1960s mantra….” if you want to get a good job you have got to get a good education”…..We went to the moon and doing so we put a huge growth spike in American technology. We became the computer wizards of the world, chemistry and aeronautics had huge growth and we created an educated technical work force.
If we can have an INTELLIGENT space program again we can spur technology…spur MANUFACTURING and TESTING. The Obama plan for space is a joke like his Obamacare “medical plan”…( really a plan to steal)…..IF you look at space experts like Dr Zubrin of The Mars Society and Elon Musk building reusable rockets that will be THREE HUNDRED TIMES…cheaper than the throw a way launch vehicles we now use…..we can become a manufacturing country again. Not only can we export our Space and manufacturing expertise but we can build Solar Collection satellites and beam the energy down and put it into the earths electrical grid ( this was all proven in the 1970s…read Gerald Oneils books…” the High Frontier” and ” Colonies in Space”)…..Elon Musk at Tesla is perfecting the storage battery for solar energy. The US DOD and others are looking at it to store FREE solar energy from the sun. Couple the cost of reusable rockets, building solar satellites, selling the energy to third world countries, powering electric cars, getting of the oil habit…..you have created industry….manufacturing…jobs….wealth…an economy again. Paying decent wages…people will spend the money. IF we keep putting people out of work via automation the economy will consist of the royalty class buying custom made trinkets and the serfs unable to afford anything…Lets go to space intelligently. Look at Dr Zubrins plan in ” The Case for MaRS”…his mars DIRECT PLAN…will create all the things we need. Expand that to build solar satellites and we have a future. Continue along the present course ………………………………we will die…..
reminiscences of was written about 80 years ago. how old are you jon?
Is Rob predicting a bull market in the precious metals market? Gold and Silver and the precious metals market look the safest and most prudent investment. Human Beings being replaced by robots in the work place……whatever next another financial scam on wall street.
OK so the robots are going to buy the the stuff they make. because people will get redundant. if you have no money you cant buy .that is what is going to happen
Interesting. This brings up two interrelated core questions we will have to answer as we increasingly rely on automation and artificial intelligence. First, how do people define themselves and obtain their sense of identity. Traditional, that has been strongly related to the work we do. Second, how do we distribute goods if a large number of people no longer perform traditional work for pay? What does this shift do to our whole economic model?
I don’t think that we are that close to a total shift. But, if we are heading in that direction, how are we going to handle it? Those currently left behind in the rustbelt may just be the canaries in the mine. And from what I’ve seen about all the reports of heroin addiction in those areas, that picture of the future isn’t pretty. People want to work and not everyone is suited to a white-collar job. Technology is leaping ahead, but our social, economic, and political institutions are not equipped to deal with the fall-out.
When our bipartisan Federal government implemented NAFTA at the beginning of Clinton’s first term, there were 1 million plus vehicle assembly workers in the USA. Today, because of industry restructuring and productivity improvements, 800,000 assembly workers build more vehicles than ever.
However, only 450,000 of these workers are in US plants. 350,000 are in 23 Mexican plants building vehicles for the US market. Projections are that by 2020, there will be 400,000 assembly workers in Mexico and only 400,000 in the US. That’s over $33 billion in lost wages for the US work force. At a conservative 4x turns, that’s $130 billion dollar loss to the US economy.
The most popular vehicle sold in the US is the Ford F-150 pick-up. It is built in four factories – one in Michigan, one in Missouri and two in Mexico. Ford plans to increase Mexican production from 250,000 vehicles to 750,000 vehicles annually over the next few years.
Daimler Benz is closing down truck factories in Virginia and Ottawa, Canada, moving most production to Mexico. 100% of Honda Civics for the US market are built in Mexico, instead of Dayton Ohio where they used to be made.
This doesn’t even touch the shift to Mexico of all the automotive components – engines, transmissions, alternators, wheels, seats, interior trim, etc., etc.
When a politician or economist tells you the factory jobs are disappearing because of automation and technology, they are lying. The Mexican workers are not more highly skilled, more technically trained or more productive than the US workers. They simply work for lower wages – and our politicians gave them America’s jobs.
May Everyone Who Shares Their Intelligent-Insight* In The Article Above, And In “All” Articles In The Weiss Research Publications, May Everyone/Everybody~~~
May You “Remain Happy!” ~awhile making All Your Choices Wisely!
Sri Da*
* * *
Modern manufacturing, robotic assembly, robots assembling robots, CNC machines, autonomous driven vehicles for trucking and delivery influencing logistics, POS systems such as Amazon bringing the the product to the satisfied customer wherever she or he may be. A virtuous circle. What’s wrong with that?
Some write that there is no capacity in this scenario for the worker, that you need the multiplying affect of labour to spread wealth so that within this virtuous circle workers have the capacity to buy and access credit. It’s what makes the economic world turn. And again, what’s wrong with that?
The outcome with this erosion of labour and job loss is the requirement to force redistribution of wealth, but to force redistribution you must first reduce your freedom by granting leaders the right to confiscate disproportionately. They become a self absorbed elite who recognise that the nexus of their power is in their ability to appropriate versus innovate. A not so virtuous circle. And some say, what’s wrong with that?
A great deal as a matter of fact. Imagine if instead of promoting leader’s vested in the status quo, you looked to leaders who believe that your value wasn’t turning a series of nuts and bolts on a line but learning to repair the robot, build the robot that builds the robots, maintain the life cycle of the driverless transport truck, monitor the drone that delivers the package.
You don’t need leaders that willing limit your freedom to pursue life, liberty and happiness and enthusiastically confiscate, you need need leaders that educate. Now that would be a virtuous circle.
The fast track technological changes to production needs to coincide with Corporate in house in built training programs of existing workforce to remain employed. Further imposition of Government regulatory policy & its implementation should make it compulsory for Corporations to abide by a mature outlook to the Human factor in their decision to hire & fire rather than just their ” BAD FOR PROFIT IN BUSINESS POLICY “. I think that the Corporate Executives are insanely paid salaries & compensations irrespective of performance of their Companies & what the heck are these ” SEVERANCE PACKAGES ” its just robbing the efforts put into the business by the Workforce in the Corporation. U are fired just as any Worker of your Company is.
In 1956 we supported the South Vietnamese Government’s refusal to participate in the reunification election as provided by the Treaty of Geneva ending French occupation of Indochina. We lost 59,000 Americans in the ensuing Vietnamese Civil War. Now our companies are manufacturing consumer goods there, paying about 60 cents per hour, importing their wares without tariffs and keeping the profits overseas to avoid income taxes. Is this a great country or what!