

The Future of Manufacturing, GM, and American Workers (Part I) - dangoldin
http://robertreich.blogspot.com/2009/05/future-of-manufacturing-gm-and-american.html

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mdasen
It's surprising that a piece like this hasn't generated that many comments
considering the number of comments similar articles create. I think that's a
testament to how measured and informed the article is. However, the final
paragraph stuck out to me:

 _The biggest challenge we face over the long term -- beyond the current
depression -- isn't how to bring manufacturing back. It's how to improve the
earnings of America's expanding army of low-wage workers who are doing
personal service jobs in hotels, hospitals, big-box retail stores, restaurant
chains, and all the other businesses that need bodies but not high skills.
More on that to come._

Earlier in the article, Secretary Reich had noted that supermarket checkout
clerks were being replaced with self-checkout machines. I'm not sure why one
would expect big-box retail labor to fare better. In fact, we're starting to
see how they won't fare better. Automation is coming to retail. Right now,
it's mostly visible in self-checkouts. However, think about Amazon: I'm sure
their warehouses use a very high level of automation to minimize labor. There
was a posting on HN a while back about robots that went around a warehouse
bringing the products all to one person which eliminates the labor of fetching
products. Is it that outrageous to think that a store like Walmart or Target
will be able to stock their shelves in an automated fashion in the future? How
about a retail store where you can go around and look and play with things and
then you just note the product numbers of the things you want and punch them
into a computer at checkout. Then an automated system bags up all your stuff
and delivers them to you. No labor needed at all.

Likewise, I yearn for the self-making bed. Roomba is already vacuuming floors
and while one can argue that it isn't as good as a hotel might need, it's not
hard to see that it will continue to get better. Is it that hard to see those
service jobs seeing less labor as well?

The problem, in my mind, is that we simply don't need much unskilled labor
anymore. Skilled labor can create things that do unskilled labor better than
unskilled laborers can. If it isn't happening now, it's not hard to believe
that it will in the future.

The question then becomes, how do we as a society deal with the fact that
there might be some people who aren't able to be skilled laborers? What
happens when the only jobs available require more skills and intellect than
the unskilled jobs of today? Do we just let their salaries languish and let
them be impoverished on the streets? I don't think that would be a good thing.
Job retraining is definitely a possibility, but to what end?

It seems like the skills required in the world today are changing at a much
faster rate than they have in the past. Where change might come after many
lifetimes, today one might have to learn many new skills in a generation in
order to stay relevant.

It's friday and I skipped lunch so I might not be so coherent, but it does
seem like there might be a point at which all low-skilled work is automated
and we possibly can't educate a portion of the population high enough that
they can become part of the class that creates capital goods (rather than
those that simply use capital goods like a cash register). How do you take a
cash-register user and turn them into a cash-register
designer/maintainer/troubleshooter? How do you take someone that stocks store
shelves and make them someone that designs robots to do that task?

~~~
yummyfajitas
_Do we just let their salaries languish and let them be impoverished on the
streets?_

At some point, we will not need unskilled labor. This is the point at which
machines can produce everything we need at little cost, and we have _more_
goods and services per capita than we do today.

In this post-scarcity future, socialism/welfare/etc is cheap. You want 2% of
my income to prevent 100 people from starving? Eh, go ahead, I don't really
care.

~~~
mdasen
This is part of what I'm wondering: how much do you have to give? Simply
providing for basic needs is clearly unacceptable (in my opinion). Heck, try
suggesting that someone go without cable TV to balance their budget and you'll
get a bad reaction. Anyway, I think it would be undesirable to have a society
in which there were two clear castes of haves and havenots even if the
havenots did have all of their needs (medical, shelter, food. . .).

And then the problem becomes: as we move into this new economy, how do we
parcel out this socialism? Majority rule would simply be tyranny and we can't
have a functional society where there are two groups and one is 100x more
wealthy than the other in a caste-like fashion. Still, those who produce need
some reward and incentive. So, how would we do it?

The only thing that I can think of is land: land is the one thing that we
can't actually produce with labor (despite Boston's Back Bay real estate). If
the cost to produce a television is essentially nothing, there's no sense in
restricting who gets one even if the design has to be done by an "upper-caste"
person. However, land - and land in "cool" areas like Seattle or San Francisco
- is in limited supply. Only certain people can live there. So, even if all
goods and services can be provided for near $0, land can't.

To be honest, I think that this future will be kinda cool. I mean, if most/all
of our material wants and needs are taken care of, we could hack away at
projects we thought were interesting/fun. Our jobs could be what we find joy
in - whether that be local theater or web apps. And I think that we would
create value that way. Potentially not in the focused, reward-driven way that
we do today, but lots of people come together around no money to do things
even today. I'm not saying that we can replace our current economy like that,
but at the point that we have wants and needs met for essentially $0, it seems
like it would be fun. Frankly, in that kind of future, there doesn't seem to
be a need to force people into things they might not like.

