Automation More Important Than Ever
President Obama’s State of the Union address focused on manufacturing in the United States – which everyone, no matter their political persuasion, can agree is a vital part of our economy. Countries that don’t make things aren’t world powers, period.
And the numbers, on the surface, can look dire. According to Forbes Magazine, 22 million manufacturing jobs were lost globally between 1995 and 2002. The U.S. lost hundreds of thousands of manufacturing jobs in that timeframe.
The common belief is that these jobs were palletized and shipped east to China or south to Mexico. While that has happened – we’ve seen it in our client base more than once – it’s only part of the story. The reality is more complicated, and may help us to understand why manufacturing output has increased in the U.S. while jobs have been reduced. Manufacturing output didn’t just grow; it rocketed 30% since 1995. China – the supposed vampire of manufacturing employment – has lost a whopping 16 million manufacturing jobs.
In a word, the “culprit” (if you want to call it that) is automation. Robotics is less expensive and significantly more capable – and continues to improve. The same goes for other automation of other kinds.
According to this Forbes article, we have grown much more adept at setting machines to do the most dangerous, difficult, dirty, and repetitive jobs. Some of these were the kind of jobs you’d never want to have a person execute, while others were higher paying, good jobs that help support communities. This makes it no easier on communities and families directly affected by the loss of these jobs, but it does tell us that the demise of manufacturing is a myth. Even here in the U.S., manufacturing output has increased as jobs have shrunk. The other side of that coin is that the unemployment rates simply don’t match the drop in manufacturing jobs. Eventually, the flow of money and resources will direct to other economic sectors.
Companies, whether in the U.S. or Asia, will continue to automate to increase efficiency, slash costs, and compete. For American manufacturers, this can be a huge advantage. With a better-educated, technologically savvy labor force, we can transition faster. The value of cheap labor may be minimized and the high costs of overseas shipping stressed as energy and related costs increase. American companies must continue to automate at every step in the process.
As the Forbes piece says, “For in terms of employment, in the long term, manufacturing globally is going the way of agriculture. It’ll end up employing 2-5 % of the population and that’s it.” Whether we like that or not.
Scott Stone Cisco-Eagle’s Director of Marketing. He has over 25 years of experience in the industry.