Can Industrial Automation Be Stopped? Do We Want To?ByRaymond D. Matkowsky
In the 16th century all labor was manual. Until a man named William Lee mechanized the production of stockings. He adapted rug looms to make long sheets of stocking material that can then be hand sown into stockings. It was quicker than the traditional knitting process.
Strangely enough Queen Elizabeth I rejected his patent because she was concerned for the welfare of the stocking knitters.
In the 19th century, textile and farm workers faced a similar situation. The reaction of workers was not positive and led to riots. However progress was not stemmed.
In the 20th century both General Motors and Fiat introduced robots into automobile manufacturing. Hand built by robots was Fiat's slogan in 1979.
According to many estimates, these innovations created more jobs than they destroyed. Innovation, in any case, was not stopped and preceded throughout the centuries. Some people believe we are in the middle of the fourth industrial revolution.
Unfortunately, in the past the effects on certain groups have been overlooked. As employers, the challenge is to make sure people are not overlooked. People buy your products, not machines. If they do not have jobs, they cannot buy your products. It is in your interest not to displace more people than you have to. Do we want to stop automation? Definitely not! Do we want to forget about our employees? No! Remember, your wealth comes from your employees and how they affect your customers. They also buy your products.
Machines Are Workers Too
Automation is not going to stop. Queen Elizabeth I could not stop the trend. The riots of textile and farm workers of the 19th century did not stop the outcome. Industrial robots came about in the 20th century. We, in the 21st century, will not stop automation. However, the smart employer will meld both people and machines into a productivity powerhouse.
To discard employees and replace them with machines makes only limited sense and leaves money on the table. Don't forget machines do not pay any payroll taxes. However, there is talk of taxing machines. Regardless, present day payroll taxes will have to be made up some other way. There is very little doubt that businesses will bear much of this. The employer might have cover part of both an employee contribution and the employer's normal contribution. The cost of machines will be more than just the cost of installation!
Employers do not consider a machine an employee. They should! They make up part of your production. Automating a factory can cost several million dollars and up. I doubt that 100% machine or human is most efficient. There is an optimal mix that will be different for each organization and each company will have to determine their own sweet point.
Complicating this determination further is that most humans will have a thirty year work span. Most likely they will get more efficient as time goes by. On the other hand, most automation components have an average lifetime of 10-15 years before they need to be replaced. Automation will continue to require cost expenditures as time goes by. Unlike humans, as equipment ages the efficiency goes down. This will make the cost of automation steeper than just the initial installation cost by itself.
Another consideration is that although the machine may be able to produce five times as much as a human can in the same time period, the question becomes can you sell that entire production? Yes or no? If the answer is yes, then leaning towards the machine makes more sense. If the answer is no, you will either have higher inventory costs or an idle machine. Even an idle machine costs money.
You will want a bond to grow between humans and machines. One tip I learned a long time ago was that many times humans bond with machines more closely if you give the machines human names. This is especially true if you give them female names. Another tip is one that the United States Postal Service uses. One person or team is responsible for the functioning of a single machine. If the machine breaks down, they are responsible to see that it is brought back into service. They are responsible for maintenance, scheduling etc. The team bonds so strongly with their machine that its operation becomes a point of honor.
Growth at a Reasonable Price
Investing has a management style called growth at a reasonable price or GARP. Its purpose is to obtain steadier results by avoiding extremes. Something similar maybe applicable to human-machine relationships. Too many companies go 100% machine. That may not be a satisfactory answer. Your company maybe more profitable with a mix of humans and machines. The mix will be different for each company. Plus the advancements your company can experience will come from people not machines. Call it a human dynamic or whatever. A machine, no matter how efficient, can only do what humans tell it to do.
At this point let me bring up the subject of artificial intelligence (AI). Can a machine learn? Yes! Can it learn or reason like a human? I doubt it! The human brain has taken thousands of years to develop and is still developing. The machine is just starting to develop some sort of intelligence. It may never catch up to the human brain.
A word of caution! Like many things AI can be used for good or evil. Although the machine will probably never duplicate the human brain, humans have used AI to redirect or spread misinformation. A company should be on guard that their machines aren't used against them.
Displaced Workers
It is inevitable that some workers will be displaced by the machine. You could lay the workers off and forget about them. However, this is a waste of valuable resources. These workers know your company. They know your customers and what the customers want.
There are 11+ million jobs listed that cannot be filled. Train displaced workers to fill some of these jobs. If you need union buy-in, get it. The union maybe more receptive to the idea than losing membership. Your company will benefit also.
If you have any comments, let us know. Email me at rdm@datastats.com. We will try to print it in our next newsletter.
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