The public perception of a decline in American manufacturing is highly overrated. It's American manufacturing jobs that have been in decline. American manufacturing itself has grown every year from 1970 to 2010 with three exceptions (2001, 2008 and 2009, recession years).
(cf. also http://goo.gl/ZA1o2 - for the historical stats; the opinion parts and any policy recommendations you can take or leave.)
Exactly, it's not foreign workers that have taken all the blue collar manufacturing jobs, it's robots.
Everyone seems to be worried about China becoming the manufacturer for the world, but as technology progresses manufacturing will move closer to the consumer.
I'm an engineer in the manufacturing sector and there is quite a bit of automation at the company I work for. Where there are robots, PLC's, and other things that can be programmed there will ALWAYS be problems that need both high tech people and blue-collar level involved. Engineers write the software, technicians repair them and workers operate them. I don't get why people have this notion that factories are comprised entirely of robots running at 100% efficiency with 5 people overseeing what used to be 1000 jobs. A robot may take someone's job and be able to perform the same amount as 3 people, but it's not like they're free-standing things that require no maintenance or other human interaction. In many instances it's just not feasible to have a robot perform the work.
I agree with you on your point about robotic manufacturing still requiring people, but I don't think you can say we will always need blue collar workers in factories.
Even without strong AI we will there's no reason to assume that robots won't take over practically all blue collar work at some point. I can't say how far into the future that will be, but I can't see any reason to think it won't happen eventually (short of some kind of mass extinction/new dark age/robot apocalypse scenario).
A major car manufacturer, BMW or Toyota I believe, was showing their new factory and touting how it only required 50 people to run operations for the entire factory. You underestimate the amount of labor a robot can replace. It's not 3 people but 10. Now some of that labor will be pushed up to control and maintenance but most will simply be phased out.
As well, new factories are being built around robots and their limited degrees of freedom.
There aren't too many manufacturing facilities in the US of that size that are automated to the extent you mentioned. There are many situations where it's nearly impossible to have a robot do the job such as installing wiring harnesses, installing hardware in very tight, awkward spaces, etc..(when I say impossible I mean it would cost more to develop that job than the income it generates). I've seen many cases where a human can do the job faster than a robot too. Sure, improving object design can improve manufacturability, but robots are not going to replace people entirely anytime soon in every type of manufacturing.
It's both, and that's the problem. The average worker is getting beaten up by automation, offshore manufacturing, and automation, all at once. It's not really surprising that wages aren't increasing under these circumstances.
the US isn't particularly friendly to capital intensive businesses. Specific factories will get local tax breaks, but you'd never see something like that for airlines.
I wish i could remember the reference, Fred Smith (the fedex guy) laid out a really clear argument why. The effect is, you just don't see that many long-bet kind of investments. What's intel's threshold to pay of a new factory? 9 months?
I think stuff like they mention in the article - biotech, nanomaterials, etc - will be fantastically more expensive here in the US. we don't have the structure for that kind of risk.
In textiles we see the opposite. Large capex businesses are still here in the US since depreciation is such a big portion of your cost component (think big battery separator, diaper or wipe production lines - 3 football fields long 24x7x365).
These big lines have almost no labor component (maybe 1-2 operators / shift) so paying a premium on labor is worth it to reduce the shipping costs.
It is all of the heavy labor activities that are in China now. They didn't just leave the US, they left everywhere that had high labor costs, and even now they are flowing to SE Asia out of China. With low labor costs, and with labor a significant component of cost, it made sense for these jobs to go right away (especially if their fibers are agricultural in origin and now harvested globally too).
Well, i'm not saying there's never capital investment - i'm saying the us tax structure favors keeping that investment as small as possible.
From what little i recall of berkshire hathaway's history, textile automation has been getting far more powerful and cheaper for like the last 150 years. lot's of textile companies went out of business from betting the farm on an expensive new machine, and not staying competitive 5 years out - because the new machines are that much better.
So with biotech or something, you have all this extra hassle. Super tight environmental control. Special heating and cooling for different resources. Special containment for the lubrication of the machines, so the aerosolized grease won't touch the stuff you're working on - all kinds of crap. basically, all the complexity you have to deal with, plus a million extra constraints.
Fred Smith's argument is it's easier to make money with debt than it is by actually making stuff. US business is forced to optimize around the cheapest possible automation. Maybe that's a good thing, robots keep getting cheaper. Maybe it's a bad thing, it's really hard to get the massive capitalization for these fancy future industries.
"... high-tech firms such as Dow Corning have kept significant amounts of manufacturing in the country. ..."
It was reported in the NYT article, "How the U.S. Lost Out on iPhone Work" (Duhigg, BradSher) ~ http://www.nytimes.com/2012/01/22/business/apple-america-and... that Dow Corning lost out on the touch-screen glass contract to a nationally backed Chinese firm. [1]
Reference
[1] "For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc... Then a bid for the work arrived from a Chinese factory... The Chinese plant got the job."
