Despite the end of the Great Recession two years ago, a record high stock market, and 10.9 percent growth in the housing market over the same time last year, US unemployment still hovered at 7.5 percent in April 2013. That statistic poses a long-term threat to an economy whose prosperity rests on consumer spending.
Unlike previous recessions, this time rising employment has not been a main factor driving the return to prosperity. What is it that made this recovery so different, so prolonged, and so painful? More than anything else, it was the trend of shipping manufacturing jobs overseas. It began in heavy industries such as shipbuilding and steel shortly after World War II and hit the high-tech industries in the 1990s. This trend had clear immediate benefits for both American companies and consumers, but the recent recession has highlighted the long-term weakness it creates in the US economy.
If a strong manufacturing sector is required for a robust US economy, how do we renovate that sector after it has been nearly sucked dry by 50 years of outsourcing manufacturing overseas?
The answer lies in the innovative use of automation -- the same thing that made this country a manufacturing powerhouse originally. Innovations such as the use of interchangeable parts and assembly-line production helped turn this country into a manufacturing giant starting in the mid-19th century. Those concepts enabled Henry Ford to transform the automobile from a rich man's toy into the common man's preferred mode of transportation. It was American innovation that produced the transistor and the computer, spawning the high-tech industry, and it was American innovation that developed the Internet, radically changing global communication.
In the future, innovation, especially through automation, will be key to ensuring that American manufacturing becomes and remains competitive with the nations that currently dominate manufacturing. American manufacturing lines of the future will use few online operators but will need skilled technicians to keep manufacturing tools operating with minimal downtime. Skilled engineers will be needed to design and build the next generation of tools.
In such a scenario, automation does not translate into fewer manufacturing jobs -- rather the opposite. An increase in companies moving manufacturing back to the US would foster development of a robust manufacturing infrastructure, including businesses manufacturing the capital equipment, parts, and components needed by the facilities producing finished goods. That infrastructure could leverage innovative approaches to automation to make American manufacturing even more competitive.
Unlike today's economy, where most jobs are now in the low-paying service sector, such an approach to increasingly automated manufacturing would generate significant growth in the number of technical and highly skilled jobs offering much higher rates of pay. That would result in an infusion of capital into the economy. This infusion would help generate additional jobs in a variety of markets, such as housing, automobiles, and consumer goods, to meet the demands of employees in the revitalized manufacturing sector.
In order to make this a reality, manufacturing equipment produced in the US must be competitive with that produced overseas. There needs to be a reasonable return on investment -- ideally one to two years. Finally, newly developed technologies must be proven for large-scale implementation before they are deployed.
Automation doesn't take away jobs. As my company has found in 20 years of automating manufacturing processes for high-tech industries, it helps create jobs. Those new jobs will be a key factor in any US economic renaissance.