Robots Will Help Reverse the Offshoring of US Jobs

Robots long ago graduated from the pages of sci-fi novels and comic books.  In nations that engage in serious manufacturing, robots have become crucial to prosperity and growth.  Industrial robots have become so common in factory settings that we no longer expect them to appear humanoid.  Around the clock, they perform the full panoply of dull or dangerous repetitive tasks that need precision or heavy lifting. At the same time, they protect humans from excessive fatigue and unhealthy environments, and just as important, they help us manufacture at very low cost.

Since robots can perform some tasks better than humans can, some workers fear being replaced in the next wave of robots.  Indeed, robots will continue displacing some manufacturing jobs as they have done for 3 decades.  They excel at well-defined, repetitive tasks such as those on assembly lines.  But inevitably, robots will also create some better, higher-paying jobs — jobs in supervision, maintenance, and in troubleshooting.

Decades ago, US manufacturers in apparel and footwear industries found they could not match the low cost of offshore labor and they either shuttered their US plants and built a foreign factory staffed at much lower wages, or they tried to engage in producing a different kind of product.

First Japan, then China, were common destinations for displaced US manufacturing jobs. Today, Japan has grown into a relatively high cost manufacturer, and China manufacturers are undergoing the same kind of “stay or leave” triage as they compete with manufacturers based in lower cost nations, such as Vietnam, Bangladesh, India and Indonesia.

Because of a highly skilled labor pool, better logistics networks and robotics, the US is now able to attract the return of some manufacturing businesses.  Robots are playing a pivotal role in the US manufacturing resurgence.  Japan is the leading robot maker today, and its manufacturers are highly dependent on robots.

South Korea leads in reliance on robots in manufacturing.  With 631 robots per 10,000 workers, it therefore has a robot density of 631.  Japan and Germany have robot densities of 306 and 303 respectively.  The US has a density of only 189, slightly behind Sweden (223) and Denmark (211).

As the US choses to reenter selected manufacturing areas (pharmaceuticals, auto parts, processed foods, extruded shapes, etc.), it will need to increase its robot density.  Ironically, garment-making, one of the earliest US offshoring job losses, is now being taken over by robots in Bangladesh.  The knitting machine robots require so little labor that perhaps, production could be returned to the US.

Today, China has a robot density of just 68, but China plans to become the top user of industrial robots by 2020 and at the same time produce 100,000 robots per year for sale to other nations.

Excluding China, across the top 11 manufacturing economies, manufacturing output as a percentage of GDP is very highly correlated (92%) with robot density, meaning the more robots, the higher is manufacturing’s contribution to GDP.

Across the same 11 nations, the change in output per hour of labor over the 2002 to 2015 period is highly correlated (75%) with robot density.  In other words, productivity growth can be expected from increases in robot usage.

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