Offshoring & Technology’s Impact On The Manufacturing Industry

Manufacturing jobs are decreasing due to technology and offshoring.  According to CNNMoney, in 1960, one in four Americans was employed in the manufacturing industry.  Today, fewer than one in ten works in a factory.

Offshoring’s Effects

Offshoring took away many manufacturing jobs since it started in the late 1970s.  Many companies moved their manufacturing plants overseas due to attractive labor costs and less stringent regulations.  At first, plants moved to Mexico.  Today, the field has expanded to Asia, South America and other areas.

Offshoring, though, created problems.  Shipping delays, quality problems, and miscommunications occur frequently.  Yet, American companies are willing to deal with these issues in exchange for lower costs.

Plants which moved overseas are starting to return.  The Reshoring Initiative works to bring back good, well-paying manufacturing jobs.  It reported about 60% of reshored jobs came from China because labor costs in China rose. Wages in other once low-cost countries are also increasing.  Automation eliminates the need for unskilled jobs and increases the need for highly-skilled, educated workers.  These higher-level skills often don’t exist in these offshore, third-world countries.

Technology’s Effects

Robotics are increasingly incorporated into manufacturing.  According to the Robotics Industry Association, North American companies spent 32% more on robots in the first quarter of 2017 than the same period last year.  Robots have led to an increase in production in the US, yet they have eliminated many manufacturing jobs.

In 1980, it required 25 semi-skilled employees to generate $1 million in manufacturing output. Today, it takes just 5 highly-skilled workers.  President Trump is working to bring back millions of manufacturing jobs.  Many industry experts believe this goal is difficult.  They claim robotics has eliminated more jobs than offshoring.

Holding a semi-skilled manufacturing background is not sufficient today.  Workers must be skilled in computer operations.  Universities are restructuring their curricula by implementing a STEM education – science, technology, engineering, and math.

While technology eliminated many jobs, it has positive effects on the jobs that remain.  Workers today are better educated, make better products, and, as a result, are better paid.  According to the Federal Reserve Bank of St. Louis, average hourly manufacturing wages as adjusted for inflation increased from $23.23 in June 2010 to $26.51 in June 2017.

Robotics holds many advantages.  Productivity rises.  Robots need no downtime; they work 24×7 with consistent results.  They are less prone to error, improving both efficiency and product quality. Robots perform jobs considered too dangerous for humans.

Though the cost of robotics continues to decline, a trend expected to continue, they require a significant capital investment.  Advanced skillsets are needed to operate and maintain robots.  Qualified workers are in short supply and highly compensated.

Matthew Rendall, writer for TechCrunch, the publication of crowdfunding CrunchBase, believes robots improve the manufacturing industry: “So, will a robot take your job? Maybe. But in return, you- and your children and grandchildren- will likely find more meaningful work, for better pay.”  Robots will continue to play a major role in manufacturing.  Let’s see how the industry responds.