The China Syndrome (or deconstructing the North American job loss myth)

Automation Magazine ^ | Sept 2003 | Dick Morely

[MalcolmS]

Walking the dogs forces me to think. My dogs are not the brightest lights in New Hampshire and, although lovable, are not the best conversationalists. So, I talk to the tape recorder and try to put down subversive thoughts. The latest rant was stimulated by a national business magazine that needed an op-ed opinion about manufacturing jobs leaving North America.

I made the assumption that the knee-jerk response of unfair competition was wrong. This position was artificial to start with, and was developed just to debate the issues. I took the position that we here in Canada and the 48 south want to lock up the manufacturing flight with diplomatic negotiation and confrontation. But what if that is the wrong approach? Could we instead use martial art philosophy and make our foes' strengths their weaknesses? Could we do manufacturing for countries such as China?

So I made the assumption that locking the barn door after the horses have left is a waste of time. Instead, let's open the doors and put food in the trough. This is what the dogs and I concluded:

Automation is the result (not the cause) of job flight. The idea that manufacturing jobs are somehow bad has caused us to replace North American jobs with automation. When people insist on an embargo of job export, my question is, "OK, so you want your children to work in an assembly plant?"

The typical response is, "Oh God, no!"

"Well then, whose children do you want working on the assembly line?"

[American] jobs are not leaving; they are being driven out. No community really wants a new assembly plant, a printed-board facility or a semiconductor enterprise in their town. If manufacturing companies try to locate in our communities, they are "fined" with high taxes, strict zoning regulations and infinite bureaucracy. These NIMBY (Not In My Backyard) attitudes belittle the best efforts of the local administrators to welcome manufacturing.

When Ireland invited industry with open arms and deferred taxes, the economy thrived. The same with China, Korea and Hong Kong. Manufacturing people are treated as heroes. Earlier in our history, Ford, Edison and Steinmetz were heroes, not villains. Today, entrepreneurs are the bad guys. Bill Gates, despite immense third-world charities and humanitarian efforts, is considered evil. In television drama, the villain is the well-dressed owner of property and the hero is the scrubby squatter preventing job development.

What is manufacturing? It used to be the whittling of parts from solid blocks of steel, but these jobs have left the country. Now, we have assembly plants and put together systems from parts manufactured in Asia. These industries are leaving as well and other business sectors are threatened.

Recently, at a conference on CAD/CAM software, many people talked about the offshore threat to the software business. A decade ago, outsourced software accounted for one third of the North American production of this critical intellectual asset. India, Russia, Hong Kong, Malaysia and Viet Nam all have growing industries in outsourced software for the NAFTA alliance. The software engineer is positioned much like the small farmer was and faces the same certain future of erosion. The real unemployment rate of highly-skilled people is now estimated at 40 percent, while the erosion of non-service jobs is moving up the food chain.

What are the solutions? Stick to high value, non-commodity items. Sematech was successful because of processes, not projects. Not in memory chips, but in $100 computer chips. Along with the merging of applications with silicon, we are now the premier supplier of the engines of commerce. The prevailing wisdom of lower cost, higher volume manufacturing is clearly wrong.

Next is to encourage entrepreneurship and talent. We think innovation is high risk and high cost and that patents are evil. Open systems and standards will save us. Baloney. Dimming the light of change has always truncated past societies and will diminish ours as well. We still have talent and innovation. Let's not lose those as well.

Last is the concept of mini-enterprise zones. Picture micro China locations throughout [America] supported on a national basis, not provincial. The country owns them and leases them to the needs of engineering and manufacturing. Protection from frivolous litigious actions needs support. Much like national parks, the species of manufacturing and innovation needs protection - it is a threatened animal. We must stop the open hunting season on enterprise. The outlook is not cheerful, and the remedies require significant compliance and social change. The heroes of manufacturing must be truly accepted and lauded. Our society must recognize that manufacturing and job creation are not the manipulations of evil corporations - they are beneficial to society.

(Special thanks to Jim Pinto for his assistance).

Dick Morley is the author of Out of the Barn available from Amazon.com. He's also known as the father of the PLC. You can contact him at morely@barn.org.

[MalcolmS]

Dick Morely is a manufacturing genius. Years ago, he invented the PLC (Programmable Logic Controller). It's a small computer/OS that never crashes, or gets a virus, works in real time, and is used to control virtually every modern automated machine in every factory in the world.

