#608 – The Real Reason the U.S. is Losing Factory Jobs

Posted on | The Agurban

The Real Reason the U.S. is Losing Factory Jobs

A November 2, 2016, Associated Press report, Mexico Stealing Factory Jobs? Blame Automation Instead, further reiterates information from a couple of our recently posted Agurbans in that robots are having a dramatic impact on worker productivity numbers, therefore few workers are needed. Advanced robotics is one of the key new technologies impacting the 4th Industrial Revolution. Some key points from the AP article are noted below:

  • Manufacturing is still flourishing in America. Problem is, factories don’t need as many people as they used to because machines now do so much of the work.
  • America has lost more than seven million factory jobs since manufacturing employment peaked in 1979. Yet American factory production, minus raw materials and some other costs, more than doubled over the same span to $1.91 trillion last year, according to the Commerce Department.
  • Trade has claimed some American factory jobs, especially after China joined the World Trade Organization in 2001 and gained easier access to the U.S. market. And industries that have relied heavily on labor — like textile and furniture manufacturing — have lost jobs and production to low-wage foreign competition.
  • A study at Ball State University’s Center for Business and Economic Research last year found that trade accounted for just 13 percent of America’s lost factory jobs. The vast majority of the lost jobs — 88 percent — were taken by robots and other homegrown factors that reduce factories’ need for human labor.
  • General Motors, for instance, now employs barely a third of the 600,000 workers it had in the 1970s. Yet it churns out more cars and trucks than ever.
  • The increased use of robots — combined with higher labor costs in China and other developing countries — has reduced the incentive for companies to chase low-wage labor around the world.
  • In a survey by the consulting firm Deloitte, global manufacturing executives predicted that that the United States — now No. 2 — will overtake China as the most competitive country in manufacturing by 2020. (Competitiveness is measured by such factors as costs, productivity and the protection of intellectual property.)

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