Alex Knapp picks up on the story about Foxconn’s plans to draft in a cool million robots for their manufacturing plants within three years, and ponders whether this is good news for the unemployed in the West:
A good portion of this move to robotics labor has, no doubt, to do with labor costs and the reports of working conditions in FoxConn’s factories in China. I do wonder, however, what this means for the future of outsourcing to Asian markets, though. If labor costs can be reduced by employing more robots in the factory, and if its feasible for a company like FoxConn to use such a large number, it begs the question of why Western companies might continue outsourcing.
One of the major reasons, after all, that companies are outsourcing their operations to Asia is for the labor costs. If those labor costs can be obviated by greater automation, then other considerations come into play. After all, America and Europe are still where most of the customers are, and with the price of oil on the rise, cheaper transportation costs might come into the mix. Moreover, with both Europe and the United States teetering on the brink of another double-dip recession, policies geared towards bringing manufacturing home via tax incentives and other measures are more likely to become law.
Hmm. Even allowing for the traditional hyperbole of corporate press releases, a million automated machines will displace a whole lot of jobs. But Knapp is far more confident than I am about governmental willingness to pass laws that make demands of their corporate paymasters, let alone ones they’d actually be obliged to adhere to; the geographically-bound nation-state has no leverage on the transnational corporation, and the only incentive you can offer them is a taxation low-ball and further erosion of worker’s rights. In other words, sure, you might get manufacturing returning to the West, but it’ll only happen because labour costs have equalised… and that’s only going to happen in places where you’ve carefully created a huge stock of labour that doesn’t have any other options. Sweatshop USA… it’s a sign of how bad things are if you can count that as a victory condition.
And to extrapolate further, the rapid maturing of fabrication technology is going to obsolete a lot of more complex machinist gigs, too. They may well be countering fabbers and sinterers among the Foxconn “robot” list, of course, though the article mentions more simple stuff – welding, spraying, low-level assembly, which are exactly the sorts of jobs that robots have traditionally obsoleted before. I watched pick’n’place machines and surface mount technology completely gut the electronics assembly industry here in the UK back in the nineties, and less than a decade ago it was already cheaper for one company I know of to source components internationally, ship them to the UK for collation, ship them out to Thailand for assembly and then back again for QA and (extensive) rework, than it was to pay UK workers to do the full process locally. That sort of price margin isn’t going to be significantly eroded by concessionary tax rates, though increased transportation costs will admittedly contribute as well.
I think if there’s anything to take away from this inexorable slide toward nigh-total automation, it’s that we can no longer sustain a global economy that relies on mass employment in the manufacturing industry to keep the money moving. I suspect there’s a tipping point in the near future (or possibly in the recent past) at which – barring existential-scale disasters that knock us back into pre-industrial ways of life – it will never again be cheaper to get humans to build things than it is to get machines to do the same work.
What happens after that point to the business models of tchotchke makers and Next Big Thing gadget creation, I have no idea… and the more economists and politicians I listen to, the more I suspect that no one else has a bloody clue either. If anyone can show me how this *isn’t* a big old zero-sum game that’s going to hit a brick wall sometime soon, please pipe up and do so.