Skip to comments.Hello Chinese exports, good-bye U.S. jobs
Posted on 06/09/2010 9:27:54 PM PDT by The Magical Mischief Tour
NEW YORK (CNNMoney.com) -- For millions of unemployed Americans, the news about China's surging export market isn't necessarily cause for celebration, even if it might be a harbinger for global recovery.
Chinese exports surged 50% in May from a year earlier, easily trouncing expectations for a 32% increase, according to a Reuters report citing a leaked statement from a Chinese official.
(Excerpt) Read more at money.cnn.com ...
Just think, if unions hadn’t driven up the price of labor so much and if the enviro-wackos hadn’t crushed the energy, mining and manufacturing sectors (factories), we could compete.
No such luck.
Imports do not cause job losses.
As a matter of fact if the import costs less than domestic made, then buying it instead actually gives us more bang for the buck and raises our standard of living.
I don’t want to compete with China in making plastic crap sold at the Dollar stores.
I disagree, I would prefer to make something better and sell it across the world and keep the profits here.
It is very difficult to find products that are NOT manufactured in China these days. Even if you go to the good Auto parts stores like Parts Plus or Carquest, most of their stuff is from overseas. The good stuff is made in Tiawan or India. Every now and then, you find something that is made in Europe, Japan or the US. At least during Depression 1.0, we had an industrial base to start over with.
Don’t forget China cut their corporate taxes 2 yrs ago. they are far more business friendly than we are.
Pray for America
How do you figure that when you don’t have a freaking job you don’t have money to buy goods made in China or USA...
Under FairTax, since there are no more corporate income taxes, payroll taxes and taxes on dividend payments and capital gains, this will entice American companies to keep as much of their jobs and production in the USA as possible. The result is obvious: the unemployment rate goes down dramatically, and the stock market goes through the roof.
The lion’s share of the profits of the Chinese exports goes to US companies. Ford, Intel, Apple, IBM all make billions of dollars on their Chinese sales and Chinese exports.
Typically on a $100 export, you’ll find the US company making $50 profit, the Chinese manufacturer/assembler making $10 and the parts vendors making another $10, with labor accounting for typically $3-$4. Meaning the US makes over twice what the Chinese make, and we have a lot less effort invested.
Each of those robots on that line used to be 2, maybe 3 people for each shift. Meaning each robot replaced about 10 people. Meaning 400 people were replaced by this single section of a production line. Rather than 400 welders and another 50 supervisors, you now have 40 robots and a dozen technicians and engineers.
And the quality and consistency of the product increased, because robots don't have hangovers, or fights with their kids, or catch cold. They don't go on strike, or get upset at their boss.
And that higher quality and consistency lowers the warranty issues of the company, increasing the profits of the company, meaning more money for the stockholders.
the truth is, most jobs "lost" in the US didn't go overseas; they were replaced by automation.
the truth is, most jobs "lost" in the US didn't go overseas; they were replaced by automation.Interesting, so who or what engineers the automation and then manufactures and sets up the automated robots?..Robots? Oompa Loompas?
That was done effectively at PacBell during the 1989 strike. In my work spaces, we removed 9-track tape drives and installed 8mm. One management employee swapped the tapes on 40 machines each morning. The 7 x 24 coverage with non-management staff to service 9-track tapes was no longer necessary. We automated the monthly data extracts and transmitted the results via Ethernet to the IBM shop. No more 9-track mounts or the related system crashes when the employee unmounted the audit tape by accident. System availability improved tremendously.
The Amdahl shop installed giant cartridge tape robots. They required ONE employee to stock the racks with fresh tapes for backups. No employees were required when a program requested the mount of a specific tape volume. The robot fetches and mounts in seconds. Much better than having to make a phone call and have a human searching a room full of 9-track tape reels hung in a "library".
At the central office, the old step-by-step switching machines and some 5 crossbar were replaced with digital switches. No need for servicing the old mechanics. On the rare occasion that a card failed in the switch, it could be replaced by an unskilled employee directed by a remote technical support center. I changed a few cards in the switches during the strike. The hardest part of the task was locating the box with the replacement spare. That removed nominally 15 to 20 jobs per office and pushed reliability stats way up.
