Are Robots Really Going To Take Your Job or Are They Going To Bring Manufacturing Back?

canadian-uk-eu-american-worker-lose-job-to-illegal-immigrant-robotThere is recent evidence that robots will not take all the manual labour jobs and that in fact, if you live in first world countries you will likely gain jobs from factories coming back to the US, Canada, EU, UK, Australia…

We have been on the road to mass robotic automation for about a decade now and while there is much left to learn in our uncertain future, there is now enough data to see some unexpected trends developing.  Most notably, it turns out that robots eliminate the cheap price of labour advantage that developing countries currently rely on:

Country Minimum Wage Details USD Hourly USD Annual Hrs Work Week
 Bangladesh 1,500 taka ($19) /month for all economic sectors not covered by industry- specific wages; garment industry min is 5,300 taka ($68) /mnth  $ 0.09  $ 224.00 48
 China Set locally, ranges from RMB9.50 ($1.39) /hr in Guangxi to RMB19.00 ($2.78) /hr  in Shanghai  $ 0.85  $1,775.00 40
 India Set by the provinces & other factors ranging from 160 rupees ($2.40) /day in Bihar to 750 rupees ($11.31) / day in Kerala  $ 0.31  $ 767.00 48
 Mexico 80.04 Mexican pesos ($3.94) per day  $ 0.48  $ 1,204.00 48
 Thailand Set buy the Provinces, bottoming out at from 300 Thai baht ($8) / day  $ 1.10  $ 2,758.00 48
 Ukraine ₴3723 (UAH) ($142.67) / month, 22.41 hryvnias ($0.86) / hour  $ 0.81  $ 1,680.00 40

SOURCE:  Obviously this varies based on US $ exchange rate.

Historically, we know that each time there is a major upheaval in production systems (the Industrial Revolution, Computers, Internet…) there is good reason for many to fear for their jobs, but in the end those changes have ALWAYS lead to more and better jobs.  This is because such industrial changes:

  1. increase life expectancy by eliminating or improving some dangerous jobs
  2. increase wages resulting in more consumption (spending)
  3. require massive support infrastructure (design, delivery, installation, maintenance, management…) resulting in many more jobs

Some very intelligent people like Bill Gates and Elon Musk that have the time, the resources and access to intellectuals in related industries think it might be different this time.  It is possible that the combination of Artificial Intelligence (AI) and Robotics will put hundreds of millions of people out of work and not create more support jobs to replace them.

While AI and robotics will definitely be a challenge for all humans in the not so distant future, it is also true that if you work in a low wage third world country doing manual labour, you are really in trouble today.

Most industrial scale production has been moved from the US, Canada, EU and other first world countries to the third world in an effort to reduce labour costs.  However, the consumption of those products still takes place in Canada, the EU, the US, Uk… so those products need to be shipped.  Shipping is expensive and slow.

What would you do if you owned a large widget producer currently operating primarily out of (say) China and you found out that you could cut your costs again by producing ‘at home’ in the West using robots?  That is the question an increasing number of industrial scale producers are facing today.

So called “OnShoring” of manufacturing jobs is being enabled by robots.  Without robots Western economies like the US, Canada, Britain, France… just can’t compete with low wages.

President Trump has been hailing the 2018 ground breaking of the new Foxconn television factory in Wisconsin as a major win for US jobs.  Foxconn previously had no US or Canadian operations, but is the second largest employer (1.1 million people!) in the world, manufacturing everything from Apple iPhones to Sony PlayStations to LED light bulbs.   It is undeniably a good thing to have products manufactured close to their source materials and the end consumers.  This is good for jobs, the environment and government tax roles.

However, it did not come as a surprise to anyone in the electronics or IT industries that Foxconn Wisconsin plant will be highly automated.  Take a look at this short news report from 2016, a year after Foxconn announced their goal to replace “almost every human worker with robots” but mentions nothing about the jobs required to keep those machines running:

The Wisconsin plant will employ just 5000 people on the line, but another 3700 will be employed as “equipment technicians” to keep the robots running 24 hours a day and another 3500 in engineering roles designing the work flow and production operations.  Beyond that about 1000 people will be employed in “business support” functions like Human Resources, Legal and Management.

The operators will earn about $55K/year but the techs will earn over $60K/year and the engineers will earn much more than that.

The bottom line is that the economics of robots are likely to destroy many low wage jobs primarily in Asian and Indian economies over the next two decades as those low end jobs are being done by robots in Western first world economies.

It is abundantly clear the the coming wave of robotic automation will take many jobs but other jobs will be created.  The answer to the question ‘Are Robots Going to Take My Job’, it depends on what you do and, unexpectedly, where you live.

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