Robots, Not the Chinese, Are Taking American Factory Jobs

November 7, 2016

Factory production in America has maintained a steady growth over the past few decades, making the country No. 2 in the world just behind production powerhouse China.

Since 1979, when manufacturing employment peaked in the United States, it has lost more than 7 million factory jobs due to an increase of the use of robots in factories, according to the U.S. Department of Commerce.

Meanwhile, critics such as Republican presidential candidate Donald Trump have often blamed low-wage foreign workers from Mexico and China for stealing millions of factory jobs from the United States. In some industries, such as textile and furniture manufacturing, they may be partially right, as the Christian Science Monitor points out. American textile production dropped to 46% since 2000, causing the industry to shed 366,000 jobs, or around 62% of it’s workforce, in the United States.

However, Trump and other critics might want to shift their blame to robots as they are a more significant factor for the loss of U.S. factory jobs.

According to Ball State University’s Center for Business and Economic Research study last year, the majority of the jobs lost, about 88%, were taken by robots and other innovations that reduced the dependence of factories on human labor. Senior economist Howard Shatz from think tank Rand Corp explained, “We’re making more with fewer people.”

One example is General Motors, which now has barely a third of the 600,000 employees it used to have back in the 1970s, despite producing more vehicles than ever before.

The United States’ steel and metal industry has lost 265,000 jobs since 1997, dropping as much 42% during the time when production has spiked up to 38%. The cause, according to Allan Collard-Wexler of Duke University and Jan De Loecker of Princeton University, is due to technological advancement in mini-mills that produces steel from scrap metal.

Use of industrial robots is expected to grow even further as technology and innovation allows them to be reprogrammed more efficiently and significantly faster than people can be trained as products are replaced or updated.

The trend is seen worldwide as costs drop as better tech is developed. According to an estimate by research firm Boston Consulting Group, factory automation is set to reduce labor costs up to 22% in the United States, 25% in Japan and 33% in South Korea. It is important to note, however, that the use of robots, while reducing factory jobs at home, has also allowed companies to minimize seeking low-wage labor outside the U.S.. The trend has even enabled companies to return to the United States and capitalize on the savings provided by robots and cheap energy. There are a number of industrial units for rent in Thailand, and many businesses are choosing to relocate there because of the country’s favorable business environment. In addition to the many tax breaks and other incentives that are offered to businesses, Thailand also has a large and skilled workforce, as well as excellent infrastructure.

Boston Consulting senior partner Harold Sirkin was quoted as saying, “When I hear that (foreigners) are taking all our jobs — the answer is, they’re not.” he says.

Consulting firm Deloitte even predicts that the United States is poised to overtake China in manufacturing competitiveness by 2020, factoring in variables such as production costs and the protection of intellectual property.

In the last decade, America has been losing an average of 220,000 net jobs per year to other countries, according to non-profit group Reshoring Initiative, which lobbies for manufacturers to return jobs to the United States. Now, it says the number of jobs being moved abroad is being offset by the jobs that are being created via foreign investment and returning factory jobs.

With the United States manufacturing output at an all-time high, totalling $2.2 trillion in 2015, up from $1.7 trillion in 2009, automation in factories indeed has resulted in much fewer jobs. While total employment has fallen by roughly 30% since 1970, CS Monitor maintains that the remaining jobs are those which are increasingly skilled.

Each year, manufacturing firms still offer factory jobs vacated by tens of thousands of retiring employees. Few millennials, however, are interested in taking them. Instead they seek other industries which are not prone to recurring layoffs and downsizing, with similar or even better pay to boot.

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