Manufacturing may well return to middle America but jobs won’t
The current president of the U.S. is perhaps one of the most controversial characters of all time. Whether you like him or not, Donald Trump has some serious problems to tackle as the political leader of the world’s biggest economy. A prominent and on-going issue is employment, which Trump hopes to solve by making it easier for U.S. companies to inshore jobs. Between 2001 and 2013, offshoring to China displaced over 3 million U.S. jobs. China has long been a popular destination for offshoring, driven by labour cost advantage. In other words, it’s cheaper for companies to carry out operations outside of America. Trump has already claimed that inshoring will save thousands of jobs, thus solving the on-going employment crisis. However, this line seems to ignore a key development of essentially all modern industrial processes – automation.
Automation and industry
Automation is continually disrupting industries across the board. One sector feeling the impact more than most is manufacturing, due to the manual nature of the work. Manufacturers have faced unprecedented change brought about by automation, from heavy machinery to intelligent cobots. Simply put, robots are better employees than humans in almost every way. They are cheaper to employ, easier to manage and generally more efficient. They make less mistakes and don’t enter complicated legal battles if they’re injured in the workplace. By 2034, it’s estimated that almost half of all jobs will be automated. Chinese company Shenzen Rapoo Technology Company, for example, has already reduced its workforce by a third in five years. It looks like offshoring is part of a much bigger picture, fostering fears about employment stability. Despite the claims of some politicians that the U.S. economy is ripe to collapse at any moment, the country is currently experiencing positive economic trends. It’s true that this doesn’t necessarily translate into a successful job market, though.
Disrupted employment… Offshoring v. automation
As well as standard manual labour and white-collar office workers, offshoring supposedly presents a threat to people employed in call-centres, customer services, IT, accounting, architecture, engineering, news reporting, stock analysis, healthcare and finally legal services. However, according to political commentator Kevin Drum, just 0.3 per cent of U.S. jobs are lost to offshoring a year. Americans have constantly worried about losing jobs to foreign competition, but in reality the real threat comes from home-grown technology. When it comes to the big national economies, automation is wreaking employment havoc, but it’s also bringing about a more level playing field. Chinese labour costs once sat at 1/12th of U.S. costs, but now the gap is virtually non-existent as they up their robot quota. On the one hand this means that automation may bring labour back into the U.S., but on the other hand, so will the U.S. itself. Somewhat ironically, many returned jobs will simply be taken up by efficient, affordable bots. Even if businesses can get hold of cheaper American employees, it will still make more sense to employ robots instead. The employment market, therefore, is only going to get worse – but it will be a global change that effects workers in every country.
As is often the case, devising effective policy rests upon seeing the bigger picture. As a business-man first and foremost, you would expect Donald Trump to recognise the huge impact of automation in his policies. It might be tunnel vision on the President’s part, but China simply isn’t as big a threat as it used to be. Automation has closed the gap between national economies, and now economic success depends upon who has the highest number of capable robots. Making it easier to inshore labour will undoubtedly increase the demand for U.S. workers, but this solution, at best, is temporary. Businesses may initially fill the gap with human employees, however when better, automated alternatives are available, it’s a no brainer. Trump, therefore, is simply trying to solve the wrong problem.
Does your business offshore labour and/or resources? Does China still pose a threat to U.S. economic dominance? Will Trump’s inshoring policy fail? Share your thoughts and opinions.