Technology gives mixed meaning to labor day celebration

September 5, 2011 By Alan S. Brown
Credit: scumdogsteev via flickr

This Labor Day, with unemployment hovering above 9 percent, workers are confronting an enigma. Although there are one-third fewer factory workers than there were only 10 years ago, manufacturing in the United States is thriving.

From 2001-10, manufacturers shed nearly 5 million manufacturing jobs, yet the value of manufactured goods rose 27 percent, and U.S. exports reached their highest level in 20 years. Technology is not only responsible for many of the job losses -- but also for the increased output as well.

By adding technology, many manufacturers have reengineered their operations to become leaner, eliminating unnecessary steps in the , and replacing large inventories with more frequent shipments from suppliers. Their investments in automation made the United States a global leader in productivity, yet it hit workers with a double whammy: that could be automated shed people, and those that could not moved overseas.

"At some point, automation is not just about replacing a cheap person, but an enormous source of data that gives you enough information about a process to improve its quality, speed, and cost. If a human's doing it, you don't have that data," said Doug Woods, president of the Association for .

U.S. manufacturers began boosting 20 years ago, when they realized they could not compete with low-cost offshore labor, said Tom Runiewicz, an at IHS Global Insight.

"The pace picked up in the ," Runiewicz said. "There was a big squeeze on companies. They had to do more with what they had. Automation saves in the short term and makes them more competitive in the long term."

Some of these technologies are readily noticed in a factory, like robots, automated production lines, and wireless scanners for tracking parts and equipment.

Software is less visible, but is just as important. The software used in modern factories monitors and controls machinery, constantly adjusting to make each cut and weld perfect and warn when there is a problem. Other systems schedule production to use available machinery and inventory most efficiently, while others analyze production data to find better ways to complete each task.

Over the past decade, those technologies have gotten cheaper and simpler to use. "Many small and mid-sized shops are able to deploy robots now," said Joe Campbell, vice president of the ABB Robot Products Group. "Ten or 20 years ago, they needed specialists and it was more difficult to get up and running."

Tens of thousands of U.S. factories have closed since 2001, but many of those manufacturers left standing have learned to use technology to become more competitive. How competitive? A new report by Boston Consulting Group predicts that over the next five years, the cost gap between Chinese and U.S. manufacturers in some low-wage states will shrink to single digits -- without even counting shipping and inventory costs.

According to Michael Zinser, one of the report's authors, Chinese workers are averaging 15-20 percent wage increases every year. If that continues, wages in China's heavily industrialized Yangtze River Delta will go from $0.72 per hour in 2000 and $3 today to $6.30 by 2015. That is still four times less than Zinser expects U.S. workers to make, but thanks to investments in automation, American workers are far more productive. While U.S. firms are not likely to take back manual assembly work from China, Zinser says factories that use advanced technologies will be competitive.

Some companies, such as Ford, NCR, Coleman, and Peerless Industries, have shifted some production from China back to the United States. Zinser and Runiewicz believe this trend will continue. That means more jobs in the , though not as many as in the past. It also means a different type of workforce.

Some, like Runiewicz, believe manufacturers will have to hire more educated workers.

"The person you need is going to very technical, almost an engineer," Runiewicz said. "That type of person [unskilled factory laborers] will almost be obsolete."

Samsung Semiconductor's new semiconductor plant in Austin, Texas shows what that trend looks like. The company’s original plant employed 1,800 people. When Samsung opened a larger, more automated plant in 2007, it let go of 750 people, including 300 manual factory workers. The new plant now has 2,200 engineers, technicians, and other workers, but almost no one does manual factory work.

Yet Woods -- who apprenticed as a tool and die maker -- believes that ordinary workers have a future. He expects smarter manufacturing software to provide the specialized skills lack, just as word processors made it easier for everyone to write grammatical reports without spelling errors.

"The jobs are not going to be what they were 20 or 25 years ago, but there is going to be more manufacturing. We're going to employ smarter technology that will enable people without a college education to work in factories," Woods said.

