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US Factories Will Come Back; Factory Jobs Won't

US Factories Will Come Back; Factory Jobs Won't
A worker handles steel products at a factory for tubes and pipes. (AP Photo/Raad Adayleh)

By Wednesday, 01 June 2016 08:30 AM Current | Bio | Archive

Donald Trump promises to bring American manufacturing jobs back from China. He won’t succeed, nor will anyone else. Those jobs are gone.

We all know the U.S. lost most of its assembly line jobs. Less widely recognized is that such jobs are rapidly disappearing from Asia, too. China is losing its labor cost advantage.

Why? Two reasons:
  • Chinese wages are climbing fast. Labor costs there rose at a 12% annual pace since 2001.
  • Robotic manufacturing techniques are getting better and less expensive.

These two trends are why Foxconn, which assembles the Apple (AAPL) iPhone, recently reduced its Kunshan workforce from 110,000 to 50,000. Other companies are doing the same, according to the South China Morning Post.

It will get worse. Factory automation is still in its infancy. The machines grow better, faster and cheaper every year.

That sounds bad — and it is — but there’s also some hope.

In addition to their efficiency, robots don’t care where you locate them. They will work equally hard, and cost roughly the same, whether they are in China or Chicago.

This being the case, as automation spreads we will see manufacturers move production in closer proximity to customers. No need to build your goods on the far side of the Pacific.

They’ll save time and expense by making their products here.

I expect U.S. manufacturing output to grow as this shift unfolds. It may even create some American jobs to supervise and maintain the machines.

Will we see the kind of mass employment gains Trump promises? No, but the same technology that kills factory jobs also makes small-scale manufacturing more feasible.

For instance, an Atlanta company called Softwear Automation may soon do what economists thought impossible: bring U.S. textile manufacturing back from the grave. I learned about it in a presentation at SXSW Interactive back in March.

Their cutting, sewing and fabric-handling robots are faster and more cost-effective than even the lowest-cost Asian labor. A company official told me they get calls almost every day from Asian manufacturers wanting to buy the machines.

That’s crazy. When even sweat shop labor costs too much, you know something big is happening.

Clothing makers using the robots won’t need as many human workers as the old garment factories did, but they will need some — and those jobs will be here in the United States.
Plastics are another fast-developing technology. 

Currently, most plastic objects are made through injection molding. You squirt liquid plastic into a mold, it cools down, and your doodad is ready.

This is very efficient if you want, say, 5 million identical objects from an Asian supplier and can wait a few months. It doesn’t work so well if you only want 1,000 and you need them tomorrow.

With additive manufacturing (the new name for 3-D printing), small runs are no problem.

You don’t need to make new molds every time. You just change the software and the machines do the rest.

For those with talent for three dimensional visualization and design, and a little creativity, the new technology can equip you to compete against China. Figure out how to make something Americans need, then start making it. The revenue will follow if your idea is a good one.

Sadly, I don’t have that talent — which I why I’m a wordsmith and not a welder. I really admire people who build tangible things. They make all our lives better.

If you’re one of those folks, try to hang on. Better days are coming — and the machines will bring them.

Patrick Watson is an Austin-based financial writer. Follow him on Twitter @PatrickW

To read more of his insights, CLICK HERE NOW.

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Donald Trump promises to bring American manufacturing jobs back from China. He won't succeed, nor will anyone else. Those jobs are gone.
factory, jobs, economy, return
Wednesday, 01 June 2016 08:30 AM
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