WASHINGTON (AP) — Donald 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 7 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’s a notch below the record set on the eve of the Great Recession in 2007. And it makes U.S. 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 U.S. market. And industries that have relied heavily on labor — like textile and furniture manufacturing — have lost jobs and production to low-wage foreign competition. U.S. textile production, for instance, is down 46 percent since 2000. And over that time, the textile industry has shed 366,000, or 62 percent, of its jobs in the United States.
But research shows that the automation of U.S. factories is a much bigger factor than foreign trade in the loss of factory jobs. A study at Ball State University’s Center for Business and Economic Research last year found that trade accounted for 13 percent of America’s lost factory jobs. The vast majority of the lost jobs — nearly 88 percent — were taken by robots and other homegrown factors that reduce factories’ need for human labor.
“We’re making more with fewer people,” said 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 percent plunge — at a time when such production in the U.S. has surged 38 percent.
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 predicted that investment in industrial robots will grow 10 percent a year in the 25 biggest export nations through 2025, up from 2 or 3 percent 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 will likely run $103,000 by 2025, Boston Consulting said. Robots will shrink labor costs 22 percent in the United States, 25 percent in Japan and 33 percent in South Korea, the firm estimates.
CEO Ronald De Feo is overseeing a turnaround at Kennametal, a Pittsburgh industrial materials company. The effort includes investing between $200 million and $300 million to modernize 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 said.
“What we want to do is automate and let attrition” reduce the workforce, he said.
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 said, will produce “better quality at lower cost” and “likely result in a combination of job cuts and reassignments.”
But the rise of the machines offers an upside to some American workers: The increased use of robots — combined with higher labor costs in China and other developing countries — has reduced the incentive for companies to chase low-wage labor around the world.
Multinational companies are also rethinking how they spread production across the globe in the 1990s and 2000s, when they tended to manufacture components in different countries and then assemble a product at a plant in China or other low-wage country. The 2011 earthquake and tsunami in Japan, which disrupted shipments of auto parts, and the bankruptcy of the South Korean shipping line Hanjin Shipping, which stranded cargo in ports, exposed the risk of relying on far-flung supply lines.
“If your supply chain gets interrupted and your raw materials are coming from offshore, all of a sudden shelves are empty and you can’t sell product,” said Thomas Caudle, president of the North Carolina-based textile company Unifi.
So companies have been returning to the United States, capitalizing on the savings provided by robots, cheap energy and the chance to be closer to customers.
“They don’t have all their eggs in that Asian basket anymore,” Caudle says.
Over the past six years, Unifi has added about 200 jobs, bringing the total to over 1,100, at its automated factory in Yadkinville, N.C., where recycled plastic bottles are converted into Repreve yarn. Unmanned carts crisscross the factory floor, retrieving packages of yarn with mechanical arms — work once done by people.
In a survey by the consulting firm Deloitte, global manufacturing executives predicted that the United States — now No. 2 — will overtake China as the most competitive country in manufacturing by 2020.
The Reshoring Initiative, a nonprofit that lobbies manufacturers to return jobs to the United States, said America was losing an average of 220,000 net jobs a year to other countries a decade ago. Now, the number being moved abroad is roughly offset by the number that are coming back or being created by foreign investment.
Harold Sirkin, senior partner at Boston Consulting, said the global scramble by companies for cheap labor is ending.
“When I hear that (foreigners) are taking all our jobs — the answer is, they’re not,” he said.
Driverless cars threaten jobs of professional drivers
WASHINGTON (AP) — Ronald De Feo has watched robots take factory jobs for years. Now he sees them threatening a new class of worker: People who drive for a living.
“I am in Pittsburgh; it’s a test market for Uber’s autonomous vehicle,” said De Feo, CEO of the industrial materials firm Kenna-metal. “We see all these (automated) Ubers running around the streets of Pittsburgh, a confusing and difficult place to navigate. If they can make that work, what do you think happens to the job of being a taxi driver?”
Computer scientists and economists said the threat isn’t merely theoretical: Automated cars pose an existential threat to the many Americans who drive for a living: 2.9 million truckers and delivery drivers, 674,000 bus drivers, 181,000 cab drivers and chauffeurs.
The big question is how long it will take auto and tech companies to clear the technical hurdles to turning the streets over to driverless cars.
“I don’t see herds of robotic trucks running down the highway in the next few years,” said Vern Meyerotto, a 61-year-old truck driver in Denver. “There’s an awful lot of development that needs to be done on it.”
Meyerotto, who has been driving since 2007, points to the self-
driving Tesla Model S car that crashed in May, killing the driver, after the car’s cameras failed to detect a tractor-trailer crossing its path. He doesn’t expect to see robotic trucks doing much driving for 10 or 15 more years.
But the quick development of driverless cars has caught economists by surprise.
Assessing which jobs were vulnerable to robots in a 2004 book, economists Frank Levy of the Massachusetts Institute of Technology and Richard Murnane of Harvard University reckoned that truck drivers were safe. Surely, a machine couldn’t negotiate rush-hour traffic without a helping human hand.
Six years later, Google’s automated cars were on the road, crossing the Golden Gate Bridge, circling Lake Tahoe and cruising down Hollywood Boulevard.
Now, companies from Ford to Tesla to Uber are investing in automated car technology.
“The next big wave of automation will apply to driving,” said Moshe Vardi, a computer scientist at Rice University.
Vardi suspects that truck drivers will be the first victims. Automated trucks can be programmed to go from one warehouse to another, plying express lanes reserved for trucks that let them avoid interacting with human drivers.
Vardi noted that vulnerable truckers have much in common with the factory workers who’ve been ousted by machines over the past several decades: They tend to be white men, middle-aged or older, with high school-only educations.
“These things do not happen without political consequences,” Vardi said.
Uber, which has been testing driverless taxis in Pittsburgh, disputes the notion that automated cars will cost the economy jobs.
“Technology also creates new work opportunities while disrupting existing ones,” Travis Kalanick, Uber’s CEO, and Anthony Levandowski, its vice president for self-driving technology, said in a statement.
For example: “Self-driving Ubers will be on the road 24 hours a day, which means they will need a lot more human maintenance.”
A 25-year veteran cabbie who goes by A. Tucker was sitting in his Peoples Cab outside the Wyndham Grand Hotel in Pittsburgh. He worked in a Jones & Laughlin steel mill for six years before he was laid off and started driving a cab. He said he fears that driverless cars will eventually compete with guys like him.
“If you flip the coin to the other side, it was like the steel industry,” Tucker said. “We thought we would never lose our jobs to automation. But we lost our jobs, and many of us are driving cabs now.”
Cab drivers have been forced to become more professional, tech-savvy and educated to compete, because they now use tablet computers, credit card processors and GPS, Tucker said.
“Change is inevitable, whether we like it or not,” he said. “That’s life on the Earth moving forward.”
Some drivers are responding to the threat with grim humor. Upon hearing that a driverless truck had crossed Colorado with a load of beer last week, one commentator on the online Truckers Forum posted a reference to the killer computer network in the Terminator movies:
“Skynet is active.”