What ‘bringing the jobs back’ actually looks like in the 21st century

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http://www.aei.org/publication/bringing-the-jobs-back-automation-21-century/

What ‘bringing the jobs back’ actually looks like in the 21st century

James Pethokoukis
June 8, 2016

It’s America’s modern political fantasy: A strong, smart, incorruptible politician can “bring the jobs back” and restore the age of mass manufacturing employment through tough negotiations and tariff walls. Of course some jobs are already coming back, and it didn’t take a trade conflict to make it happen. And how it’s happening suggests the results aren’t anything like what populist politicians are promising.
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I recently wrote about how Adidas is opening a new factory in Germany, “pledging to automate shoe production – which is currently done mostly by hand in Asia – and enable the shoes to be made more quickly and closer to its sales outlets.” Along the same lines, Virginia Postrel in her recent BloombergView column writes more about the automation of the sewing industry:

More automation does mean more sewing in the U.S. and other developed countries. But contrary to the dreams of on-shoring cheerleaders, whether economic nationalists or pro-union fantasists, robot sewing doesn’t imply a return to mass industrial employment any more than high-yield seeds mean we’ll all be farmers again. Automated sewing generates only a few more, and higher-paid, local jobs. It’s about increasing productivity and consumer value, not putting more people to work.

Sewn-product makers are beginning to adopt “autonomous work cells,” where machines do all the work. In an interview, [Frank Henderson, CEO of Henderson Sewing Machine Co. in Andalusia, Alabama] recounts a project for a company that sews a non-apparel product often customized with logos. The client used to employ 27 people in China, shipping 9.5 million units to the U.S. each year. Transportation could take upwards of nine months and if the company picked colors that turned out to be unpopular, it was stuck. To bring manufacturing closer to customers, six vendors including Henderson Sewing collaborated to create a new U.S.-based system that starts with the customer entering the order online and ends with the box loaded onto a truck the next day.

“We cut a product, screen-printed it, flash-dried it, loaded it on to a power and free track, loaded it into 10 autonomous work cells — sewing machines — sewed the product, inverted it, packed it into boxes, depending on the order size, of small, medium, or large, taped the box, sealed the box, put the bar code on it and put it in a truck, says Henderson. “And no human touched it.” Just three workers – one per shift – handle the entire process.

Although sewing automation does reduce head counts, cutting labor costs isn’t the primary goal. “Why would I automate something that’s already cheap anyway?” asks K.P. Reddy, the CEO of Softwear Automation, an Atlanta-based startup that uses machine vision to drive precision sewing systems. Rather, automation promises quicker turnaround, lower transit costs and greater precision. That’s good news for consumers and retailers, bad news for Bangladesh. The jobs at risk are the low-skilled, repetitive tasks that have been the way out of poverty for two centuries. That road may be about to close.

[SirLinksALot]

Trump said this in his speeach at Liberty University: "We’re gonna get Apple to start building their damn computers and things in this country, instead of in other countries.”

Of course we know that today, Most of Apple’s products, including the iPhone, are built in China.

Although Trump didn’t specify how he’d get Apple to move its production to the United States, it’s safe to assume that tariffs (He's proposing 45% on Chinese made products) would apply.

Putting aside the practicality of these proposals for a moment, it’s easy to see the appeal to a big slice of the electorate. For decades Americans have watched well-paying, middle-class jobs migrate overseas when U.S. factories close.

The statistics are disheartening. Since 1999, the United States has lost 5 million manufacturing jobs, about half of them to China. The current total of 12.3 million manufacturing jobs is 7.3 million lower than the 1979 peak of 19.6 million.

And Donald Trump has raised hopes, saying he can put things right with these tariffs.

It would be great if Trump were right. If slapping tariffs on the imported goods of U.S. companies had any chance of bringing back millions of lost manufacturing jobs, the idea would have broad support.

But Trump’s plan won’t work. It can’t work. And I’ve got several reasons why…

A Lot of American Workers (especially those laid off ) Lack the Skills: While cheaper labor is part of the equation in the migration of manufacturing jobs overseas, it’s not the only – or in some cases, the most important – factor. Many manufacturing jobs require the sort of vocational skills that few in the United States today want to learn. But China has invested heavily in such vocational training. That’s one of the reasons Apple CEO Tim Cook cited when asked last year on the CBS News program “60 Minutes” why Apple builds the iPhone in China.

Let's face it, not everyone is cut out for college and spending hundreds of thousands of dollars for mostly useless liberal arts degrees is not going to make one "employable".

In Germany, training for many vocations is provided by means of a dual program of training and education. Apprentices spend three to four days a week at a company providing vocational training, where they acquire the practical skills required for their field of work. The remaining one or two days are spent at a vocational school, where apprentices receive a theoretical grounding in their future job. I suggest that we look seriously into this model.

Automation Took a Lot of Those Jobs: While it’s certainly true that many U.S. manufacturing jobs moved to China and other foreign countries, a lot of them simply disappeared as the result of improving technology, particularly in the area of robotics. Take General Motors Co., for example. Back in the 1970s, the automaker employed more than 600,000 workers. Today it employs just 216,000 – and yet turns out more vehicles than ever.

The American Consumer Would Be Crushed if we follow Trump's tariffs proposal: What Donald Trump doesn’t say is that heavy tariffs on imported products would get passed on to the consumer. If implemented as a blanket policy, prices of many products would soar.

Trump tells us that he’d impose a 45% tariff on all Chinese imports as part of his bring-the-jobs-home plan. That means the prices of practically everything in Wal-Mart and most other retailers would nearly double overnight. Imagine the backlash to that.

Capitalism Is Brutal – but It’s Efficient: Where companies decide to build a factory depends on a number of factors – the cost of labor, the cost of energy, its proximity to the target market, etc. Corporate executives do what makes the most sense and will provide the company with the maximum advantage in the market. That’s their responsibility to shareholders. One reason Apple was drawn into using China to build its products was because the bulk of its supply chain is in Asia, for example. Using brute force tariffs to force U.S. corporations to make choices harmful to their bottom lines may end up having a result more unwelcome than outsourced jobs – the companies themselves might move overseas.

The best thing Trump can do is to make it easier to do business in America. Cut regulations, taxes, government interference and social engineering. I can't think of any other way.

Disagreements welcome...