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Onshoring: A Trend in Automation?

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RichardEnginier
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Iron
Infrastructure
RichardEnginier   2/12/2013 10:23:50 AM
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It's nice tobuild factories in the U.S.A., nevertheless without people to build subsystems, such as computer systems and elevators, it would seem hard to maintain a larger industrial base.

And our lack of public transportation forcing people to drive to work forces up wages.  At least the robots mean fewer people need to drive to work.

Without an overall industrial policy we cannot move forward. Does more industry mean more trucks and more congestion? What do we want to do with railroads?

Are we developing new machinery rapidly enough?

What about an executive class not financially oriented? Is GM a car company or a financial company?

It's too easy just to say build factories. We are at least 50 years beyond the ability to have industry grow just anyway the wind blows.

Even where industry will be located has changed: imigrants went to many marginal places no longer attractive to new generations. Too many peole thnk that an area once full of industry is an automatic restoration.

And cities like Philadelphia, once the largest manufacturing area, is full of service businesses with expensive labor. New York City is the same way. Yet these were the places with public transportation for accomodating a lower cost workforce.

And what do we do with the people not skilled enough to compete for the limited industrial jobs?

My first steps to industrialization involve fundrasing for internships for people who crank wrenches working with racing teams and helping the high school shop departments. And if anyone wants to form a fund to invest in Western Pennsylvania where natural gas is abundent let me know.

I'm also looking into starting a Super Pak to push for industrial development.

Industry is engineering and engineering means industy.

Richard

JimRW
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Silver
Re: Onshoring Manufacturing
JimRW   2/12/2013 10:33:17 AM
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WW - Those are valid points, although a bit of a wet blanket on good news. It is absolutely true that US (and European) wage standards will not support those low skill/low wage manufacturing jobs (mostly assembly). Luckily, assembly can be automated for a lot of products and I think companies are realizing that the cost of automation, including the reduced number of higher skill/higher wage labor, is still better in the long run than having the work done offshore far away from the target market.

Another benefit of reshoring, that should include jobs, will come from just having the work done here in the US. Innovation happens more where the manufacturing is happening and design is closer coupled to production, and innovation helps drive the jobs economy as new products create need for more resources.

I believe it is also true that there will always be a need for low skill/low wage manufacturing jobs to be done somewhere, but typically for products that cannot command a premium price. Those jobs are gone from the US forever, or until worldwide wages reach some semblance of parity. In other words, not in our lifetime.

williamlweaver
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Platinum
Re: Onshoring Manufacturing
williamlweaver   2/12/2013 10:57:06 AM
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JimRW excellent thoughts on innovation - "happens more where the manufacturing is happening and design is closer coupled to production..."

I wasn't aiming for a "wet" blanket, but at least a "sober" blanket. Offshoring is a symptom, not the disease. If policies are successful in onshoring manufacturing, I'm suggesting that is similar to air lifting mouthwash into a country suffering from massive tooth decay. Since our economists insist on governing in an age of scarcity, it is difficult to have any leverage on consumer goods that are infinitely abundant. (as of June 2012 the US has 300,000,000 mobile phones in use, and as of 2009 more than 50% of households have 3 or more TVs). The economic solution is to enact policies that artificially create scarcity (farm subsidies, moratoriums on domestic oil production, 4 new refineries since 1990, no new nuclear plants since 1977...)

I'm anxious to hear the plans for Jobs during Today's Fat Tuesday State Of the Union Address. We want jobs?  Lift the artificial scarcity and transition the country into an age of abundance.    

GTOlover
User Rank
Platinum
Re: Onshoring Manufacturing
GTOlover   2/12/2013 11:00:01 AM
The only thing you will hear at the SOTU is, "It is not my fault, those evil Republicans!"

TJ McDermott
User Rank
Blogger
H-1B will dampen job onshoring
TJ McDermott   2/12/2013 11:10:03 PM
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Manufacturing may be coming back, and it may mean a need for more scientists and engineers, but the H-1B visa program means companies will be importing workers to fill that need.

It's always about the bottom line - companies will take the lowest-cost path.

It would be nice if the current administration, in addition to incentives for onshoring, also did something about that damned H-1B visa program.  Maybe a rule that unemployment must be below 4 percent before H-1B visas can be granted?

plasticmaster
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Silver
As the world turns...
plasticmaster   2/12/2013 11:28:04 PM
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Manufacturing (in general) tends to follow the lowest cost avenues. How low depends on how much work they want to put into a given project up front. First it was America, then Japan, Taiwan, and eventually found its way to China.

A very good article on the history of outsourcing is found here: https://wikis.nyu.edu/ek6/modernamerica/index.php/Industry/Outsourcing

Automation will definately improve the US's chances of successfully in-sourcing. But there will always be a need for low wage work here from the worker's position. Not everyone can be a rocket scientist, engineer, or a degree holder. There are those that need/want simple work.

Another way the US could compete USING labor would be to consider some kind of model fashioned after a program the Chinese developed out of necessity. When the planned city of Shenzhen went up starting in the mid-70's and capitalism was being experimented with, Companies had a need for labor and attracted people from all over the country with dreams of making a lot more money in the factories than they could make farming.

These people came with nothing. They arrived at the company doorsteps with a few changes of clothing. 

The answer for them? Dormatories...with cooks! Provide them with a roof over their heads and 3 square meals a day and pay them a little and they were happy. 

This is not necessarily the answer for finding low wage solutions in the US, but I can't help but think that something along these lines, manifested in some fashion, couldn't be a valuable solution to keeping low cost workers employed in addition to automation.

apresher
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Blogger
Onshoring a Trend?
apresher   2/13/2013 8:32:50 AM
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From last night's State of the Union address, it's obvious that this issue is on the radar in Washington.  The President mentioned Apple, along with Ford and Caterpillar, as companies bringing manufacturing back to the U.S.  The President also said that "Our first priority is making America a magnet for new jobs and manufacturing."  It will be interesting to see if this issue gains traction, and what proposals come forward.

Nancy Golden
User Rank
Platinum
Re: Onshoring a Trend?
Nancy Golden   2/13/2013 11:46:39 AM
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That caught my attention as well, apresher. I am just wondering what their incentive is - especially since the President also announced a raise in minimum wage to nine dollars an hour. While I truly hope all of this happens - there is still the same carrot that drove these companies off-shore in the first place - the cost of producing their products have been lower outside the U.S. which speaks to higher profit margins.

Charles Murray
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Blogger
Re: Onshoring a Trend?
Charles Murray   2/13/2013 1:54:34 PM
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Nice story, Al. The chilling phrase in there is "Chinese workers began to resist poor labor conditions in the form of strikes and suicides." I guess we've all read about the conditions at FoxConn and heard about the nets outside the compounds, but it's still scary to see it mentioned in this context. Let's hope the trend toward onshoring continues -- for everyone's sake.

apresher
User Rank
Blogger
Onshoring a Trend?
apresher   2/15/2013 9:55:51 AM
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Nancy, I think you hit it on the head in terms of what are the incentives?  It will be interesting to see what actual incentives come forward but this is obviously an issue where the politicians are focusing.  We'll have to wait and see.  Could be a big story over the next few years ...  or not?

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