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Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

October 15, 2014



Understanding The Tradeoffs Between Jobs & Automation

Can We Manage the Impact of Automation on the Jobs Market?



Holste Says:

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It's interesting to note that despite losing millions of jobs to labor saving "machines" over the past 100 years or so, we actually have more total jobs today than we did when the construction, steel, auto, telephone, and food industries had a lot more workers and a lot less automation.
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Previous Columns by Cliff Holste

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Sorting it Out: The Case for Count-Back - Three Step Approach to Getting it Right the First Time

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As was painfully obvious during the most recent recession, the economy of the United States, as well as all other industrialized countries, is based on jobs. Jobs, along with the tax revenues they create, are critical to the health, prosperity, and security of the country and its citizens. That is why leaders of industrialized countries are focused on job creation.


Within the global business community, efficiency, speed, and productivity are highly sought after attributes. The U.S. workforce is already the most productive in the world. But, we have just scratched the surface. We are now entering an era where the number of jobs, (blue collar, white collar, and service related) in the economy will be drastically reduced by automation.

The Logistics Industry is just beginning to see the affect of automation on jobs. SCD recently reported that at one Los Angeles terminal labor positions will be reduce by 40-50% after automation projects are completed in 2016.

New technology at the TraPac terminal (Port of Los Angeles) is likely to reduce the number of workers needed per crane by 53%, and by 85% in the area where containers are loaded on to trucks and rail cars. See - “Automation emerging as Key Issue in West Coast Port Negotiations”.

Automated machines have been replacing construction, manufacturing, and assembly line workers since the early 1900s. More recently however, blazing fast and relatively inexpensive computer based technologies such as voice recognition systems have replaced telephone operators; ATMs have replaced bank tellers; and, computerized kiosks have replaced grocery checkout clerks, gas station attendants, and the list goes on and on. Even the military is adopting automation technology like the Predator Drones to wage war while reducing collateral damage and risk to its own personnel.

As a result, the marketplace is rapidly becoming dominated by automation technology. While we do enjoy the many convinces this technology provides in our daily lives, we sometimes wonder (as President Obama did in a speech he gave in June of 2011) – “where have all the people gone that use to do these jobs?”

 

Will Future Advances In Automation Create Enough New Higher Level Jobs?

It’s interesting to note that despite losing millions of jobs to labor saving “machines” over the past 100 years or so, we actually have more total jobs today than we did when the construction, steel, auto, telephone, and food industries had a lot more workers and a lot less automation. Somehow, new jobs get created to replace the old ones – because someone has to build all those machines. However, the problem going forward is that the thousands of jobs created by providers of automation will not offset the millions of production and service jobs lost to automation. For example:


Analysis, concepting, and programming will be done by highly specialized engineers, while design, manufacturing, and assembly will be done by computers and robots.

Operating and servicing robotic systems and automated equipment will be performed by a few skilled technicians, while maintaining and repairing the robots will most likely be done by other robots.

Customer interface with automated systems (including the family car) will be through a combination of voice and touch screen technology. Human assistance will be limited and available on an as needed basis only.



As stated above, automation isn't exactly a new phenomenon - businesses are constantly looking for ways to replace workers with machines that will lower cost, increase margin, and speed up delivery of products to consumers. But, as has always been the case, at least up until the beginning of this century, the development and deployment of new technology creates new jobs for some while eliminating existing jobs for others. For example:

 

 

Before there were backhoes and massive earth movers, there were men with shovels and wheelbarrows. A backhoe replaced a hundred men with shovels. But new businesses and factories sprang up to manufacture the backhoes, and those companies hired people - many of them former ditch diggers. All of these new businesses and factories tended to employ many of the workers displaced by machines. The growing economy generally absorbed every unemployed worker in the new businesses that were created by advances in technology.


Today, new jobs are still being created, but unfortunately, not at a rate fast enough to soak up the unemployed.

 

Understanding Future Job Creation Issues – More Questions than Answers

Aside from all of the politics associated with job creation - the hard truth about the U.S. economy today and going forward is that businesses don’t need as many of us as workers, but, still need us as consumers. The American economy depends on a healthy base of consumers spending their money. Massive across the board unemployment causes a sharp downward spiral that hurts the entire economy.

Industry and economic experts agree that the industrialized world is entering a new age of advanced automation. Once autonomous robots start arriving in the job market in significant numbers (something that we will see happening by the end of this decade) they have the potential to dramatically change the global economy. With consumer spending accounting for two-thirds of economic activity, anything that spooks consumers (who have jobs) into losing confidence in their future prospects, slows down spending and fuels the downward spiral.

The issues are profound. How do we prevent this downward spiral from happening? Can we reset the economy so that we enter the new era of automation smoothly? With machines doing most of the work, can we actually create a society that takes advantage of the leisure time that automation can provide? Or, will the millions of people displaced by automation end up being homeless and destitute, living in government provided dormitories? And if so, what will this do to the tax rate paid by those who have jobs. It appears that some European countries are already experiencing this situation.


Final Thoughts

 

While the above business and social issues are complex they are just the tip of the iceberg. Instead of letting the inevitability of automation happen to us in a highly disruptive way, political and business leaders should take the time now to think about how we want the economy to work for all of the citizens of the automation age.

Editor’s note: We want to credit Marshall Brain (http://marshallbrain.com ), who is the author of Robotic Nation 2015, for his thoughts on this important subject, a few of which have been included in this article.

 

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