We have been automating work that can be done more effectively by machines. There really isn't much room for the uneducated, unskilled worker in a highly automated world. The semi-skilled tasks are exportable to places with lower labor costs. What remains is low end service work...retail, hospitality (restaurant/hotel) or higher skilled work. Little in-between. That can bite the skilled worker as well. There just aren't a ton of job openings for the highly skilled person either. Lose one and you might night be able to make ends meet with what remains in the low skilled service industries.
There are plenty of folks around with those skills. More players than positions available.
Don’t blame the Chinese, or Indians, or Mexicans. Blame the robots
For a little while I watched the cable show “How It is Made”, every American factory was almost fully automated (just like you stated). Very little human interaction.
A new theory I recently heard on the radio surmised that automation will replace all labor forces (even the Chinese and Indians) as there is an insatiable desire to increase efficiency and productivity while reducing cost. What made this theory interesting was that a similar thing has already happened to the agriculture business. The futurist who was describing it basically made the point that automation will allow us to produce all the goods we can consume with a very small percentage of workers. This of course leads to the dilemma of how you sell these goods to a population with no jobs. His prediction was that it was inevitable that we would have to tax industry profits to redistribute to unemployed workers just so industry would have someone to buy their goods. This may be one reason why the government types seem unconcerned about permanent unemployment of 10 to 20 percent and so eager to increase their role of distributing national wealth.
China’s stuff is actually pretty good and getting better. I work with former Chinese citizens and Chinese suppliers and they are very entrepreneurial - believe me, they are beyond “copying” in a few areas of which I have some familiarity and they have some novel products and novel ways to mass-produce them inexpensively (not all of which involve cheap labor). Some of the best and amazingly inexpensive firmware development tools some from China. With so many engineers there, they have a big market. Their optics can be 95% as good as Japanese optics at 20% of the price. I remind under-30 people I work with that when I was a kid, “Made in Japan” was automatic garbage - EXCEPT for Sony electronics. China is following the Japanese path. I think that what we see is a combination of our own decline and their ascendancy. I have a real fear that after I’m gone, the US will be something like England, settling into a “second tier” status.
The idea of “normal unemployment” has been explored in science fiction since at least the 50’s, with varying degrees of “baseline” existence, ranging from a place to live, eat, and sleep to pretty extreme wealth by present standards.
I like to point out to people the creeping definition of “poor”. Not that long ago, “poor” in this country meant “barely having enough to eat”. Now, it might mean driving a 15-year old car and living in a cheap apartment.
A lot of American engineers, a good amount of Japanese and German engineers, too (those three completely dominate the field of automation and industrial robotics, like 98%). Most are manufactured by robotics. Go check out the ABB assembly lines and you'll see 98% of the work done by robotics, with technicians monitoring output screens.
Robots stack our pancakes, eliminating 3 dozen people with just 4 robots.
Robots pack furniture, eliminating thousands of workers and all chances of L&I disability claims.
Robots pick and sort matched components with speed beyond what a team of 20 people can do, with higher accuracy.
Here's a FANUC (an American company) with a massive 40 tool head, doing the job of 20 people, and lifting a 200 pound component at the end. Doing it with precision and repeatability and in a tenth the time of the human team.
Go to any large manufacturing company that used to employ tens or hundreds of thousands of people, and you'll find massive amounts of automation. Jobs are down because we're using fewer, smarter engineers to design automation systems, and then using those same automation systems to build more automation systems.
Many more jobs are lost to automation than overseas companies; in fact, even in China the big State employers are facing huge pressure from smaller, privately owned companies with robotics. Manufacturing jobs are gone because we simply do not need them any more. We've replaced those jobs with robots.
I got to see the tape room for one Hughes Aircraft facility in the early 80’s.
Imagine a wall that is 30 feet high, covered with three stories of IBM vacuum column 9-tracks. Each row of tape drives had, I dunno, 10 drives. This whole thing was underground in SoCal.
