VIDEO: Will Robots Really Kill Manufacturing Employment?
James Anderton posted on January 29, 2016 |

Make no mistake, industrial automation is drastically reducing productions cost for manufacturers worldwide. In the process however, automation reduces the need for shopfloor personnel.

A major report entitled “Future of Jobs,” released during the recent World Economic Forum in Davos, Switzerland, predicts that the so-called Fourth Industrial Revolution will eliminate 5.1 million jobs in the world’s 15 leading industrial nations.

This number accounts for approximately two-thirds of the planet’s workforce. Mish Shedlock of Global Economic Analysis has summarized the massive report, and extracted some interesting statistics. Take a look at this chart.

(Image courtesy TalkMarkets.com)
(Image courtesy TalkMarkets.com)

Although job losses in manufacturing will be significant, three times that number will be lost in office and administrative employment.

This just makes sense. Assembly line mass production is relatively easy to automate, for the same reasons as a hundred years ago: by breaking down complex assembly tasks into a series of simple repetitive actions, the current generation of relatively stupid industrial robots can readily handle the tasks.

But the rise of artificial intelligence, collaborative robots and extensive connectivity means that automation can now begin to do all the things we imagined as kids watching the Jetsons.

If you’re a young person, it is probably best not to count on a career driving trucks, flipping burgers or cleaning hotel rooms. These were never the most desirable jobs, but the current wave of automation is on the cusp of replacing a vast army of mid-level managers and support personnel.

When the bankers, lawyers and accountants start dropping like flies, my guess is we will see some public outcry and short-term blowback. But the cost savings are undeniable, and that means that the trend is unstoppable.

Take a look at this chart showing the stability of various sectors.

(Source: Future of Jobs Survey, World Economic Forum.)
(Source: Future of Jobs Survey, World Economic Forum.)

According to the report, it looks like healthcare will be the big loser in terms stability and job security. This is unsurprising, as medicine has been extremely slow to adopt modern information technology, and probably has the most to gain from advanced analytics and automation.

For example, I expect that within my lifetime human hands performing surgery will seem like an unwanted and dangerous option. Similarly, I have no doubt that artificial intelligence will become capable of medical diagnostics far in advance of even the most experienced physician.

Naturally, the creative class will be relatively stable; it’s going to be a while before supercomputers write screenplays or paint great works of art. And I believe that engineering will fall into the same category of creative enterprise.

Engineering problem-solving requires considerable lateral thinking. Current automated design processes, for example, use computer speed to iterate designs tens of millions of times to arrive at the best solution. But the system itself is constrained by human-programmed physical laws and are highly sensitive to the initial conditions they start with. Which means there will always be room for the engineer who sketches something brilliant on the back of a beer coaster.

From a manufacturing standpoint, the automation issue is largely moot, at least in North America.

With the bulk of labor-intensive manufacturing already located offshore, extensive factory automation will be slightly jobs positive Stateside, as advanced robotics increase the need for skilled personnel to install operate and service them.

For China and India, however, it’s a different the story. Social cohesion means jobs everywhere, but even more so in densely populated nations.

When the robots make even $10 per day labor redundant, what happens then? My guess is that the industrialized world will have to move toward some form of unemployment insurance or guaranteed minimum income in order to transition the displaced industrial workers, while at the same time providing enough disposable income for them to create the necessary consumer demand for the products made by the robots.

The political right regards this as the beginning of the welfare state, but I think the mathematics will prove inescapable. If incomes trend to zero faster than prices do, we will see a systemic economic and industrial collapse. If it’s the other way around, we will all lead a charmed life with a chicken in every pot and a new Chevy in every driveway.

It’s election time in the US, yet none of the candidates have addressed this crucial issue.

Maybe it’s time to take to your social media and email to ask some pointed questions of your candidates.

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