Wes Iversen, "Outsourcing Not the Culprit in Manufacturing Job Loss," Automation World, December 9, 2003. www.automationworld.com/view-320. Reproduced by permission.

Wes Iversen is managing editor at Automation World, a magazine for automation professionals.

Productivity increases due to automation—not the outsourcing of labor overseas—account for manufacturing job losses in the United States. In fact, China, which is often singled out as being the culprit for American factory job losses, is experiencing a decline in manufacturing jobs because of automation. Likewise, manufacturing job growth in India has remained flat even though its economy is thriving. These trends will continue, as manufacturers must constantly invest in automation and other innovations to maintain productivity.

For many Americans, the word "outsourcing" conjures up images of manufacturing job decline. But the United States is far from alone in losing manufacturing employment, points out Dan Miklovic, vice president and research director at GartnerG2, the business research arm of Stamford, Conn.-based Gartner Inc. "Recent studies show that manufacturing jobs are declining everywhere," said Miklovic, during a Nov. 17 [2003] panel discussion on outsourcing, part of a Global Media Summit sponsored by Rockwell Automation, Milwaukee.

Over the past decade, U.S. manufacturing jobs have declined by more than 11 percent, Miklovic noted. But at the same time, Japan’s manufacturing employment base has dropped by 16 percent, while the number of manufacturing jobs in countries including Brazil have declined by some 20 percent, he pointed out. "And one of the largest losers of manufacturing jobs has been China," Miklovic added. "We like to pick on China and say that all of these jobs are going to China, but they’re losing jobs in manufacturing as well."

The reason for the job losses? Miklovic summed it up in one word: automation. Through automation, he said, "we are really doing a good job of improving the productivity of people."

Miklovic reminded media attendees at the panel session that 25 percent to 30 percent of the U.S. population was at one time involved in agricultural jobs. But today, only 3 percent of Americans work in agriculture, yet they have turned the United States into a net agricultural exporter, he noted. "The same thing is now happening in manufacturing," Miklovic said. "Through automation, through improved productivity, we’re driving the number of jobs down on a global basis."

Job Loss in India

Confirmation came from another panel participant, K. Muralidharan, senior general manager for Sundram Fasteners Ltd., a major Indian automotive parts manufacturer. In India, he said, growing use of automation is holding down manufacturing job growth despite the large amount of outsourcing work that is flowing to the country. "I find that outsourcing in India has actually cost jobs in Indian industry, though in the long term, it will probably have a positive effect on employment," Muralidharan said.

Manufacturing employment remains at about the same level in India today as it was during the recession of the late 1990s, according to Muralidharan. "The Indian economy is booming now, and it is predicted that in the next five years, the curve will only be upward. But still, the jobs and employment are not really growing at the same pace," said Muralidharan. "The economies of scale that have been created due to outsourcing from developed countries have forced Indian industry to take on automation heavily, which was not the case about 10 years back," he said.

GartnerG2′s Miklovic noted that the use of automation contributes to a cyclical situation in many industries. When a U.S. manufacturer develops a new product, for example, the company has first-mover advantage for a time. But in the next phase, when other manufacturers enter the market, competition often shifts to price. In response, some U.S. producers may move manufacturing offshore to developing nations, to take advantage of lower labor costs. However, said Miklovic, they frequently find that the level of automation and technology available in developing nations is less than that of the United States.

A Lesson for Manufacturers

This means that U.S. manufacturers who then invest in sophisticated automation technology at home can gain the upper hand for a time over lower-priced imports, thanks to the higher quality product allowed by the automation, said Miklovic. But the automation technology used in the developing nations eventually catches up, giving products produced there the advantage, he added.

"We see this in semiconductors all the time," Miklovic said. "Semiconductors typically have been produced in Japan and Taiwan. But now there is a booming semiconductor market that’s starting in China." While the density and sophistication of semiconductor chips produced in China cannot yet match that of Japan and Taiwan, said Miklovic, China’s technology is moving in that direction.

"Automation only works for a period of time," said Miklovic. The lesson for manufacturers is that they must continually reinvest in automation and innovation, he said. "If you stand still, ultimately you lose."

FURTHER READINGS

Books

• Rick Baldoz, Charles Koeber, and Philip Kraft, eds. The Critical Study of Work: Labor, Technology, and Global Production. Philadelphia: Temple University Press, 2001.
• George A. Bekey Autonomous Robots: From Biological Inspiration to Implementation and Control. Cambridge, MA: MIT Press, 2005.
• Beno Benhabib Manufacturing: Design, Production, Automation and Integration. New York: Marcel Dekker, 2003.
• Danny Briere and Pat Hurley Smart Homes for Dummies. 3rd Ed. Indianapolis: Wiley, 2007.
• Joseph L. Jones Robot Programming: A Practical Guide to Behavior-Based Robotics. New York: McGraw-Hill, 2004.
• Jim Pinto Automation Unplugged: Pinto’s Perspectives, Pointers, & Prognostications. Research Triangle Park, NC: ISA, 2004.
• Jeremy Rifkin The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era. New York: Jeremy P. Tarcher/Penguin, 2004.
• Thomas B. Sheridan Humans and Automation: System Design and Research Issues. Hoboken, NJ: John Wiley & Sons, 2002.
• Jon Stenerson Industrial Automation and Process Control. Upper Saddle River, NJ: Prentice Hall, 2003.
• Edwin Wise Robotics Demystified. New York: McGraw-Hill, 2005.

Periodicals

• Trudy E. Bell "Getting Automation Some Respect," The Institute, March 2007.
• Jeremy Caplan "Cause of Death: Sloppy Doctors," Time, January 15, 2007.
• Monica Elliott "Mechanical Logic: Smart Machines Are Getting a Lot of Attention from Engineers and Researchers, but Will They Really Be Able to Think for Themselves?" Industrial Engineer, July 1, 2005.
• Henrik Eriksson and Toomas Timpka "The Potential of Smart Homes for Injury Prevention Among the Elderly," International Journal of Injury Control and Safety Promotion, June 2002.
• Scott Feshuck "Ladies and Gents, I Present You: The Apocalypse," Maclean’s, June 11, 2007.
• Joel Greenberg "Robotic Cars Could Take Pressure Off Nation’s Highways," Los Angeles Times, June 23, 2007.
• Gregory M. Lamb "Coming Soon: Robo-Greeter," Christian Science Monitor, August 30, 2004.
• Scott LaFee "A Bot’s Life," San Diego Union-Tribune, July 12, 2007.
• Julia Malone "Farmers, Inventors Explore Automation as Answer to Labor Shortage," Washington Bureau, June 1, 2006.
• Ted Needleman "Yeah, Sure: The ‘Almost’ Paperless Office," Non-Profit Times, March 1, 2005.
• Jim Pinto "Staying Competitive," Automation World, July 2007.
• Susan K. Schmeichel "Smart Homes Could Up Seniors’ Quality of Life," Pittsburgh Tribune-Review, October 7, 2002.
• Matt Sedensky "Professor Believes Software Can Determine Quality Work," USA Today, May 5, 2005.
• Margaret Wertheim "Robots That Build (but Still Won’t Do Windows)," New York Times, March 11, 2004.
• Ben Worthen "When Good Call-Center Automation Goes Bad," Wall Street Journal, July 11, 2007.

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