Fair point, but saying that Dow Corning is not high-tech because it did not win the Apple iPhone business is akin to saying Foursquare is not 'high-tech' since FB also does location based services.
The NYT article does not give any detail on that specific contract, margins paid, etc. There are many reasons DC might not have that specific business but that doesn't detract from the sophistication of their current mftg or its location in the US.
I work in mftg and many of the branded, PR-heavy products are actually pretty poor decisions from an economic standpoint - think of Andrioid's market share compared to Apple's profit-share.
"... saying that Dow Corning is not high-tech because it did not win the Apple iPhone business ..."
I didn't say that. I cited the reference. Corning Inc. has the technology to produce the product. The article cites lead time to set up a batch-run & lack of facilities. Corning Inc. lost out because the Chinese firm was able to meet the un-reasonable constraints, faster. Is that the real reason Corning Inc. lost? I don't know, I just remember the NYT quote.
"Dow Corning have kept significant amounts
of manufacturing in the country"
When an MIT hack reports Corning Inc. as an example of keeping manufacturing in the US and the NYT incidentally reports Corning Inc. loosing a contract to supplying a high volume, hi-tech manufactured product, something doesn't tally. What's the real answer?
The character of a nation is stronger when aligned with those who create value, than with those who move value around. The making is as important to character as design. America needs more makers. Not all makers can be Hackers. Makers on a National scale means more manufacturing jobs, the great middle class participating in the making.
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[ 3.6 ms ] story [ 47.8 ms ] thread(cf. also http://goo.gl/ZA1o2 - for the historical stats; the opinion parts and any policy recommendations you can take or leave.)
Everyone seems to be worried about China becoming the manufacturer for the world, but as technology progresses manufacturing will move closer to the consumer.
Even without strong AI we will there's no reason to assume that robots won't take over practically all blue collar work at some point. I can't say how far into the future that will be, but I can't see any reason to think it won't happen eventually (short of some kind of mass extinction/new dark age/robot apocalypse scenario).
As well, new factories are being built around robots and their limited degrees of freedom.
I wish i could remember the reference, Fred Smith (the fedex guy) laid out a really clear argument why. The effect is, you just don't see that many long-bet kind of investments. What's intel's threshold to pay of a new factory? 9 months?
I think stuff like they mention in the article - biotech, nanomaterials, etc - will be fantastically more expensive here in the US. we don't have the structure for that kind of risk.
These big lines have almost no labor component (maybe 1-2 operators / shift) so paying a premium on labor is worth it to reduce the shipping costs.
It is all of the heavy labor activities that are in China now. They didn't just leave the US, they left everywhere that had high labor costs, and even now they are flowing to SE Asia out of China. With low labor costs, and with labor a significant component of cost, it made sense for these jobs to go right away (especially if their fibers are agricultural in origin and now harvested globally too).
From what little i recall of berkshire hathaway's history, textile automation has been getting far more powerful and cheaper for like the last 150 years. lot's of textile companies went out of business from betting the farm on an expensive new machine, and not staying competitive 5 years out - because the new machines are that much better.
So with biotech or something, you have all this extra hassle. Super tight environmental control. Special heating and cooling for different resources. Special containment for the lubrication of the machines, so the aerosolized grease won't touch the stuff you're working on - all kinds of crap. basically, all the complexity you have to deal with, plus a million extra constraints.
found the old link: http://online.wsj.com/article/SB122488966230768509.html
Fred Smith's argument is it's easier to make money with debt than it is by actually making stuff. US business is forced to optimize around the cheapest possible automation. Maybe that's a good thing, robots keep getting cheaper. Maybe it's a bad thing, it's really hard to get the massive capitalization for these fancy future industries.
It was reported in the NYT article, "How the U.S. Lost Out on iPhone Work" (Duhigg, BradSher) ~ http://www.nytimes.com/2012/01/22/business/apple-america-and... that Dow Corning lost out on the touch-screen glass contract to a nationally backed Chinese firm. [1]
Reference
[1] "For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc... Then a bid for the work arrived from a Chinese factory... The Chinese plant got the job."
The NYT article does not give any detail on that specific contract, margins paid, etc. There are many reasons DC might not have that specific business but that doesn't detract from the sophistication of their current mftg or its location in the US.
I work in mftg and many of the branded, PR-heavy products are actually pretty poor decisions from an economic standpoint - think of Andrioid's market share compared to Apple's profit-share.
I didn't say that. I cited the reference. Corning Inc. has the technology to produce the product. The article cites lead time to set up a batch-run & lack of facilities. Corning Inc. lost out because the Chinese firm was able to meet the un-reasonable constraints, faster. Is that the real reason Corning Inc. lost? I don't know, I just remember the NYT quote.
When an MIT hack reports Corning Inc. as an example of keeping manufacturing in the US and the NYT incidentally reports Corning Inc. loosing a contract to supplying a high volume, hi-tech manufactured product, something doesn't tally. What's the real answer?