We’re all aware of the potential effects of outsourcing, however a recent CNet article discusses how automation may become even more disruptive. Richard Samson has started a blog dubbed "Automatic Abundance" to provide alerts on the topic.
Samson is confident that technology is a larger issue than outsourcing. He argues that automatic systems have eliminated most jobs in farming, helped cut manufacturing to less than 17 percent of the nonagricultural work force and are now displacing white-collar workers such as bank tellers. "Offpeopling has much more impact than offshoring or outsourcing," he said. "Yet it’s not in the headlines or on TV."
Several months ago Automation World had a similar article on how automation has caused far larger job losses than outsourcing:
Over the past decade, U.S. manufacturing jobs have declined by more than 11 percent, Miklovic noted. But at the same time, Japan’s manufacturing employment base has dropped by 16 percent, while the number of manufacturing jobs in countries including Brazil have declined by some 20 percent, he pointed out. “And one of the largest losers of manufacturing jobs has been China,” Miklovic added. “We like to pick on China and say that all of these jobs are going to China, but they’re losing jobs in manufacturing as well.”
The article concludes that automation is behind the job losses, but there are other methods that also create significant productivity improvements. Lean manufacturing and lean enterprise. Waste reduction. Value stream mapping. We are doing a really good job of improving the productivity of people. The same article continues with an interesting observation… and warning… for manufacturers that chase lower labor costs by going overseas:
GartnerG2’s Miklovic noted that the use of automation contributes to a cyclical situation in many industries. When a U.S. manufacturer develops a new product, for example, the company has first-mover advantage for a time. But in the next phase, when other manufacturers enter the market, competition often shifts to price. In response, some U.S. producers may move manufacturing offshore to developing nations, to take advantage of lower labor costs. However, said Miklovic, they frequently find that the level of automation and technology available in developing nations is less than that of the United States.
This means that U.S. manufacturers who then invest in sophisticated automation technology at home can gain the upper hand for a time over lower-priced imports, thanks to the higher quality product allowed by the automation, said Miklovic. But the automation technology used in the developing nations eventually catches up, giving products produced there the advantage, he added.
Once again it is necessary to focus on total cost, not just labor cost. And as we mention time and time again, unnecessary complexity is the largest cost in business. See our post on Excellence Through Simplicity to learn more.