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August 21, 2012

The Post-Manufacturing World

A fascinating piece in last Sunday’s New York Times provided a clear picture of how automation is changing the world:

This is the future. A new wave of robots, far more adept than those now commonly used by automakers and other heavy manufacturers, are replacing workers around the world in both manufacturing and distribution. Factories like the one here in the Netherlands are a striking counterpoint to those used by Apple and other consumer electronics giants, which employ hundreds of thousands of low-skilled workers.

“With these machines, we can make any consumer device in the world,” said Binne Visser, an electrical engineer who manages the Philips assembly line in Drachten.

Even Chinese companies are beginning to recognize that robotic factories are the wave of the future:

Even as Foxconn, Apple’s iPhone manufacturer, continues to build new plants and hire thousands of additional workers to make smartphones, it plans to install more than a million robots within a few years to supplement its work force in China.

Foxconn has not disclosed how many workers will be displaced or when. But its chairman, Terry Gou, has publicly endorsed a growing use of robots. Speaking of his more than one million employees worldwide, he said in January, according to the official Xinhua news agency: “As human beings are also animals, to manage one million animals gives me a headache.”

As Via Meadia has noted before, industry is gradually returning to the United States, thanks in part to the domestic energy revolution and in part to American experience with technology and high-end manufacturing. This is certainly a welcome development, but it will not revive mass middle-class employment in manufacturing; robots, and not people, will be doing most of the work.

Just as fewer and fewer people grew food in the 20th century even as more and more people ate better, so too in the 21st century will fewer people be making the stuff that more people have more of.

The future of employment is in services and the production of experiences. Think of how more people are now employed creating a restaurant experience (service, menus, decor) than in growing the food that you eat there. Rather than try to revive the manufacturing economy of the mid-20th century, economic policy ought to find a way to be pro-jobs in a post-manufacturing world.

Politically, the country doesn’t seem ready for this kind of debate yet. Both parties feel the need to appear as if they have a plan to create boatloads of high-wage manufacturing jobs, but ultimately the post-manufacturing jobs discussion is the most important one to have.

Posted in Economics & Business, Quick Takes
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  • Tom Holsinger

    Consider what “fabbers” (3D fabricators) capable of working with metal could do for American manufacturing. AFAIK, that is chiefly an issue of when.

    http://www.ennex.com/~fabbers/intro.asp

    http://en.wikipedia.org/wiki/3D_printing

    From the Wikipedia entry:

    “It is also predicted by some additive manufacturing advocates that this technological development arc will change the nature of commerce, because end users will be able to do much of their own manufacturing rather than engaging in trade to buy products from other people and corporations.”

  • http://inthisdimension.com alex scipio

    Well, we’d BETTER have this discussion soon. The robotics & 3D printing advances take us farther into the Information Age, and farther from the Inudstrial Age. In the Industrial Age, there were lots of low-skill jobs for low-skill workers. Since half the population is below average, that meant jobs for them. As we progress to fewer low-skill jobs, we aren’t progressing to fewer low-skill people, in fact, we are importing them from south of our borders, and adding to them by union-run mal-education in public K-12.

    It isn’t just that we need (?) low skill jobs, though, I don’t think. We need to raise the educational/intellectual level of that half of America that is below average. In other words, we need to change our education system so drastically that we move the average up – way up. It is arguable that this cannot be done with education unions – at all.

    AND we must do everything we can to reduce the number of people who will be left behind even from a re-vamped education system – and that means closing our borders to low-skill/no-skill people.

    Or our division of wealth, leisure, education and expectations will become insurmountable.

  • Eurydice

    That’s an awful lot of Chinese people making menus.

  • Georgiaboy61

    Re: “We need to raise the educational/intellectual level of that half of America that is below average. In other words, we need to change our education system so drastically that we move the average up – way up.” Alex Scipio, we agree that raising the level of educational attainment is critical to America’s future, but I am not so sanguine concerning education as a panacea. After all, for decades, politicians and economists have been telling Americans that if they would only study harder and in the right fields, that would solve our problems. Well, no, not so fast… The “red queen” hypothesis of evolutionary theory posits that we must run ever-faster just to remain in place relative to other organisms competing for survival. There are always going to be also-rans in society; the real question concerns how we are to provide a humane and useful existence to those people (who, by the way, comprise the vast bulk of the human race).

    I could not agree more with you regarding the necessity of closing our borders to low-skill and under-educated immigrants. But, we need a national discussion of what to do with all of the surplus labor we already have. Those folks on the dole, for example, should be put to work – even if it is just doing things like picking up the trash or the like. In order for that to happen, however, we need tasks for them to do. Having useful work is part of what gives humans dignity and self-worth. This begs the question…

    Does the economy exist to serve humans, or do humans exist to serve the economy? There are more than a few globalists and futurists out there who would answer the latter, but I vote for the former. Robots don’t have to take over running the world from humans; we did OK without them for all of our prior history. Yes, automation and technology can do wonders – but let’s be wise about when/where to use them. Just because a given task can be done by a robot does not mean that it should be.

