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Robotics, reshoring, and American jobs

Good news?   Boston Consulting Group foresees more large manufacturers boosting production for the American market by adding capacity in the U.S. itself, compared with any other country.  It cites “decreasing costs and improved capabilities of advanced manufacturing technologies such as robotics.”  Under this optimistic scenario, how much value would American workers add?  When robotics and other automation gets built for, and installed in American workplaces, where are jobs created?   

Increasingly, these jobs are being created and sustained outside the United States, even for domestic factories.   

{mosads}The first industrial robots were developed and manufactured by Americans, and General Motors became the first user, in 1961.  Over recent decades, however, the domestic robot industry has declined.   A Commerce Department national security assessment from 1991 asserted that American robot manufacturers lost market share throughout the 1980s, with shipments of U.S.-manufactured robots falling by 33 percent between 1984 and 1989, despite robust domestic demand and a weak dollar.   

According to the 1991 report: 

The competitiveness of robotics firms in the United States has declined dramatically from a promising beginning.  America’s once largest robotics producer, Cincinnati Milacron… has now sold its patents and marketing rights to ABB Robotics….The U.S. robot industry was abandoned by the auto industry, and it is rapidly losing the initiative in many other markets as well, including…defense contractors.

Today’s leading suppliers are multinationals based outside the United States.  Citing Commerce Department figures, a May 2014 briefing paper prepared by the U.S. International Trade Commission showed the previous year’s industrial robot trade deficit reaching more than $200 million. 

Robots are just one part of the machinery market.  During the first 11 months of 2015, the U.S. imported $347 billion dollars more in machinery than it exported to other countries.  The value created by American workers designing and manufacturing robots and other machines is in a tailspin.   

Trade figures in “General industrial machinery” show imports and exports roughly in balance in 2000, but $8 billion in deficit for 2010.  For the first 11 months of 2015, the deficit was almost $25 billion!  With other categories already running deficits in 2000, like electrical and office machinery, imbalances have since widened considerably.  

After Lagunitas Brewing Company announced, in 2012, plans for a new plant in Chicago, all brewing equipment was ordered from Germany, according to a Lagunitas employee conducting a tour of the 300,000 square foot facility last summer.   German technicians spent six months in Chicago installing equipment and integrating sensors and software. 

During the summer of 2015, I heard that two Midwestern manufacturers were retrofitting factories making corrugated boxes and other containers.  The automation equipment, also from Germany, was said to boost capacity at each plant by several hundred percent, while reducing the number of local employees. 

Why are workers abroad — largely in the European Union and Japan — adding so much value in the production of “American” products?   

Could one reason be that people from other countries are more likely to want to work in robotics, factory automation, and other disciplines with currency in the productive and competitive economy?    

Of more than 1.8 million bachelors’ degrees earned in the U.S. in the 2012-13 school year, only 103,000 were in engineering, and industrial engineering was one of least popular specialties. “Industrial Engineer” was named to Business Insider’s list of the 19 hottest jobs for 2016, with a gap between monthly job postings and actual monthly hires of 47,279.   

The gap across all U.S. manufacturing is wider.  According to a 2015 report by Deloitte Consulting and the Manufacturing Institute, between 2015 and 2025 “nearly 3 ½ Million manufacturing jobs likely need to be filled. The skills gap will result in 2 Million of those jobs being unfilled.”

Beyond jobs needing to be filled in the U.S., many others can be filled wherever in the world an employer operates, or has suppliers. 

Encouraging foreign students in technical fields like robotics to contribute domestically, the U.S. government offers the possibility for “practical training” through work during their studies and following graduation.  Graduates on non-immigrant visas can extend their time working in the U.S., provided their degrees are in certain STEM fields, including “Mechatronics, Robotics, and Automation Engineering”, and “Automation Engineer Technology/Technician”. 

This “optional practical training” extension was first offered in 2008.  When enlarged in 2011, a U.S. Immigration and Customs Enforcement press release noted “the Obama administration is helping to address shortages in certain high tech sectors of talented scientists and technology experts”.

Government programs encouraging foreign tech workers have, of course, been exploited to the detriment of Americans. Many employers have opted to use cheaper foreign workers, whether here or abroad. One reason foreign workers are cheaper is that, on average, they are younger than the graying U.S. tech workforce, and much less costly to insure.  American colleges and universities are granting not many more bachelor’s degrees in computer science than they were 30 years ago, while our population has risen by more than 80 million, and the importance of information technology has grown immeasurably in every sector of industry, commerce, infrastructure, and social discourse.  

Today, the so-called “Internet of Things” is enabling upgraded, data-driven automation for manufacturing, healthcare, and even residences.  Yet not enough native-born Americans are preparing for demanding careers in information technology, manufacturing engineering, and related disciplines, undermining creation of middle class jobs here.  Employers will access workers with pertinent skills and knowledge, wherever they can be found.   

On Christmas Eve, I met a 60 year old IBM technical executive about to retire.  Though based at corporate headquarters in Armonk, New York, he was largely unfamiliar with IBM’s Internet of Things business, and unaware of a major and far reaching development in the company’s storied history.

Less than two weeks before, on December 15, 2015, IBM announced the opening of a new headquarters for its Watson Internet of Things business unit.   

The headquarters of IBM Watson IoT was located in Munich. 

Orlowek, a native Washingtonian living in Chicago, is a consultant in international business development.


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