Yesterday, I read an editorial from last year in BusinessWeek, written by the President of the Robotics Industries Association -- Jeff Burnstein -- which went as follows:
If you work in an American manufacturing company today, you should be worried about your job. I live in Michigan and have witnessed the destruction caused by shuttered factories and jobs shipped overseas. When plants close, whole communities suffer.Obviously, Mr Burnstein is doing his job - advocating for robotics and trying to minimize the downsides. But is he telling the truth? How can we determine how much of the manufacturing job loss of recent decades is due to offshoring versus automation?
With unemployment at about 14 percent or higher in Michigan, it's not surprising some workers are afraid of robots capable of working seven days a week, 24 hours a day with great accuracy and reliability, capable of performing many tasks better than people.
That fear, so prevalent in the early days of robotics, today is misplaced. What should really give workers pause is when their companies won't use robots and other automated technologies to become stronger global competitors.
U.S. technology and business innovators recognize that robots in factories have the potential to save and create more jobs than they eliminate. Robots help companies turn out higher-quality and lower-cost goods to compete with those made in China, Mexico, India, or other low-wage nations. They remove people from dangerous and boring jobs they shouldn't have been doing in the first place, and put them in higher-skilled, higher-paying positions.
It occurred to me that one way to get a rough idea is to look at the auto industry. In that industry, to a first approximation, domestic cars are still domestically produced and so offshoring can be measured by loss of market share of the domestic auto producers. Meanwhile, we can get statistics of employment and car production and use those to estimate how much job loss is due to automation of the domestic industry.
I picked on General Motors as the largest and most visible domestic car company. I'm using 1955 and 2009 as my comparison years because I happened to be able to find convenient statistics for those years.
I found GM's overall market share over time here.
I estimate GM's market share in 1955 at 47% - which was probably slightly before their peak in market share. By 2009 it had fallen to 19.5%, only 41% as large as it was in 1955. So we can attribute a reduction in jobs by a factor 0.4 to to be due to loss of market share (relative to the 2009 situation had there been no loss of market share). Presumably, that can mainly be viewed as due to competition from imports (ie the equivalent of offshoring).
I found an extended excerpt from GM's 1955 annual report here. In that year, GM made 4,477,000 cars and trucks in US factories. To do so, it employed about 555,000 people domestically. Thus GM was producing 8 cars/employee in 1955. In 2009, according to its annual report, GM sold 2,084,000 cars in the US. To accomplish that required 77,000 US employees. Thus GM was domestically producing 27 cars per employee. (I checked and it doesn't make much difference to this ratio if you include Mexico and Canada). The ratio 8/27 is 30%. Thus we can attribute a reduction of jobs by a factor 0.3 to be due to increased productivity which we can presumably mainly put down to automation.
Of course, these two factors are multiplicative. If GM had had no loss of market share but somehow was managing to do this at 1955 levels of productivity, it would employ 1/(0.3*0.4) = 8.3 times as many people. Of the two factors, both are roughly equal in importance, but productivity improvements (automation) appear to be slightly more important than loss of market share (offshoring) -- though I wouldn't place too much stress on that difference given the uncertainties of this rough calculation.
Thus when Mr Burnstein claims "U.S. technology and business innovators recognize that robots in factories have the potential to save and create more jobs than they eliminate", I don't think he's telling us the truth.