Automation: Can It Save Jobs?

April 1, 2004
“Where Are the Jobs?” screams the cover of the March 22 issue of BusinessWeek. “Machines Continue Takeover,” warns the March 7 edition of the Chicago Tribune.

“IBM and the Vanishing White-Collar Job,” predicts the February issue of FastCompany.

It doesn’t take a rocket scientist, or even a political scientist, to see that the U.S. media, and indeed this year’s U.S. presidential race, is concerned with three things—jobs, jobs and jobs.

In 1992, Democratic advisor James Carville coined the phrase, “It’s the economy, stupid!” Twelve years later, the Democrats have co-opted the phrase, “It’s the jobs, stupid!” in their attacks on the administration over the 3 million U.S. manufacturing jobs lost in recent years.

Yet other, perhaps saner, voices are worried that the outcry about outsourcing is masking a more pressing concern—that the United States is about to face a shortage in skilled technical personnel. While we fret about manufacturing, engineering and information technology jobs going abroad, we don’t have enough “inventory” in the pipeline to meet expected future needs.

The Facts

Between July 2000 and October 2003, the U. S. lost one out of every six factory jobs, according to the National Association of Manufacturers. While globalization and outsourcing are being blamed as the culprits for lost jobs, another scapegoat has emerged—automation.

Yes, automation eliminates jobs. If a company applies automation appropriately, it can convert as many as 25 to 30 percent of manual operations to automated ones—with even higher percentages possible.

Dick Hill, vice president with ARC Advisory Group, has this to say about automation: “In my way of thinking, anything that could be automated, should be automated. Automation works very well on things like linear thinking. However, if the process requires intuitive extrapolation, then you’d better have some humans involved in the control. After all, the most important thing about employees is their knowledge—not their labor from their necks down.”

One of the more interesting media reports on this subject examined manufacturers who were using automation to remain viable. The argument goes like this—isn’t it better to eliminate a percentage of low-skilled labor through automation, in order to save the manufacturing operation as a whole? This is cold comfort if you are one of those whose job has been eliminated, but it works on the macro scale. Productivity improves, manufacturers remain competitive and the majority of jobs at a facility are preserved.

Manufacturing is critical to the health of an economy. In addition to contributing to a country’s output (it accounts for about 14 percent of the U.S. GDP), manufacturing is part of the industry web of companies that buy and sell goods (converting raw materials to products) and consume services—including legal, financial, health and transportation.

Fortune magazine just released its 2004 Fortune 500 list. U.S. manufacturers comprise seven of the top 10 positions. And although the number one company—Wal-Mart—doesn’t make products, the way it sells goods has forever changed manufacturing.

The ability to manufacture competitively, and to create an environment where global companies choose to manufacture, are leading challenges facing the U.S. economy. I recently heard former House Speaker Newt Gingrich refer to this as “insourcing,” which he defined as making America a country in which international companies want to do business.

To attract and retain these businesses, we’d better work on the inventory of talent in the employment pipeline. Automated systems require skilled personnel to install, operate and maintain. More automation means more productivity, more competitive operations—and more demand for technical talent.

The task at hand is to intelligently apply automation, and then make sure the workforce has the necessary skills. After all, it’s what’s in our heads that’s important. Continue to improve what’s in yours.