No, Mexico is Not Taking U.S. Factory Jobs; Robots Are

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U.S. factory worker
Darren Delozier (cq), Oregon City works on a partition wall for the articulated electric streetcar being made, for use in Portland, by Oregon Iron Works in Clackamas. The streetcar should be completed later this spring.

Presidential candidate Donald Trump has often put the blame on China and Mexico for a sharp drop in U.S. factory jobs. But a recent report says there is a less obvious culprit for the dire situation: the industrial robot revolution.

Yes, robots not trade partners stole millions of jobs from Americans, the report suggests. Even though Trump once said America is not “mak[ing] anything anymore,” experts disagree. In fact, the country has a flourishing manufacturing industry. But factories now produce more with less human personnel as machines are doing the bulk of the work.

Stats Disagree with Trump

The number of factory jobs has sunk by 7 million since 1979, when U.S. manufacturing employment was at its peak. In the meantime, the factory production jumped to $1.91 trillion in 2015, which is twice as much as the 1979 levels, the Commerce Department says.

The figure makes the U.S. the world’s second-largest manufacturer behind China.

On the other hand, Trump is right when he says that free trade took away some of America’s factory jobs. This happened especially after the year 2001 when the World Trade Organization gave China membership. From that point on, the Chinese had a much smoother access to the U.S. market.

As a result, many of the jobs in textile and furniture manufacturing were shipped overseas where wages are a lot lower. For instance, the country’s textile production collapsed 46 percent after 2001, while the industry cut 62 percent of its workforce, or about 366,000 jobs.

U.S. Produces More with Fewer Workers

But despite these numbers, the robot revolution inside U.S. factories played a much larger part than foreign trade.

Researchers at Ball State University’s Center for Business and Economic Research found that trade competitors siphoned 13 percent of the country’s factory jobs. By contrast, machines and automation replaced 88 percent of those jobs.

“We’re making more with fewer people,”

says Howard Shatz, an analyst with Rand Corp.

The phenomenon is visible across a wide range of industries. For instance, General Motors boosted car and truck production but it uses just a third of its initial workforce. In the 1970s, the Detroit-based auto maker had 600,000 workers.

The U.S. steel industry witnessed a similar phenomenon. The industry of primary metals shed 265,000 positions in two decades, which marks a 42 percent drop from 1997 levels. In the meantime, the production jumped 38 percent.

Duke University researchers confirmed that foreign competition is not the main culprit in the lost steel jobs. Many workers lost their jobs because of mini-mills which can produce steel from scrap metal.

Robot Revolution at the Begining

All analysts agree that the industrial robot revolution has just started. They estimate that the world’s top export nations will raise investments in the technology by 10 percent by 2025. In recent years, the investments rose by just 2 to 3 percent.

Factories would rather work with robots for countless reasons. For instance, they can adapt quicker to new technologies as they can be trained a lot faster than human workers.

What’s more, they are a lot cheaper than people as their price continues to drop. Recent estimates show robots could reduce U.S. labor costs by 22 percent, Japan’s by 25 percent, and South Korea’s by 33 percent.

Image Source: Flickr

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