Labor Day 2011: Technology Changes Workers' Lives

Sept. 5, 2011 — -- This Labor Day, with unemployment hovering above 9 percent, workers are confronting an enigma. Although there are one-third fewer factory workers than there were only 10 years ago, manufacturing in the United States is thriving.

From 2001-10, manufacturers shed nearly 5 million manufacturing jobs, yet the value of manufactured goods rose 27 percent, and U.S. exports reached their highest level in 20 years. Technology is not only responsible for many of the job losses -- but also for the increased output as well.

By adding technology, many manufacturers have reengineered their operations to become leaner, eliminating unnecessary steps in the manufacturing process, and replacing large inventories with more frequent shipments from suppliers. Their investments in automation made the United States a global leader in productivity, yet it hit workers with a double whammy: factories that could be automated shed people, and those that could not moved overseas.

"At some point, automation is not just about replacing a cheap person, but an enormous source of data that gives you enough information about a process to improve its quality, speed, and cost. If a human's doing it, you don't have that data," said Doug Woods, president of the Association for Manufacturing Technology.

U.S. manufacturers began boosting technology investments 20 years ago, when they realized they could not compete with low-cost offshore labor, said Tom Runiewicz, an economist at IHS Global Insight.

"The pace picked up in the recession," Runiewicz said. "There was a big squeeze on companies. They had to do more with what they had. Automation saves in the short term and makes them more competitive in the long term."

Some of these technologies are readily noticed in a factory, like robots, automated production lines, and wireless scanners for tracking parts and equipment.

Software is less visible, but is just as important. The software used in modern factories monitors and controls machinery, constantly adjusting to make each cut and weld perfect and warn when there is a problem. Other systems schedule production to use available machinery and inventory most efficiently, while others analyze production data to find better ways to complete each task.

Over the past decade, those technologies have gotten cheaper and simpler to use. "Many small and mid-sized shops are able to deploy robots now," said Joe Campbell, vice president of the ABB Robot Products Group. "Ten or 20 years ago, they needed specialists and it was more difficult to get up and running."

Tens of thousands of U.S. factories have closed since 2001, but many of those manufacturers left standing have learned to use technology to become more competitive. How competitive? A new report by Boston Consulting Group predicts that over the next five years, the cost gap between Chinese and U.S. manufacturers in some low-wage states will shrink to single digits -- without even counting shipping and inventory costs.