Why ro­bots, not trade, are be­hind so many fac­tory job losses

Jamaica Gleaner - - EATB TODAY -

WASH­ING­TON (AP): ON­ALD TRUMP blames Mex­ico and China for steal­ing mil­lions of jobs from the United States. He might want to bash the ro­bots in­stead.

De­spite the Repub­li­can pres­i­den­tial nom­i­nee’s charge that “we don’t make any­thing any­more,” man­u­fac­tur­ing is still flour­ish­ing in Amer­ica. Prob­lem is, fac­to­ries don’t need as many peo­ple as they used to be­cause ma­chines now do so much of the work.

Amer­ica has lost more than seven mil­lion fac­tory jobs since man­u­fac­tur­ing em­ploy­ment peaked in 1979. Yet Amer­i­can fac­tory pro­duc­tion, mi­nus raw ma­te­ri­als and some other costs, more than dou­bled over the same span to $1.91 tril­lion last year, ac­cord­ing to the Com­merce Depart­ment, which uses 2009 dol­lars to ad­just for in­fla­tion. That is a notch be­low the record set on the eve of the Great Re­ces­sion in 2007. And it makes US man­u­fac­tur­ers No. 2 in the world be­hind China.

Trump and other crit­ics are right that trade has claimed some Amer­i­can fac­tory jobs, es­pe­cially af­ter China joined the World Trade Or­ga­ni­za­tion in 2001 and gained eas­ier ac­cess to the US mar­ket. And in­dus­tries that have re­lied heav­ily on labour — like tex­tile and fur­ni­ture man­u­fac­tur­ing — have lost jobs and pro­duc­tion to low-wage for­eign com­pe­ti­tion. US tex­tile pro­duc­tion, for in­stance, is down 46 per cent since 2000. And over that time, the tex­tile in­dus­try has shed 366,000, or 62 per cent, of its jobs in the United States.

But re­search shows that the au­toma­tion of US fac­to­ries is a much big­ger fac­tor than for­eign trade in the loss of fac­tory jobs.

DSu­san Stacy moves a tube to sort re­cy­cled plas­tic bot­tle chips be­ing pro­cessed at the Repreve Bot­tle Pro­cess­ing Cen­ter, part of the Unifi tex­tile com­pany in Yad­kinville, North Carolina. A study at Ball State Univer­sity’s Cen­ter for Busi­ness and Eco­nomic Re­search last year found that trade ac­counted for just 13 per cent of Amer­ica’s lost fac­tory jobs. The vast ma­jor­ity of the lost jobs — 88 per cent — were taken by ro­bots and other home-grown fac­tors that re­duce fac­to­ries’ need for hu­man labour.

MAK­ING MORE THAN EVER

“We’re mak­ing more with fewer peo­ple,” says Howard Shatz, a se­nior econ­o­mist at the Rand Corp think tank.

Gen­eral Mo­tors, for in­stance, now em­ploys barely a third of the 600,000 work­ers it had in the 1970s. Yet it churns out more cars and trucks than ever.

Or look at pro­duc­tion of steel and other pri­mary me­tals. Since 1997, the United States has lost 265,000 jobs in the pro­duc­tion of pri­mary me­tals — a 42 per cent plunge — at a time when such pro­duc­tion in the US has surged 38 per cent.

Al­lan Col­lard-Wexler of Duke Univer­sity and Jan De Loecker of Prince­ton Univer­sity found last year that Amer­ica didn’t lose most steel jobs to for­eign com­pe­ti­tion or fal­ter­ing sales. Steel jobs van­ished be­cause of the rise of a new tech­nol­ogy: su­per-ef­fi­cient mini-mills that make steel largely from scrap metal.

The robot revo­lu­tion is just be­gin­ning.

The Bos­ton Con­sult­ing Group pre­dicts that in­vest­ment in in­dus­trial ro­bots will grow 10 per cent a year in the 25-big­gest ex­port na­tions through 2025, up from two or three per cent growth in re­cent years.

The eco­nom­ics of ro­bot­ics are hard to ar­gue with. When prod­ucts are re­placed or up­dated, ro­bots can be re­pro­grammed far faster and more eas­ily than peo­ple can be re­trained.

And the costs are drop­ping: Own­ing and op­er­at­ing a ro­botic spot welder cost an av­er­age $182,000 in 2005 and $133,000 in 2014 and is likely to run $103,000 by 2025, Bos­ton Con­sult­ing says. Ro­bots will shrink labour costs 22 per cent in the United States, 25 per cent in Ja­pan, and 33 per cent in South Korea, the firm es­ti­mates.

CEO Ron­ald De Feo is over­see­ing a turn­around at Ken­nametal, a Pitts­burgh-based in­dus­trial ma­te­ri­als com­pany. The ef­fort in­cludes in­vest­ing $200 mil­lion to $300 mil­lion to mod­ernise Ken­nametal’s fac­to­ries while cut­ting 1,000 of 12,000 jobs. Au­toma­tion is claim­ing some of those jobs and will claim more in the fu­ture, De Feo says.

“What we want to do is au­to­mate and let at­tri­tion re­duce the work­force,” he says.

Vis­it­ing a Ken­nametal plant in Ger­many, De Feo found work­ers pack­ing items by hand. He or­dered $10 mil­lion in ma­chin­ery to au­to­mate the process in Ger­many and North Amer­ica.

That move, he says, will pro­duce “bet­ter qual­ity at lower cost” and is likely to “re­sult in a com­bi­na­tion of job cuts and re­as­sign­ments”. A worker loads spools of thread at the Repreve Bot­tle Pro­cess­ing Cen­ter, part of the Unifi tex­tile com­pany in Yad­kinville, North Carolina. Amer­ica has lost more than seven mil­lion fac­tory jobs since man­u­fac­tur­ing em­ploy­ment peaked in 1979.

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