Automate or export jobs

All right, of course it's not as simple as "Automate or export jobs." Perhaps the headline should read: "Get more aggressive about smart application of automation or update your résumé, because your North American facility is unlikely to remain competitive, long-term"—but that was too long, of course.

By Mark T. Hoske, Editor-in-Chief March 1, 2004

All right, of course it’s not as simple as “Automate or export jobs.” Perhaps the headline should read: “Get more aggressive about smart application of automation or update your resume, because your North American facility is unlikely to remain competitive, long-term”—but that was too long, of course. Though that’s blunt, it does speak to the essence of recent National Association of Manufacturers (NAM) survey findings.

You may have read the Feb. 25, Daily News item at www.controleng.com, “NMW 2004: NAM survey finds manufacturing recovery, improved hiring.” NAM’s report predicts that U.S. gross domestic product (GDP) will increase a healthy 4% in 2004, following an earlier 4.3% burst in 2003. “As for manufacturing, after edging up 2.7% in 2003, we expect production to increase by more than 6% in 2004,” says Jerry Jasinowski, NAM’s president. “That’s the fastest pace since 1999.” Companies planning to hire new employees (31%) outnumbered those expecting layoffs (6%) by a more than five-to-one ratio. The 432 respondents, of a random sampling of 3,000 NAM members, also reported that the jobs they expect to fill are more likely to be higher-paid, higher-skilled production (34%) and professional positions (12%), rather than lower-skilled and support positions (18%).

The survey also identifies “structural costs” that add 22.4% to price of production for U.S. firms, relative to major non-U.S. competitors—costs which could stand some slimming down. These costs are from corporate tax rates, employee benefits, tort litigation, regulator compliance, and energy. NAM members responding to the survey feel adversely affected by heavy tax burdens (40%); cost of compliance with environmental regulations (43%); cost of complying with human resource rules (52%); fear of litigation (39%); and skyrocketing health care costs and other non-wage compensation (89%). Depending on the political wind, some pressure might ease, but all of these certainly are not, and should not, go away. Automation needs to make up for that 22% premium in U.S. production costs and then some.

Many European manufacturing companies have had a higher cost of doing business than firms in the U.S., and my sense is that many Europeans are slightly more accepting of technology upgrades to keep competitive against lower-cost U.S. labor. Guess what? Now the U.S. needs to get more proactive about applying automation in intelligent ways to stay competitive against lower-cost labor in other areas of the world.

MHoske@cfemedia.com