Maybe that's too hippy.

------
fauigerzigerk
Not that I'm in favor of rescuing the likes of GM, quite the contrary, but it
has to be said, when a car company closes down, not just last century blue
collar jobs will be lost. All the highly paid car designers and embedded
systems engineers, etc, will lose their jobs as well.

If GM and Chrysler were let go, maybe the world would see a wave of auto
startups once again. After all there would be unused car plants as well. And I
bet GM engineers are on average less incompetent than GM management. They
might have some crazy ideas that would work well in the market and would never
have been approved inside GM. Maybe that's just wishful thinking :-)

~~~
encoderer
I don't know the right answer. I do strongly support our President but I do
feel a discomfort over owning 75% of GM.

On one hand, we've seen this before with Conrail. Huge success. And even with
Chrysler 30 years ago. On the other, if the company can't turn around, when
does a politician decide that, despite sunk cost, we need to abandon support
and liquidate.

My reason for posting, though, is I think the way you're casting the auto
business is way off mark.

A full 10% of our GDP is tied to the auto industry thru the huge amounts of
suppliers. If GM and Chrysler were "let go" as you put it, the world wouldn't
see anything but a massive depression for a good long period.

Furthermore, nearly every significant supplier (say, over $10MM in annual
sales) is supplying at least a couple automakers if not most of them. They've
all pushed hard to diversify. And most of them are in peril after 3-5 years of
tough times at the "Big 3." If Chrysler and GM are let to fail, huge swaths
will go under, and Ford, Toyota, Honda, Nissan, etc, will no longer be able to
get the parts they need. That could very well be the economic "stiff breeze"
needed to blow over a few of the remaining global automakers that are
themselves teetering.

And even after we pull out of that mess, I find it unlikely we'll see any
'startups' in the auto biz. It's just got too many working parts. Product
development, manufacturing, marketing, sales and service are all multi-multi-
million dollar problems.

Finally, the "last century blue collar jobs" you mention is pretty far off
base as well. If you're talking unskilled labor, then you mean simple assembly
tasks. But a lot of the simple assembly has been automated. But I'll grant you
that by and large, assembly is "last century blue collar." Thing is, most of
the workers (by far) aren't doing assembly. And it's not just the "car
designers" either, which are really quite a small bunch.

What you're missing is the huge middle. The machinists and fabricators. People
programming CNC machines. People fixing those same machines.

And you're missing the huge corporate structures. The AR and AP clerks, the IT
staffs, the sales and marketing. The HUGE numbers of engineers designing each
hinge, each screw, each spring.

This industry is vital to our nations economy. No question about it. The
Midwest would be ground zero, but the depression would spread globally.

~~~
fauigerzigerk
I'm not sure why you say I'm off base when I say that "not just last century
blue collar jobs will be lost". You go on to essentially support the point I
was making only in much more detail.

However, I disagree about the suppliers problem. It's absurd to assume that
the world's auto industry would basically cease to exist if GM was liquidated.
At the end of the day the strongest manufacturers would survive, maybe by
bailing out their own suppliers. Auto makers are not systemically important in
the same way that banks are.

It's funny that you mention the 1979 bailout of Chrysler. Is that the success
you're hoping for? Bailing out an auto maker only to bail them out again 30
years later? I think that's a very good example showing why no auto maker
should ever be bailed out. It just keeps a rotten corporate culture alive.

I do _not_ think that the auto industry or manufacturing in general is
obsolete, quite the contrary. There are huge technological challenges coming
up, the most important one being energy/fuel efficiency. This is a high tech
sector that nobody should want to see fail. There are many related services
that are also at stake, which do not fall into the unskilled labour category
either.

But bailing out rotten companies is no way to achieve anything. Don't forget
that the troubles at GM and Chrysler were not caused by the current financial
crisis. They have been ailing for a long time.

