Industrial automation for productivity growth

Not long ago, many of the products we purchased were manufactured in large factories employing hundreds or even thousands of workers. Such companies were more productive and profitable than those working with earlier manufacturing methods because of mechanization, the enhancement of human labor through powered machines and tools that increased each worker’s productivity.

Mechanization has been the primary contribution of Henry Ford’s innovations in assembly-line technology: production-line innovations that enabled Ford to build tens of thousands of automobiles every year, and sell them at prices everyone could afford. Mechanization increased productivity, but the human workforce was, by and large, still in the loop. The will to replace human labor with machines was created with the advent of our modern, global economy: nowadays it’s more important than ever for manufacturers, especially those in developed countries with a high labor cost, to invest in industrial automation. The competition, in both quality and cost, from manufacturers in developing nations is simply too robust to be ignored. In order to remain profitable, established manufacturers must squeeze out as much waste as possible from their processes, to make them lean and efficient with consistent high-quality output.

When properly implemented, industrial automation affords a number of advantages: increased productivity, the reduction of operational costs, a consistent product quality, increased safety and flexibility, among others. Companies need to consider the following three fundamental perspectives: what automation is making possible with current technology and is likely to make possible as the technology continues to evolve; what factors besides technical feasibility to consider when making decisions about automation; and how to begin thinking about where—and how much—to automate in order to best capture value from automation over the long term. Workers often see the other side of the medal: the most widely held fear, and one that taps into people’s earliest fears about industrialization, is of mass unemployment as robots take most of the jobs. Other critiques of the proliferation of artificial intelligence and increased automation are more nuanced: some say that it will drive even greater inequality.

But the situation isn’t as grim as one might think. In fact, if we step back from the narrow focus on technology and take a wider historical, economic and humanist view, the picture is far from bleak. Counterintuitive as it may seem, automation can play a key role in creating more and better jobs, and rising prosperity. There are broadly three reasons to be cheerful about the march of the robots. Since the Industrial Revolution, the automation of human labor has run hand-in-hand with productivity gains, economic growth and an increase in the number of jobs and prosperity. It is productivity growth that largely accounts for why most of us are six times better off than our great-grandparents.

How can automation create more jobs? A classic example of how this process can work is that, during the Industrial Revolution in the UK, 98 per cent of the manual labor involved in weaving cloth was mechanized. But, despite the concerns, the number of textile workers exploded. As costs plummeted, demand grew, and so did the size of the industry – and therefore job numbers. The cake got bigger. The jobs also changed from hand-weaving to operating the weaving machines.

The general assumption is that if the robot doesn’t replace you, it will deskill you. Yet a recent study by the Boston University School of Law into the impact of automation on 270 occupations in the USA since 1950 found that only one was eliminated – lift operators. The other jobs were partially automated and in many cases, this automation led to more jobs, often more skilled positions. Jobs are made up of a myriad of tasks, many of which are not easily automated. “Automation doesn’t generally eliminate jobs. Automation generally eliminates dull, tedious, and repetitive tasks. If you remove all the tasks, you remove the job. “But that’s rare”, says Varian, founding dean of the School of Information at the University of California, Berkeley.

Pessimists tend to overestimate the extent to which humans can be replaced and how fast will happen. They share a faulty assumption with artificial-intelligence optimists, who look forward to ‘singularity’, when computer intelligence will supposedly surpass our own. They see impressive breakthroughs in narrow and bounded machine-learning problems, like beating humans at board games, and extrapolate that this singularity is inevitable and around the corner. This assumption runs far ahead of current knowledge. We’re a long way from understanding human intelligence, never mind surpassing it. Gloom merchants tend to imbue technology with superpowers, while running down human ingenuity. Surely our perception, curiosity, creativity, critical thinking, judgement and adaptability will drive the world forward – aided by more automation.

We have nothing to fear, but the fear of robots itself.

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