Dont tell this to the U.S. presidential candidates as they campaign through the heartland because they might come after us. The chief cause of manufacturing job losses in the U.S. is not migration to low-cost countries like China, India or Mexico. The bogeymen are automation professionals like you and me.
The facts are undeniable. Automation is the single biggest destroyer of manufacturing jobs, not just in the U.S., but worldwide. Thats a good thing. Its called productivity, and manufacturing more with fewer people is perhaps the major driver behind improved living standards worldwide over the past few centuries.
This might be obvious to some, but casual conversations with machine builder automation professionals over the past few years tell me there are still misconceptions. If people in our own industry are misinformed, think about the confusion among the general public.
The Luddites in early 19th century England knew the score. These British textile artisans felt their livelihood threatened by the Industrial Revolution and protested by destroying mechanized looms.
Things havent changed much since then. Companies automate, jobs are eliminated or at least not added, and people panic. Panic in 19th century England led workers to destroy machines, and panic today makes people protest globalization.
Perhaps some facts can help here.
Companies automate to make more with the same number of people, to make the same amount with fewer people or to improve quality.
The first two reasons obviously cut the need for manufacturing labor. The third reason does too, in indirect, powerful ways. Higher-quality products require less very-labor-intensive rework.
So there you have it. We automation professionals first laid waste to employment in the agricultural sector worldwide through automation, and we now have manufacturing in our cross hairs.
From the entry, A History of American Agriculture, at inventors.about.com, we see that in 1850 it took about 75 labor hours to produce 100 bushels of corn with a walking plow, a harrow and hand planting. Fast forward 137 years, and we find it now takes about three labor hours to produce 100 bushels of corn with a tractor, a five-bottom plow, a 25-ft tandem disk, a planter, a 25-ft herbicide applicator, a 15-ft self-propelled combine and trucks.
Engineers, machines and automation go in and workers go out, to the tune of a 25-fold reduction in required labor hours over little more than a century. Its much the same story in manufacturing.
Looking at some more recent numbers in the manufacturing sector, we see that U.S. real value added manufacturing outputgood proxy for the amount of stuff madeadvanced from about $1.1 trillion to about $1.4 trillion from 1995 to 2002. During that same period, the U.S. lost 2 million manufacturing jobs.
Perhaps these manufacturing jobs are moving to China? No. China lost 15 million manufacturing jobs during that span. Mexican manufacturing employment also declined, and Indian manufacturing employment was flat at best.
Automation destroys manufacturing jobs at a fearsome rate, but increases in manufacturing productivity are a good thing. Automation also serves another purpose for high-wage countries like the U.S.
Automation replaces labor with capital, namely machines and automation systems. As labor content in finished products decline, the cost of labor becomes less important when it comes to decisions about where to site new plants or expand old facilities. Thats why the U.S. share of worldwide manufacturing output has held steady at about 20% for decades.
But all of the good things associated with automation dont come without pain. Displaced manufacturing workers need somewhere to go, and they often need training to get there. Government assistance could help.
Rather than spending billions on protectionism, nations and their workforces would be better off spending a fraction of those sums retraining low-skilled manufacturing workers displaced by automation. These workers could become productive members of the service sector or highly trained automation and machine operations employees in the manufacturing sector.