Thursday, October 28, 2010

Do robots take away jobs or just change the mix of workers?

All of us are thinking about jobs and the economy, and those of us that are techno-centric are also concerned about the discussion as to whether robots take away jobs -- or not. It's an argument that's been going on since the invention of robots. Hollywood has vilified robots while Asians think of them reverently. Nevertheless, the question is valid and disruptive. Disruptive in the sense that jobs are lost when a superior technology emerges - think workhorses when cars started to be mass-marketed. Our present digital era is a disruptive one.

Distributing the workload increases skill levels - think Microsoft Word versus stand-alone word processors, or travel agents when e-tickets and online airline websites surfaced.

Jeanne Dietsch, CEO of MobileRobots, said in her blog earlier this year:
Did people lose jobs to computers? Yes, a number of secretaries had to upgrade their skills, and executives who refused to learn to type had a tough time of it, just to cite two examples. But these jobs were replaced by tens of thousands of high-paying software engineering positions, plus computer installers, computer operators, data storage firms and more.
A very thoughtful and well researched paper about jobs and automation appeared in Good Magazine's "Automation Insurance: Robots Are Replacing Middle Class Jobs:
MIT economist David Autor
MIT economist David Autor published a report that looked at the shifting employment landscape in America. He came to this scary conclusion: Our workforce is splitting in two. The number of high-skill, high-income jobs (think lawyers or research scientists or managers) is growing. So is the number of low-skill, low-income jobs (think food preparation or security guards). Those jobs in the middle? They’re disappearing. Autor calls it “the polarization of job opportunities.” 
Princeton economist Paul Krugman is out there telling Congress to spend more money to create jobs. The former secretary of labor Robert Reich is arguing for tax breaks for the bottom brackets so people can buy stuff again. Here’s the thing, though: The erosion of the middle class is a phenomenon that’s bigger than the Great Recession. Middle-range jobs have been getting scarcer since the late 1970s, and wages for the ones that are still around have remained stagnant. 
In his report, Autor says that a leading explanation for the disappearance of the middle class is “ongoing automation and off-shoring of middle-skilled ‘routine’ tasks that were formerly performed primarily by workers with moderate education (a high school diploma but less than a four-year college degree).” Routine tasks, he explains, are ones that “can be carried out successfully by either a computer executing a program or, alternatively, by a comparatively less-educated worker in a developing country.”

The culprit, in other words, is technology. The hard truth—and you don’t see it addressed in news reports—is that the middle class is disappearing in large part because technology is rendering middle-class skills obsolete. 
People say America doesn’t make anything anymore, but that’s not true. With the exception of a few short lapses, manufacturing output has been on the rise since the 1980s. What is true is that industrial robots have been carrying ever more of the manufacturing burden on their steely shoulders since they appeared in the 1950s. Today, a Japanese company called Fanuc, Ltd., has industrial robots making other industrial robots in a “lights out” factory. (That’s the somewhat unsettling term for a fully automated production facility where you don’t need lights because you don’t need humans.)
Research findings like this are just part of the current dialogue about whether robots are truly taking away jobs or just redistributing the workforce and increasing productivity.

Omitted from Autor's report, however, was that part of the dialogue which deals with investments in education and research and development. Because of intense focus (some might say greedy) on quarterly profits and production efficiencies to meet those quarterly quotas, we've had a decade where R & D has either been reduced or off-shored. Further, because of wars and other reasons, there's been less investment in STEM (Science, Technology, Engineering and Mathematics) education - budget cuts - although the Obama Administration has been showing signs of renewed interest in this area in the last few months.

John Dulchinos, CEO, Adept
Earlier this year John Dulchinos, the CEO of Adept, during an interview with GetRobo's Noriko Kageki, made a dramatic observation:
Did you know that there are a billion cell phones per year being made globally of which 200-300 million are sold in the U.S. but not a single one is built in the US? Ten years ago that was not the case. 
If the industry can’t remain competitive, then there are no jobs. And robots are automating tasks no longer done by hand.  But in almost all cases those people are redeployed into other applications in the plant and allow the plant to grow and get even more efficient.
Foxconn workers
Sad but true. Even iPhones (and iPads, Macs and iPods) are manufactured in China. As many as 400,000 of the workers at Foxconn produce Apple products. (Foxconn has been in the news because that's the place where there were so many suicides and suicide attempts.) Thus the question is whether companies can compete from nearby manufacturing facilities or must they, in order to produce a low-cost product, resort to off-shoring. Many think that robotics and government investments in STEM education and vocational retraining can help the economy rather than enlarge the disparity described by Autor.

British pottery manufacturer Wade Ceramics is one such proponent of stay-at-home automation, and says Wade can now make some of its products for the same costs as firms in China – thanks to a £3 million investment in robotic equipment. Managing Director Paul Farmer, in a recent article in The Sentinel, said:
We haven't lost permanent staff because we have been busy in other parts of the business... We have lost some agency workers, but we have kept the permanent workforce stable. We are growing and in fact we are starting to recruit again... At the moment we're looking for engineers and machine operators.

Wage levels in China are going up and I believe the minimum-order quantities there are huge. This [robotic] technology and our flexibility means we can really exploit that.
Mr Farmer believes automation is becoming more important as traditional skills become harder to find.
There isn't any young blood coming through and we are all having to fight each other for the skills out there.
Wade Ceramics is representative of a very real situation: a shifting, reduced or diminishing workforce due to a variety of causes.  The effect is that Wade is having difficulty finding skilled labor to man its factories.  The same situation is appearing in certain areas around the world, Japan in particular. And robotics is playing a role in remedying the situation.  It seems to me that robotics and automation are inevitable and it's incumbent on governments to upwardly retrain and educate the workforce accordingly.