Why Donald Trump Can't Bring Back Manufacturing Jobs
The United States lost approximately 5.6 million manufacturing jobs between 2000 and 2010. That's 560,000 jobs per year. It's easy to see why Donald Trump's promises to bring back manufacturing jobs resonated with many blue collar workers. It also explains much of the appeal of Democratic candidate Bernie Sanders who also railed against companies sending jobs overseas.
In his inauguration speech, Donald Trump talked about rusted out factories. He won the presidency largely because blue collar workers hoped he would bring back manufacturing jobs from China and Mexico.
Bruceton, TN covered in the Atlantic article "Ghost Towns of the 21st Century" is a perfect example of the devastation caused when factories leave:
"The three giant H.I.S. [Henry I. Siegel] plants in town are empty, their windows broken, their paint peeling. A few new manufacturing operations have come, but they’ve also left. One by one, the businesses on the main streets of Bruceton and neighboring town Hollow Rock have closed, leaving modern-day ghost towns."
Yet at the same time that blue collar voters are putting their faith in populists railing against offshoring, manufacturers have actually been returning to the United States and many are struggling to fill positions.
Reshoring is a trend that has been going on for years. In it's 2015 article "Reshoring Has Slowed But Hasn't Stopped" Forbes described reshoring as:
"...the repatriation of factory jobs that previously had been outsourced to China."
"newly built U.S.-based production capacity that five to 10 years ago would have gone offshore."
The reason for reshoring:
"The shifting economics of global manufacturing no longer justifies offshoring many goods intended for the North American market."
The article pointed out that American companies will likely continue manufacturing in China to serve their Asia Pacific markets but it's increasingly making economic sense to bring jobs back home. It's possible that reshoring will accelerate under a Trump Administration that's shaming companies for sending jobs overseas.
But that may not necessarily lead to a huge increase in manufacturing jobs because a large percentage of the jobs that disappeared in the last decade or so haven't disappeared due to outsourcing. They've instead been taken over by robots. A study by Ball State University's Center for Business and Economic Research found that 85% of job losses in manufacturing were due to robotics and increased automation in factories.
The Wall Street Journal had this headline in it's 9/1/2016 issue:
"As Skill Requirements Increase, More Manufacturing Jobs Go Unfilled"
The headline was accompanied by this subheading:
"Number of open positions highest in 15 years, with many workers not possessing skills to do today’s jobs"
Kiva Robots are replacing humans in many warehouse jobs
The NY Times article "Wanted: Factory Workers, Degree Required" had this telling quote from Eric Spiegel, the former President of Siemens U.S.A.:
"In our factories, there’s a computer about every 20 or 30 feet. People on the plant floor need to be much more skilled than they were in the past. There are no jobs for high school graduates at Siemens today.”
At one time, a factory worker with a high school diploma could buy a house and raise a family on a single salary. Many small towns in the US thrived with two or three factories. When globalization hit those towns went into decline. But factories today have much less need for low and semi-skilled workers. And factories today are far more productive than in the past, which means companies not only need fewer workers, they need fewer locations as well. Towns like Bruceton, TN, that were decimated by the loss of manufacturers may never be able to bounce back.
Liberal commentator David Pakman has been bringing attention to automation killing jobs
Ben Casselman put it bluntly in his article "Manufacturing Jobs Are Never Coming Back."
"Whether or not those manufacturing jobs could have been saved, they aren’t coming back, at least not most of them. How do we know? Because in recent years, factories have been coming back, but the jobs haven’t. Because of rising wages in China, the need for shorter supply chains and other factors, a small but growing group of companies are shifting production back to the U.S. But the factories they build here are heavily automated, employing a small fraction of the workers they would have a generation ago."
Artificial intelligence won't just put blue collar workers out of work. Fukoku Mutual Life Insurance in Japan replaced a whole department of 34 insurance workers with technology called IBM Watson. The company predicts the computer will increase productivity by 30%. One study predicts that "nearly half of all jobs in Japan could be performed by robots by 2035."
In his book Rise of the Robots, author Martin Ford fears that humanity faces a bleak future. Unlike in previous economic revolutions, Ford believes that technology will ultimately destroy many more jobs than it will create putting millions of people out of work.
"Artificial intelligence is already well on its way to making “good jobs” obsolete: many paralegals, journalists, office workers, and even computer programmers are poised to be replaced by robots and smart software. As progress continues, blue and white collar jobs alike will evaporate, squeezing working- and middle-class families ever further. The result could well be massive unemployment and inequality as well as the implosion of the consumer economy itself."
© 2017 JA Jehan