I agree that auto startups are unlikely. But a little more creative thinking
on the part of the US government wouldn't hurt. Are wholesale bailouts of
rotten behemoths really the only way to rebuild the US auto industry? I can't
believe that.

~~~
encoderer
Briefly, I disagree that the jobs I listed are "last century blue collar."
Many of those people are knowledge workers that just happen to use their hands
as well as their minds.

Secondly, in my younger years I worked as a software developer at a Tier 1
automotive supplier. I've got a lot of friends in the business.

I wasn't being an alarmist. Many of these companies are on the brink. On top
of that, there aren't many "strong" auto companies to "bail out" the
suppliers.

Right now the forecast is a pitiful 9MM autos sold this year. At this rate,
we're going to have serious problems, even Toyota may face bankruptcy.

And about Chrysler... they were bailed out, invented the mini-van, and, by
acquiring Jeep via AMC,ignited an SUV market.

That's a corporate success story. It's been 30 years, there's been titanic
shifts in the global market.

------
calambrac
I believe its dangerous to assume that the jobs we're losing as our
technological abilities advance will continue to be replaced by new ones. Keep
in mind, we're not just talking about losing manufacturing jobs (which is all
the author seems to focus on here). We're also talking about losing human
resources departments, which previously had to track all the other human
employees in the company, and managers, who had to manage the underlings and
the human resource department.

Robots aren't going to stay confined to manufacturing plants. CAT is heavily
invested in robotic trucks. One of the coolest videos that I've seen that's
been posted to this site showed a robotic fulfillment center. There was one
just today (admittedly, kind of silly) about a robotic garbage man. This is
only going to continue.

Then there are the jobs that aren't necessarily disappearing, but that aren't
growing, either. Software is letting accounting and finance departments ramp
up their productivity per worker. A company can these days grow in complexity
and revenues but only needs to staff at replacement levels to keep up with the
increased work load. And, as it becomes more and more obvious that there are
very real benefits to offloading to service providers rather than maintaining
your own data centers, ops teams, and IT departments, companies will.

This isn't surprising. This whole community is formed around the idea that
these days, starting a viable business is completely in the power of small
teams of smart people. We've talked about the real jobs that are coming along
with these companies as they become established, but I would bet that they're
running at a level of productivity that shames companies of their size from
just 10 years ago.

It's a real question: where are the new jobs coming from? For the next few
years, we'll have a nice little bubble in the healthcare industry as the Baby
Boomer wave crests, but that's hardly sustainable.

I think the real question is, how are we going to restructure to deal with
high levels of unemployment, so that we stay stable and productive? How do we
incentivize the smart and capable to keep pushing us forward without
completely dropping everyone else?

~~~
crpatino
"I think the real question is, how are we going to restructure to deal with
high levels of unemployment, so that we stay stable and productive? ..."

The real issue - social issue at least, is how will the people support
themselves. As more an more jobs are automated away, it becomes unfeasible for
everyone to rely on a paycheck to feed themselves. I am not seeing a Welfare
State heavily taxing profits to provide for an increasingly unemployed
population. There will be plenty of suffering from the ones whose services are
not needed anymore.

For this reason, it is increasingly important for common people to own their
means of production. The only job you cannot be laid off is the self employed
one. This is more and more an strategic issue for the household economy to
have at least one bread winner working on their own venture.

Seems like this century will be very entrepreneurial, or won't be at all,

~~~
calambrac
You're right, I should have been more clear. "High levels of unemployment"
isn't right; I should have said something like "increasingly rapid dissolution
of the current employment model". I certainly didn't mean to imply I thought
the answer was a "Welfare State", though I'm probably not as opposed to the
idea of socialism as you seem to be.

Dramatically increased entrepreneurialism certainly counts as restructuring.

~~~
crpatino
Hey, a mild form of socialism is great in many ways.

I have been thinking a lot lately about the rights to "Life, Freedom and
Pursue of Happiness". In particular, I don't think the founders meant the
right to Life to mean "right to not being killed by direct unjustified violent
action". If you have the right to Life, you should have the right to the means
to stay alive and healthy.

My critic to the Welfare State idea is not that we should not care for our own
people. It has more to do with keeping the citizenship disempowered. If you
cannot provide yourself with basic needs by your own means and work, because
the barriers of entry are so high... then the only option left is to have
someone bail you out of the mess.

As techies, I feel we are very vulnerable. Think Spolsky's Development
Abstraction Layer
([http://www.joelonsoftware.com/articles/DevelopmentAbstractio...](http://www.joelonsoftware.com/articles/DevelopmentAbstraction.html)).
We can fall in a comfort zone by being productive within a larger organization
that extracts economic benefits from our creations... but once we become
severed from that infrastructure, many of us become helpless.

------
dan_the_welder
Follow the hidden subsidies.

How is is economical to built a fleet of fuel guzzling ships that weigh approx
120,000 tons and deliver goods in what are essentially disposable 8000 pound
tin cans?

Fuel oil is artificially cheap. This explains everything.

The steel in one container ship would be enough to create 240 million square
feet of domestic manufacturing space with wages and profit benefits that go
along with it.

Call that 240 twenty thousand square foot manufacturing spaces in every single
state in the USA.

There are approx 4500 container ships in service and over 600 on order being
built

Anyone want to play with these numbers, maybe figure out how much oil they are
burning to get their cargo around?

4500 ships * 240 million feet of manufacturing space = one Trillion square
feet of manufacturing space!!!