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3 / 5 (2) Sep 05, 2011
The flipside, of course, is that if robots were capable enough to take over ALL jobs, then no one would NEED to work, since all necessary labor (including maintenance of the robots) would be done by robots.

Unemployment is a good thing if working is no longer necessary. It's just getting to that point that's the difficult part. Forcing people out of work in an environment where they still must in order to survive is what the problem is.
1.8 / 5 (5) Sep 05, 2011
This only stresses the importance of online job training so the blue collar workers can find a job as a more affluent software or mechanical engineer. Doing this would grow productivity even more. Capitalism is evolution.
1 / 5 (1) Sep 05, 2011
then no one would NEED to work, since all necessary labor (including maintenance of the robots) would be done by robots.

Problem then is: Who would pay for the goods and with what?

Even robots have a maintenance cost and the product itself has a cost (energy, material, ... ) so giving the product away for free is not an option - and certainly not in the interest of the owners of the factories.

With no worker actually being needed there's also no one to pay and therefore no consumer. While this would mean the end of capitalism (which would not be a bad thing per se) I can't see any of the factory owners handing over the keys to their factories 'for the common good'.
not rated yet Sep 05, 2011
The fact that the finite number of jobs doesn't account for the population explosion. More people need more jobs to buy products. more machines take said jobs, less people have jobs, less product is sold eliminate more people because they cost more to do jobs than machines on and on till we all live in the street. add the comming AI singularity and catch 22 anyone?
1 / 5 (1) Sep 05, 2011
You guys really need to be schooled up on Econ 101. So what happened to the typewriter manufacturers when the computer came along? What happened to the wagon builders when cars came along? People get layed off from companies with outdated products and they seek employment in a new and growing industry. Are ATMs and airport kiosks bad? NO, they improve efficiency and allow people to take on more affluent jobs. I guess we should just throw away bodosers and graders so we can dig ditches right? If you want "shovel ready jobs" than i guess that's the way to go...
not rated yet Sep 06, 2011
".but thanks to investments in automation, American workers are far more productive."

Of course American workers are going to be more productive. Automation doesn't require sleep, need a break, form a union, or require nearly as many resources compared to their human counter-parts. Needing minimal maintenance and existing for the sole purpose of production, automation=efficiency.

I'm predicting another "big crunch". Sometime in the next 10-20 years, technology will be moving at such an advanced pace that our workforce will be unable to keep up with it; all the while we make them smarter and more efficient, continuing to make more jobs obsolete.

It's going to happen fast. Only a select few will be able to "keep up", leaving computer jobs to less of us in an already horrible job market. Then we'll all be twiddling our thumbs wondering "what now?"

And let's not forget: once a technology is implemented, our dependence ensures it's continued forward march. We cannot go back.

not rated yet Sep 06, 2011
People get layed off from companies with outdated products and they seek employment in a new and growing industry.

What happened to the wagon builders when cars came along?

This may have been true when you could go from industry X to industry Y and be employed as an unskilled worker. No problem. But today the unskilled worker is ni less and less demand. The jobs that are left are beyond their capabilities (and even beyond many people's capabilities to learn)

This gives you the paradox situation many first world civilizations face today: There are enough jobs to go around but you have a vast number of unemployable people and a shortage when it comes to highly skilled personnel.

Economics would say: So let's educate all these unemployable people and make them engineers and whatnot - but I think anyone can see the flaw in this.
not rated yet Sep 06, 2011
Automation has another effect: More value per worker is created (i.e. today a worker can, with the help of robots, create more cars that are worth more as a ratio to his hourly wages than he could 50 years ago)

BUT: That created value needs to be paid for by some consumer. I.e. someone has to BUY those cars. So the money to buy those cars must be put into the hands of some consumer (which, ideally, should be the worker or his peers elsewhere).

The discrepancy is obvious: More value is created than money is being put in the hands of the consumers. This can only lead to infaltion and/or a crash in the long run.

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