FIVE WAYS AUTOMATION WILL CHANGE MANUFACTURING IN THE WORKFORCE

August 25, 2017


WHERE WE ARE:

The manufacturing industry remains an essential component of the U.S. economy.  In 2016, manufacturing accounted for almost twelve percent (11.7%) of the U.S. gross domestic product (GDP) and contributed slightly over two trillion dollars ($2.18 trillion) to our economy. Every dollar spent in manufacturing adds close to two dollars ($1.81) to the economy because it contributes to development in auxiliary sectors such as logistics, retail, and business services.  I personally think this is a striking number when you compare that contribution to other sectors of our economy.  Interestingly enough, according to recent research, manufacturing could constitute as much as thirty-three percent (33%) of the U.S. GDP if both its entire value chain and production for other sectors are included.  Research from the Bureau of Labor Statistics shows that employment in manufacturing has been trending up since January of 2017. After double-digit gains in the first quarter of 2017, six thousand (6,000) new jobs were added in April.  Currently, the manufacturing industry employs 12,396,000 people, which equals more than nine percent (9%) of the U.S. workforce.   Nonetheless, many experts are concerned that these employment gains are soon to be halted by the ever-rising adoption of automation. Yet automation is inevitable—and like in the previous industrial revolutions, automation is likely to result in job creation in the long term.  If we look back at the Industrial Revolution.

INDUSTRIAL REVOLUTION:

The Industrial Revolution began in the late 18th century when a series of new inventions such as the spinning jenny and steam engine transformed manufacturing in Britain. The changes in British manufacturing spread across Europe and America, replacing traditional rural lifestyles as people migrated to cities in search of work. Men, women and children worked in the new factories operating machines that spun and wove cloth, or made pottery, paper and glass.

Women under 20 made comprised the majority of all factory workers, according to an article on the Industrial Revolution by the Economic History Association. Many power loom workers, and most water frame and spinning jenny workers, were women. However, few women were mule spinners, and male workers sometimes violently resisted attempts to hire women for this position, although some women did work as assistant mule spinners. Many children also worked in the factories and mines, operating the same dangerous equipment as adult workers.  As you might suspect, this was a great departure from times prior to the revolution.

WHERE WE ARE GOING:

In an attempt to create more jobs, the new administration is reassessing free trade agreements, leveraging tariffs on imports, and promising tax incentives to manufacturers to keep their production plants in the U.S. Yet while these measures are certainly making the U.S. more attractive for manufacturers, they’re unlikely to directly increase the number of jobs in the sector. What it will do, however, is free up more capital for manufacturers to invest in automation. This will have the following benefits:

  • Automation will reduce production costs and make U.S. companies more competitive in the global market. High domestic operating costs—in large part due to comparatively high wages—compromise the U.S. manufacturing industry’s position as the world leader. Our main competitor is China, where low-cost production plants currently produce almost eighteen percent (17.6%) of the world’s goods—just zero-point percent (0.6%) less than the U.S. Automation allows manufacturers to reduce labor costs and streamline processes. Lower manufacturing costs results in lower product prices, which in turn will increase demand.

Low-cost production plants in China currently produce 17.6% of the world’s goods—just 0.6% less

than the U.S.

  • Automation increases productivity and improves quality. Smart manufacturing processes that make use of technologies such as robotics, big data, analytics, sensors, and the IoT are faster, safer, more accurate, and more consistent than traditional assembly lines. Robotics provide 24/7 labor, while automated systems perform real-time monitoring of the production process. Irregularities, such as equipment failures or quality glitches, can be immediately addressed. Connected plants use sensors to keep track of inventory and equipment performance, and automatically send orders to suppliers when necessary. All of this combined minimizes downtime, while maximizing output and product quality.
  • Manufacturers will re-invest in innovation and R&D. Cutting-edge technologies. such as robotics, additive manufacturing, and augmented reality (AR) are likely to be widely adopted within a few years. For example, Apple® CEO Tim Cook recently announced the tech giant’s $1 billion investment fund aimed at assisting U.S. companies practicing advanced manufacturing. To remain competitive, manufacturers will have to re-invest a portion of their profits in R&D. An important aspect of innovation will involve determining how to integrate increasingly sophisticated technologies with human functions to create highly effective solutions that support manufacturers’ outcomes.

Technologies such as robotics, additive manufacturing, and augmented reality are likely to be widely adopted soon. To remain competitive, manufacturers will have to re-invest a portion of their profits in R&D.

HOW AUTOMATION WILL AFFECT THE WORKFORCE:

Now, let’s look at the five ways in which automation will affect the workforce.

  • Certain jobs will be eliminated.  By 2025, 3.5 million jobs will be created in manufacturing—yet due to the skills gap, two (2) million will remain unfilled. Certain repetitive jobs, primarily on the assembly line will be eliminated.  This trend is with us right now.  Retraining of employees is imperative.
  • Current jobs will be modified.  In sixty percent (60%) of all occupations, thirty percent (30%) of the tasks can be automated.  For the first time, we hear the word “co-bot”.  Co-bot is robotic assisted manufacturing where an employee works side-by-side with a robotic system.  It’s happening right now.
  • New jobs will be created. There are several ways automation will create new jobs. First, lower operating costs will make U.S. products more affordable, which will result in rising demand. This in turn will increase production volume and create more jobs. Second, while automation can streamline and optimize processes, there are still tasks that haven’t been or can’t be fully automated. Supervision, maintenance, and troubleshooting will all require a human component for the foreseeable future. Third, as more manufacturers adopt new technologies, there’s a growing need to fill new roles such as data scientists and IoT engineers. Fourth, as technology evolves due to practical application, new roles that integrate human skills with technology will be created and quickly become commonplace.
  • There will be a skills gap between eliminated jobs and modified or new roles. Manufacturers should partner with educational institutions that offer vocational training in STEM fields. By offering students on-the-job training, they can foster a skilled and loyal workforce.  Manufacturers need to step up and offer additional job training.  Employees need to step up and accept the training that is being offered.  Survival is dependent upon both.
  • The manufacturing workforce will keep evolving. Manufacturers must invest in talent acquisition and development—both to build expertise in-house and to facilitate continuous innovation.  Ten years ago, would you have heard the words, RFID, Biometrics, Stereolithography, Additive manufacturing?  I don’t think so.  The workforce MUST keep evolving because technology will only improve and become a more-present force on the manufacturing floor.

As always, I welcome your comments.

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