Along one wall, there was a HUGE light board with numbers set up in columns and rows. The “runners” would look up on the board to see what tape number to pull - and off to the stacks they’d run. Some jobs were asking for multiple tapes, and the runners who were smart (so I was told) would wait to see all the volume numbers for a job go up on the board before they’d take off. Woe unto the runner who would mount only some of the tapes needed by a job. The operators wanted all the tapes for a job to be hung at once - ie, to not get into a situation where one tape for a three-tape job was hung, and there were no available drives to hang the other two until other jobs completed.
I guess they had about two dozen runners to make sure that tapes were pulled, hung and put back into the racks with sufficient dispatch. That’s all these kids did - pass a security clearance and run 9-track tapes up and down the aisles and stairs. They didn’t do much else other than run, really. Since the place ran 7x24, there were something like four shifts of these runners - three shifts and spares for holidays, weekends and sick days.
Then there were operators on consoles who would direct the OS to mount/unmount the tapes, let the user’s job proceed, etc. I guess there were about six of those guys, all sitting on chairs with wheels, whizzing up and down a row of console 3270’s tied into the multiple mainframes. Again, three shifts’ worth of people were needed.
I never did get a straight answer from the HAC people as to how many computers tied into this tape room. “You don’t need to know,” was their answer. I’d never seen a larger computing installation before, and I’ve never seen a similar one since. All those people are likely gone now, replaced by systems like the robotic tape library you detailed. It was a most impressive installation, and trying to describe it to younger people in computing now just gets a puzzled look. Trying to describe what it was like to submit a job that required operators mount drives/tapes/etc for you — kids today just have no concept that you could submit a job and get results hours or even a day later.
Sure, at Chinese manufacturing wages and Chinese levels of pollution - $134 a month, and environmental-related health cost above 10% of GDP.
Reducing US wages and environmental protections to anything remotely resembling Chinese standards is not a practical solution to the problem of international manufacturing competitiveness.
Excellent post. And the flip side of that is that even if protectionist measures increased the cost of domestically produced textiles (for example) the point where employers could pay textile workers even the minimum wage, most such textiles would be produced in highly automated factories providing only a fraction of the jobs of their predecessors, and most of those would be semi/ highly skilled jobs for which displaced American textile workers are not qualified.
My wife is a mid-level manager at a “US” F100 company which has been rapidly outsourcing increasingly skilled work for a decade. Increasingly, she communicates internationally with other managers in her area at approximately her level of responsibility via teleconferencing and similar techniques, and they in turn are increasingly “managed” by the same methods.
It’s very clear to people at her level that as the company becomes increasing international the next step is to start outsourcing the work of the next two layers of management above her - basically, the people who been directing the outsourcing efforts!
These people - who are at the lowest level of the corporate hierarchy were you start to receive really lavish rewards - are just starting to wake up to the fact that *they* in turn are subject to having their functions outsourced to highly competent executives (mostly Indian, in this case) who work for perhaps 25% were 30% of the total compensation packages of their US counterparts.
I’m pretty cynical about the extent to which our elected representatives and the people who are their major contributors care about the current loss of jobs to outsourcing - but the consensus seems to be that the majority of upper-middle-class jobs in this country are outsourceable over the next 20 years, and I’ve seen estimates that it may be as high as 70%.
And when *those* people start losing their jobs in large numbers, politicians are going to have to start paying attention.
My facility in San Diego has 5 floors with 110,000 square feet of
raised computer floor. What I described earlier was
the tape library supporting one of about 50 systems
supporting the business systems for PacBell in southern
CA. There is a similar facility in Hayward for the
The original 9-track setup for just the small Amdahl
shop looked like an orchestra pit. The tape drives
were arrayed in a semi-circle with 6 levels. Each
tape drive had an electronic display for the tape
volume number needed. The operator consoles
were located where they could see all the drives.
The tape runners had to go to an adjacent room
to fetch the tapes. There were often 6 to 10
runners on duty depending on the schedule of
jobs to run.
It was time to automate that process. Thanks for
sharing your observation. That was a pretty large
You are absolutely right! My sweetie had a hair dryer that was made by Sunbeam, someplace in Ohio if I remember correctly. It recently died. She bought it in 1987. The Chinese-made piece of crap that replaced it is not nearly as good. I hear about it all the time...