    A warning from history: if humans allow machines to take over too-much of running the world, they risk being viewed as irrelevent and ultimately, “excess to needs” and disposable. You can bet that our lords and masters, so-called, are thinking along just these lines.

  • stewart bowland

    It’s time for luddites everywhere to smash those machines and bring the world back to a more human centric state. The environment can’t take any more destruction and people deserve a decent life with a decent job.

  • http://Thepencilofnature.net Lorenz Gude

    No, the solution is to have those teachers apply the Lake Woebegone solution and give all those kids a trophy made in China telling them that they above average. Then adjust the results of the standardized test to make it so. Problem solved!

  • Kris

    “As human beings are also animals, to manage one million animals gives me a headache.”

    Well then, perhaps you should be replaced by a robot, dear.

  • silia

    What happens when services are robotized with artificial intelligence robots?

    As for punditry, 90% of commentators might as well be robots.

  • Crocodile Chuck

    The author misses the following important points about manufacturing, along with the hopeless economists who, like him, pander to the elites.

    Manufacturing endows countries with three advantages:

    1) It enables them to achieve productivity benefits, by applying technology to processes. ONLY BY ACHIEVING PRODUCTIVITY BENEFITS CAN COUNTRIES INCREASE THEIR STANDARDS OF LIVING.
    2) It enables companies to develop ‘adjacent’ services, often high margin e.g. General Electric wouldn’t be able to sign companies to ten year maintenance contracts for turbines if it didn’t make the turbines in the first place
    3) It fosters innovation, through the nexus of engineers AND shop floor machining/manufacturing expertise, which would not exist in the absence of a manufacturing capability in the first place.

    If the author doubts these assertions, perhaps he should travel to such countries as Germany and Switzerland-both with higher GDP per capita than the United States, and both with current account surpluses.

    While there, he might investigate how their governments support manufacturing, rather than the shameful laissez faire ‘hands off’ treatment the US has afforded it over the last twelve years.

  • cacrucil

    I would say that a lot of Americans aren’t so much focused on manufacturing per se. Rather, they are concerned about the loss of manufacturing jobs because they pay so well relative to other sectors of the economy.

    If there were a lot of good paying service jobs available, I would wager that you would find a lot of Americans willing and able to do the work. That is why healthcare remains an attractive option for many. Registered nurses, fore example, make enough money to buy a house and raise a family.

  • http://scottlocklin.wordpress.com Scott Locklin

    “Consider what “fabbers” (3D fabricators) capable of working with metal could do for American manufacturing. ”

    I’ve considered it: virtually nothing. You haven’t the slightest idea what you’re talking about. Sintered metal is junk, and laser sintering is outrageously expensive compared to lathes for anything other than small run manufacturing. Tub thumpers for this technology have never actually worked with it.

  • thibaud

    “The future of employment is in services and the production of experiences. ”

    Mead’s naive misunderstanding of technology and of the economy generally are not helping him here. He seems to be unable or unwilling to do the most cursory research into where all this services jobs growth is ACTUALLY occurring.

    Clue #1: The BLS estimates that 63% of all new jobs created to 2020 in our brave new services economy will require no more than a high school degree, if that.

    Clue #2: by far the fastest growing jobs category in percentage terms, and one of the largest in absolute terms, is low-end healthcare/social assistance jobs, including Home Health Aides health aides (706,000) and Personal Care Aides (607,000).

    These categories alone represent 7% OF THE TOTAL JOBS GROWTH envisaged for the nation to 2020. Add in other healthcare jobs and you get to over 10% of all jobs.

    Clue #3: the other huge growth categories are Retail Trade (median salary $20k), Admin and Customer Service (median salary $26-30k), Fast Food/Food Prep (median salary $18k), and Construction, especially unskilled Construction Aides.

    So a Q for our host: How many HS dropouts earning $20k think of themselves as engaged in the “production of experiences”?

    Perhaps they just suffer from a lack of imagination. They could join Kickstarter and fund that killer bead-pan monitoring app. Or a tool to monitor their colleagues’ efficiency at bricklaying.

    Chasing unicorns like the “customer experience economy” will not hide the fact that we have a vast and growing proletariat, many of whom are employed at dirt wages serving an equally vast, and growing, elderly population that cannot provide for itself.

    It goes without saying that scr3wing both of these needy populations by slashing Medicare to pay for tax cuts for Romney and his ilk does not amount to a “serious” plan for an advanced democracy.

  • http://www.badgermech.blogspot.com Joe

    Thibaud, why do you and your compatriots believe so strongly in human determinism? Why do you think that, should one be engaged in bricklaying or low-level health assistance, one is permanently stuck there? It’s an interesting characteristic, because you do refer to them as ‘populations,’ Now, the elderly are certainly a ‘population:’ once you get old, there’s no going back. But plenty of people work [bad] jobs in their younger years, only to move up later. It’s kind of the way things are ‘supposed’ to work here, and youngsters (like my brother and I) who go through this phase of their lives are often better served by this than they would’ve been by a parentally-funded college education.