He is also a force behind Geek Pride Day. His website is here.

[MalcolmS]

Ping for a job-loss root cause analysis. Another way to fight the battle since diplomacy/trade agreements seem to be politically impossible.



Disclaimer: Morely is an American, but I came across this piece in a Canadian Automation journal. I excerpted some rah rah Canada stuff at the end. I think the problem, and the advice, applies the US as well.

[FLAUSA]

I think that his "not in my backyard" root cause is right on the money. Too many communities don't want manufacturing (smoke stack industries) around them. Clean air and clean water are more important than jobs. There is also a mentality of keeping out manufacturing because manufacturing pays higher wages, which means the local government and local businessmen (businesswomen) must also pay higher wages.

[rdb3]

Interesting article.

[LibertyAndJusticeForAll]

His special thanks to Jim Pinto, from India:
"Jim Pinto is an Electronics Engineer by background. He was born in India, lived in England for about 8 years, where he founded KPE Controls. He moved to the U.S. in 1968 and worked for Burroughs Corporation, in Pasadena, California. He then moved to San Diego, where he founded Action in 1972."
Here is one of his recent articles in favor of globalisation:
http://www.jimpinto.com/writings/globalcompetition.html
"With fast developing quality skills and wage-rates that are just 10% of comparable western equivalents, China is poised to take over the world's manufacturing. Manufacturing workers outside of China are being displaced on a large scale; even Mexico is losing manufacturing jobs to China.

But that’s just half the story. China and India are poised to replace the world's knowledge workers as well. Both countries turn out hordes of engineering graduates each year from universities that are rapidly growing in size and quality. Pay ranges for engineers range from $3,000 to $7,000 a year. India has the advantage of a high-percentage of English-speaking scientists and engineers.

Software development in India has been booming in recent years. India now sells $5b software annually to the US, with 60% annual growth projected over the next decade. As product design becomes more network-centric and less location-dependent, competition against Western engineers is becoming fierce.

Many automation companies are moving rapidly to outsource product design and manufacturing to the Far East and software to India. Honeywell, GE, Rockwell, Invensys and many others are generating significant cost reductions through manufacturing in China and software development in India. In a global environment, this is indeed a good business decision for most companies. However, with significantly higher pay scales, it does mean that manufacturing and design engineers in US, Canada and Europe are under a severe disadvantage. Budgets are measured directly against offshore alternatives and WIDESPREAD LAYOFFS are a direct result."

[LibertyAndJusticeForAll]

Don't worry, be happy. It's all a myth ping.

[LS]

I agree that the major impediment to American job creation of any type, including manufacturing, is local/state/federal regulations and taxes. However, he makes a critical point: people---MOST PEOPLE---look down their noses at manufacturing jobs. While they sing their praises on forums such as this, the question Morely asks is the right one, "Do you want your son or daughter to work in a factory?" and the answer for most people is "no." A generation of steel and auto workers worked overtime to put their kids through college so that they wouldn't HAVE to work in a factory. I find that ironic, now, that everyone wants to "save" the factory jobs that their own attitudes helped kill.

Personally, I think factory jobs are important and necessary, and above all, honorable. I think that, also, of doormen, garbage collectors, tow-truck drivers, and waiters---all the type of jobs that people routinely "dis." However, when I, a professor, say this, I'm accused of wanting a "class structure" because I don't think everyone is college material, and I do think we let FAR too many people into colleges to get meaningless degrees, when in fact they should go into the world of work.

[FreedomPoster]

Do you mean to suggest that the U.S. graduates too many Norwegian Art History majors? How could there be too many?

[NoControllingLegalAuthority]

Communities throughout Tennessee are suffering from the loss of local manufacturing plants and would move heaven and earth to have new ones built.

Of course many parents would wish their children a life of high-paying, easy jobs without experiencing hard work in a factory. That isn't the real world, though.

Those factories have been the lifeblood of this country and their loss is a terrible blow to the economic health of the United States.

[Libertarianize the GOP]

bump

[EVO X]

Personally, I think factory jobs are important and necessary, and above all, honorable. I think that, also, of doormen, garbage collectors, tow-truck drivers, and waiters

I had a tour of a car plant last month. Most of the jobs at that plant require technical knowledge to design and keep the automation going. There was very little unskilled labor at the plant

[Willie Green]

Dick Morely is a manufacturing genius.

