Krugman: Rise of robots and the reshoring” of manufacturing to the United States

[pampango]

Catherine Rampell and Nick Wingfield write about the growing evidence for “reshoring” of manufacturing to the United States. They cite several reasons: rising wages in Asia; lower energy costs here; higher transportation costs. In a followup piece, however, Rampell cites another factor: robots.

The most valuable part of each computer, a motherboard loaded with microprocessors and memory, is already largely made with robots, according to my colleague Quentin Hardy. People do things like fitting in batteries and snapping on screens.

As more robots are built, largely by other robots, “assembly can be done here as well as anywhere else,” said Rob Enderle, an analyst based in San Jose, Calif., who has been following the computer electronics industry for a quarter-century. “That will replace most of the workers, though you will need a few people to manage the robots.”

Robots mean that labor costs don’t matter much, so you might as well locate in advanced countries with large markets and good infrastructure (which may soon not include us, but that’s another issue). On the other hand, it’s not good news for workers!

http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/

Increasing automation in manufacturing seems to be the main reason that manufacturing employment is declining in all countries even while manufacturing output continues to increase.

[high density]

1. Every factory you need to fill up with robots...

...all start with a bunch of highly-paid engineers and fabricators to architect and build the system. So if it means slave labor in China making things or robots in America making things, I think robots in America is better.

[Beartracks]

2. If "assembly can be done here as well as anywhere else"...

... since "people [just] do things like fitting in batteries and snapping on screens," does that mean that manufacturers will expect to pay American assembly workers a pittance similar to what they pay to workers in the developing world?

===================

[pampango]

3. "Robots mean that labor costs don’t matter much..." so there should be less pressure on wages, but

"it’s not good news for workers". Even if the returning jobs pay well there won't be many of them.

[quaker bill]

4. The graph is the take home message

Labor gets a smaller and smaller slice of the economy over time. Sure, engineers and designers get good work designing the factory once. But very few get jobs manufacturing things when they are done.

Our robots are cheaper and more efficient than overseas slave labor over their lifecycle. If you have the millions needed to own robots, they will make you even richer. If you don't, they do the work you might have done, don't form unions, and never need a coffee break or paid holiday.

We will need to reimagine the entire social structure once this takes off. It will change the meaning of a job and promote greater levels of income disparity than anything seen to date. Some few of us will design and maintain the robots, others will serve them sandwiches.