There is a prevalent argument used these days to explain the steep job losses within US manufacturing.

The gist of the argument goes something like this:

“Advances in the automation of manufacturing technologies have resulted in drastically higher productivity and, therefore, they’ve reduced or even eliminated the need for people to perform those tasks.”

It’s an entertaining, almost intoxicating argument to anyone with minimal manufacturing experience.

But I’m not buying it.

Look, there’s no denying the fact that automation is changing – has changed – the face of manufacturing. Many tasks that have historically relied heavily on manual labor require less today. But it doesn’t add up to declare that automation has advanced to the point that it explains away the dramatic job losses in US manufacturing.

Consider these points, and tell me that automation and ‘hyper productivity’ alone have caused the manufacturing malaise in this country:

  • The Productivity Myth – The glitches in the productivity numbers pumped out by the Bureau of Labor Statistics (BLS) & used most frequently by the Federal Reserve are well-documented and the arguments are persuasive. When those productivity numbers are used to form arguments that the US has simply become more productive per worker, they’re working from a flawed premise. Simply put, these numbers portray a level of productivity that just isn’t accurate, since production that was moved offshore but ‘owned’ by US companies is counted as US productivity by the BLS – at the lower labor costs after off-shoring. So, anytime you see these numbers thrown around by pundits and economists pretending to ‘get’ manufacturing, be skeptical.
  • Automation Vs. The Skilled Labor Shortage – If automation has had the impact on manufacturing labor that we’re hearing, then why all the commotion and demand for skilled labor? I mean, shouldn’t there be much less need for people on the shopfloor since we can just automate everything? Of course, this is rubbish. Sure, many processes around massed-produced products require less operators. But anyone that’s spent even a scintilla of time in a custom design & manufacturing environment knows the imperfections, deviations, problems and corrections that are inherent in turning raw materials into tight-tolerance, technically sophisticated products. Ask any shop owner, applications engineer, designer or plant manager to tell you the last time they plugged in a 5-axis, horizontal machining center with state of the art tooling, computer numerical control, palletizing and advanced workholding & handling technology, and that it worked without any effort. I’ll save you some time: it doesn’t happen that way. Anyone that believes high tech is plug & play has likely spent little time where the chips are made. (And BTW – if people aren’t still a real part of the manufacturing equation, and automation is the catalyst for hyper-productivity, why is it a problem that the ‘world’s shop floor’ is experiencing labor shortages?)
  • Just Who’s Buying All This Automation Technology? To explain the remarkable gains in productivity by US workers, many economists point to equally remarkable technology advances making their way to the shop floor. If that were the case, manufacturing automation markets would’ve exploded – and that simply hasn’t happened. According to the US Manufacturing Technology Consumption Reports from the AMDTA, in 1997 there were a total of 37,922 metalworking & metalforming units sold in the US manufacturing market. (Keep in mind that not all of those units could possibly represent the cutting-edge technology of the time.) Since that peak, manufacturing technology consumption has fallen, fluctuated, and skittered – but never approached the nearly 38,000 units of ’97 (unless you count ’98, which was only half of a good year). Last year, the USMTC report shows manufacturing technology consumption at 18,383 units. So, let me get this straight: We’ve lost between 3-million and 5-million manufacturing jobs since 2000 (depending on who you ask). And at the same time, consumption of the same automation technology that allegedly displaced them has fallen by 50%? OK – thanks. Now, pull the other one.

There’s nothing new to the notion that technology disinter-mediates people by redefining human intervention points. It’s always been so. Look no further than the Luddites for a fine example. But, unfortunately there’s also nothing new to wide-eyed rationalists investing too soon in speculative potential rather than actual substance. For a fine example of THAT, just go back to the mess the Dot-com Bubble made just a few years ago.

The facts are real.

  • We aren’t measuring productivity accurately enough to tell what’s real from a regional or national perspective.
  • Manufacturing still requires human intervention. We will continue to wrestle with this – it’s the human condition. But we ain’t there yet, and all the hoping or wishing won’t change that.
  • Labor and the core of US manufacturing expertise have been gutted in favor of cheap labor costs, by those that know the price of everything, but the value of nothing.

For those that explain away our loss of manufacturing jobs to productivity through automation, I have just one more question for you:

Who’s gonna build & fix all these robots?