The stock market is up again. The Fed says the ‘recession’ is over. There was big news that unemployment is inching back below 10%.
Everyone wants to return to the ‘good old days’ of full employment. No one wants to take a pay cut. But here is the difficult truth. The current recession is not just a temporary thing – it is a radical shift in the structure of our economic way of life.
Automation technology continues to reduce human work, physical and mental, in the production of goods and services.
Automation started in manufacturing, but continues to expand into most other arenas. Telephone operators have been replaced by automatic switchboards; secretaries by answering machines; clerks by computers. Medical records are kept with much greater speed and accuracy by automated systems. ATMs have almost eliminated the need to visit banks during working hours. Today, you do not even need to put your check in an envelope for ATM deposit – you can simply take a picture with your smartphone and send it to the bank.
Automation is eliminating manufacturing jobs everywhere in the world. In the first decade of this new millennium, about 3 million factory jobs were eliminated, about 30% of the workforce, supposedly to compete with cheap foreign labour. Here is the point: those jobs are NOT coming back, and it has nothing to do with the cost of labour.
Automation technology continues to eliminate the need for workers. Productivity increased about 9% in 2010, the biggest gain in 20 years. Investments in automation technology (beyond just manufacturing) increased 15%, as most companies pushed to do more with less.
Well-managed companies do not want to hire people and then lay them off again. They keep looking for high-tech ways to do more with less. During the recession, productivity gains allowed many companies to maintain, or even increase profit margins, as revenues decreased. Companies who laid off thousands of workers have learned to use existing technology more effectively, to have ‘lean’ operations. Production lines produced faster, with fewer people.
Here are some facts: Manufacturing profits rose above $122 billion during the last quarter of 2010, the highest for any quarter since 2006, with 2,4 million fewer employees. Many companies do not really want to hire again, even as profits increase. Since the start of the mooted recovery, manufacturing jobs have increased, but only by about 5% of the 3 million jobs lost since the decline. Factories will not get back to pre-recession employment levels for a decade, if ever.
Chronic unemployment is facing not only the US, but Europe as well. Off-shore manufacturing is NOT to blame – even China is reducing its labour workforce. Industrial work is increasingly done by machines, which produce cheaper, faster and better.
The prospect of employment will continue to diminish for a large percentage of the population. Current thinking is simply looking in the rear-view mirror – let us get back to the good old days of full employment. We are not really considering solutions for the new era, where there is no more ‘work’ work.
Web media boosts automation knowledge
Education is not keeping up with today’s speed of technology change, causing a growing skills mismatch in the industrial automation arena.
Today, individual skills are bolstered and expanded through specialised groups within social networks, many organised specifically to share automation knowledge.
Most engineers join automation special-interest groups on Twitter, Facebook, LinkedIn and the like, sharing questions, problems and solutions with the automation community at large. It is amazing how quickly multiple responses arrive from people who have applicable knowledge or experience. The productivity results are significant.
This type of knowledge can also be accessed ‘on the fly’ with smartphones and iPads. Engineers and technicians talk through problems and solve each other’s issues using words, images and video. Indeed, many factories and process plants are providing iPads and equivalents to their engineers and technicians for just that purpose.
Most automation suppliers and end-users have started to leverage social media to connect with the worldwide industrial automation community in a variety of ways, ranging from online forums, wikis and communities, to blogs and micro-blogs. Designed to foster interactivity, forums and wikis provide for sharing of industry information and a platform for Q&A discussions.
This type of media interaction is bringing major shifts in learn-shop-and-buy behaviour. It is a practical approach to leverage valuable market insights that have previously been difficult to find. It also helps suppliers to monitor and listen to customer conversations, yielding a clear understanding about what they are talking, who influences them, what interests them, what motivates them and what drives their behaviour. Ultimately, these new mechanisms provide the insights necessary to identify opportunities and develop creative strategies that provide sustainable competitive advantage.
Collaboration and innovation happen when people get together and feed off one another, adding to each other’s ideas and seeing problems, solutions and opportunities from different angles.
Conventional engineering education is becoming outdated; social media provides and enhances up-to-date knowledge and gets results.
Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. His popular e-mail newsletter, JimPinto.com eNews, is widely read (with direct circulation of about 7000 and web-readership of two to three times that number). His areas of interest are technology futures, marketing and business strategies for a fast-changing environment, and industrial automation with a slant towards technology trends.
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