He may be an electro-mechanical geek, but he's also an absolute moron when it comes to manufacturing economics.

Just look at this asinine statement: "Automation is the result (not the cause) of job flight."

Poppycock. What a pile of bull manure!

Labor-saving automation is driven by tight labor markets, characterized by the scarcity of skills and rising labor costs.
Globalization undermines the economic justification for automation by vastly expanding the labor pool, driving wages to the subsistance level. The transnational corporatist slavemasters are luddites seeking to minimize BOTH labor costs AND capital investment.

[RipSawyer]

"Personally, I think factory jobs are important and necessary, and above all, honorable. I think that, also, of doormen, garbage collectors, tow-truck drivers, and waiters---all the type of jobs that people routinely "dis." However, when I, a professor, say this, I'm accused of wanting a "class structure" because I don't think everyone is college material, and I do think we let FAR too many people into colleges to get meaningless degrees, when in fact they should go into the world of work."
Amen to that, brother! Give people a real high-school education instead of turning out illiterates and stop requiring an undergraduate degree for jobs that used to be done by people with an eigth grade education.

[LS]

Well, you know that the research is now showing that most of the people with degrees are overeducated for the work they do anyway---it's become a sort of "union card" just to get into certain types of jobs, whether those jobs need the skills college offers or not.

[LS]

Oh, I agree. And becoming increasingly more so. Yet the ironic thing is that the more unskilled jobs are eliminated, the more need there is for highly skilled people to design and built the machines that make the machiens.

[sarcasm]

Well, you know that the research is now showing that most of the people with degrees are overeducated for the work they do anyway---it's become a sort of "union card" just to get into certain types of jobs, whether those jobs need the skills college offers or not.

Yep. There are way too many colleges and universities in the United States. Just think of the savings if we laid off all of the useless instructors.

[RichardMoore]

Service jobs that involve taking care of the elderly are all that will be available unless you leave the country. The coming baby boomers retirement will be followed shortly by their overweight physical breakdown. Then you can look forward to changing diapers on demented, and disabled adults.( been doing that for 25 years myself) Unless of course the Gov't finds a way to get rid of us all.

I'd prefer a factory job but it won't be my problem. The real problem lies in Industrial Capitalism itself. That's why we need cheap labor in dirty factories in China to keep our economy going. So what's the solution?

Get used to living in a Third World Country called the United States of North America where Spanish is spoken everywhere, well mayby not in Canada and Muslims are on the demographic rise.

Wait, let me get my fire suit on.

[harpseal]

Ping on or off let me know

[=Intervention=]

The article writer is right, of course. Manual labor has become so disrespected that everyone thinks that college is THE ONLY WAY. It's a phenomenon I call "degree creep." Years ago, you used to be able to get a good job with a bachelor's degree. Now, you need at least a Master's, if not a PHD. You have to have enough sheepskins to stand out from the crowd, because everyone has a degree! Additionally, that is why you have a well-nigh meaningless primary educational system nowadays. You can't fail students if getting into college is the only way allowed!

It's unhealthy, and this degree creep is a large part of the debt incurred by the average American. And when the feds can't pay their bills, and the average American can't pay his bills, the country becomes insolvent and controlled by those who own bonds (i.e. foreigners). If you think about it, it's a frightening possibility...

Elitism is its own undoing. Those who demand a college degree for everyone not only diminish its value for those who do obtain one, but depress the pay scale for the manual laborers that remain.

[MalcolmS]

>>>However, when I, a professor, say this, I'm accused of wanting a "class structure" because I don't think everyone is college material, and I do think we let FAR too many people into colleges to get meaningless degrees, when in fact they should go into the world of work." <<<

Here's something for your class, Professor. Ask them who saves more lives, Doctors or Garbagemen?

The answer is Garbagemen (along with sewer workers and the engineers and construction workers who build and maintain them). Without modern sanitation, Doctors could in no way keep up with all of the diseases that would be spread, including Cholera, Dysentery etc. The vast improvement in lifespan can be traced in history not to the rise of scientific medicine and germ theory, but to modern sanitation.