    Assuming that low-wage workers are permanently stuck there is as arrogant as it is shortsighted.

  • Jacko

    Thibaud is right. Couldn’t have said it better myself. Oh, brave new world….

  • Tom Holsinger

    Scott Jocklin,

    You might read what I said rather than what you thought I said, ncluding the articles I linked to. Metal cintering is at best capable of making protoypes. While rapid production of protoypes would be useful, I said real 3D metal fabrication is some time off because the technology isn’t there yet.

    But it will be. 3D fabrication of hydrocarbon-based products wasn’t possible until recently. That changed, and so will 3D fabrication of metal products.

    Technolgy changes.

  • cas

    I guess it’s time to re-train so I can be a robotic repair teachnician!

  • Kenny

    ” industry is gradually returning to the United States, thanks in part to the domestic energy revolution and in part to American experience with technology and high-end manufacturing. This is certainly a welcome development, but it will not revive mass middle-class employment in manufacturing; robots, and not people, will be doing most of the work.”

    Exactly true, Mr. Mead, which is why education is so critical for young people.

    And by education I don’t necessarily mean a college degree. A legitimate high school education of the 1950′s type would be a blessing for many.

    And this is why American public education needs to be radically reformed, starting with the elimination of teachers unions and maybe teachers colleges, too.

  • thibaud

    #13 Joe – please put your straw man back in your pocket.

    I agree that there’s such a thing as social mobility – but what’s not obvious to the US-centric crowd here is that the US has the LOWEST degree of social mobility in the advanced northern industrial world.

    To be more exact, recent studies of intergenerational mobility – kids making more money than their parents – have shown there to be TWICE AS HIGH a correlation between generations’ incomes in the USA (and the UK) than in Canada and the nordic countries.

    Shocking, I know, but eppur si muovo.

    As with so many other canards promoted here – eg that public pensions in peer nations of northern Europe and Canada are going to [heck] in a handbasket – the reality is the opposite of what Mead would have us believe.

    We have a huge proletariat that would like to believe it’s actually part of the middle class.

    And professional politicians like Paul Ryan who keep lying to the proles, telling them that slashing taxes for Romney and his crowd, while gutting the safety net, will actually benefit the proles.

  • Emerson

    So, as predicted in science fiction from rotting magzines, once robots do all the work we’ll all be able to relax and enjoy lives of leisure and prosperity?

  • Joe

    @18

    ‘Proles?’ You just can’t help yourself, can you? Maybe the reason those people want to vote for Romney/Ryan ‘and his crowd’ (as if Obama, Reid or Pelosi belonged to a different ‘crowd’) is because they rightly distrust the ability of today’s technocrat to meddle the average ‘prole’ into prosperity. Perhaps they’ve seen liberal solutions, and surmised that we were all better off with the problems in the first place.

    But speaking of straw men, how did we even get on the subject of Paul Ryan? He’s got nothing to do with a post on the growth of robotics! While we’re at it, note that I was quite obviously not referring to inter-generational mobility in my comment above–I was speaking to personal economic mobility within one’s lifetime, which is quite a different thing altogether.

    And if you want to talk ‘canards,’ how about the recurring canard that the US can somehow model itself on small, homogoneous Northern-European countries? Of course the Nordic countries are great! We know! Beyond expanding the apprenticeship/tech education model of Germany, which is a great idea, there’s really not a whole lot for us to look at over there!

    Relentlessly attacking your points there sure felt good, but didn’t really accomplish anything to advance the discussion. Sorry, but the value of being a constant contrarian is really quite limited.

  • thibaud

    Joe – I love the way you beat your chest about perceived slights to the US workingman – even as you try to sneer at the safety net that your side wishes to tear apart.

    You also float new canards. Canada isn’t [homogeneous]. They have a separatist province where a different language is spoken and which has produced violent political movements in recent memory. Neither for that matter is Germany or Holland [homogeneous], but feel free to believe whatever you like.

    Re. German vocational ed/tech training, this model succeeds in large part because of “liberalism” ie heavy state intervention across multiple realms.

    For starters, it requires strong unions participating in management councils whereby the state influences hiring decisions and employment levels. German’s unemployment rate is much lower than ours in part because the German government has pushed German employers to keep people on the payroll and re-allocate work during the recession.

    Finally, it goes without saying that an advanced industrial nation in which two-thirds or so of its population is just barely getting by will need a secure safety net, especially so in the area of universal health insurance (supplemented by optional private insurance run on a non-profit basis). This more than anything is what distinguishes our high-growth, stable, fiscally responsible northern peers from the America envisaged by the Norquist/TP loons.