I love baseball, and this weekend I attended minor league games in Indianapolis, Nashville, and Louisville. While in Louisville, I took a tour of the Louisville Slugger Museum, which features a working factory that makes bats for big leaguers and recreational players. During the tour, we learned that from the 1880s to the 1970s, bats were made by hand. They were the work of craftsmen who used their hands and eyes. A good bat maker could carve a bat in 20-30 minutes. By the late 1970s an automated process was devised with a new lathe that could carve a bat in 30 seconds. Great for the company, not so good for the men who worked the lathes.
This story underscores the impact of automation on work. One of the lathes at Louisville Slugger could cut more in an hour than a man could do in a day. No sane business would continue to work in an inefficient manner. Layoffs were necessary. Similar advances have led to millions of layoffs in manufacturing, assembly, and supply chain. Better technology means fewer jobs. No company can stick with people when machines can do as good or better a job at a much lower cost. We all love innovation, but we have to look realistically at its aftereffects. Faster, cheaper, and more efficient usually means people will lose their jobs. The challenge is to generate new jobs in a world where machines, software, and automation are improving all the time. What will we do if a time comes when we have more people than jobs?
I heard a report today from CNBC Business that manufacturing has grown in the U.S. for 16 consecutive months. This news puzzled me. If manufacturing activity has increased for a year and a quarter, where are the jobs? Traditionally manufacturing has been a key driver of job growth. While hiring is up in this sector of the economy, why hasn’t it gone up even more? Maybe the growth is steady, but small. Maybe, jobs gained are balanced by jobs lost in other sectors, especially the public sector. Manufacturing has to grow for the job market to recover. The question is how much does it have to grow and how long will it take.
I often recommend that readers ignore breathless reports of rising or shrinking unemployment rates. That hasn’t changed, but it is important to follow industry trends. For example, the manufacturing sector has grown for 9 straight months. Will that lead to more jobs. It will. But will it make up for all the jobs lost in that sector? No. For some people, however, it will offer jobs. That is good news.
The other side of the coin? We don’t know the costs and after-effects of the oil spill in the Gulf of Mexico. Eleven workers died in the initial accident Charter boat owners and fishermen have already been put out of work. Who will be next? This accident is ugly and getting uglier. It will hurt working people. The question is: How many people and for how long?
Greg Burns has a great post in the Chicago Tribune. He writes that all aspects of manufacturing in America have declined. That’s the bad news. The good news is that there are smart, small, agile manufacturing companies in the U.S. that can compete with China’s low (slave) wage alternative.
One company Burns does not mention is Finkl Steel, which like many other American mills is proving that small and smart beats big and traditional (the great plants of the 1950s were smart; however, they could not change). Finkl moved with the times, and it is growing in its new location on Chicago's South side.
Only companies that can adapt will survive. Only workers who have the skills need to operate computers and precision machinery will have the opportunity to work at these companies. The days of simple tasks fueled by muscle and sweat are over.