Plastics News' China Web site recently published two automation-related stories: “North American robot sales shrink in 2009,” and “Fanuc building new factory in Shanghai.” The stories made me think about the relationship between U.S. jobs, China and robots.
When I joined Plastics News, my first impression of U.S. manufacturing was of an industry filled with complaints and sometimes rage about China. That certainly hasn't changed over the years. But the reason why people in our industry get upset isn't as simple as I thought it was — China taking manufacturing business away from the U.S. The truth is, people interpret the term “business” in their own ways.
In many cases, the business entity stays, the profit stays, and the ownership and top management stay. Just the manufacturing jobs go away to lower-cost regions — like China.
Soon enough, I started to hear and write about U.S. manufacturers managing to beat “the China price,” so to speak. The trump card usually is the utilization of automation equipment. That makes perfect sense, doesn't it? If China's advantage lies in low-cost labor, you beat it by minimizing labor in the equation. Highly automated domestic manufacturing has other benefits: better quality, higher consistency, lower freight costs, shorter lead times, etc.
For a while, I truly believed automation was the solution for U.S. manufacturers suffering with the “China problem.” It's simple: Robots defeat cheap Chinese workers. Problem solved.
But as time went by, China has remained a “problem” for U.S. manufacturing. Every once in a while, we write about companies moving manufacturing from China back to the United States. But the volume of such events isn't significant enough to claim a trend, let alone victory.
Then, I realized my original thinking was naïve. Robots outperform and replace not only Chinese workers but also American workers. If the goal of U.S. manufacturing is to keep domestic jobs, ultimately robots are not the solution.
Meantime, China is quickly integrating automation into its manufacturing to offset labor cost hikes and improve quality.
Just because robot sales declined in North America does not mean the level of automation has decreased. Perhaps potential buyers are holding off spending during hard times.
But I would like to share some comments from a Japanese executive at Shanghai-Fanuc Robotics Co. Ltd. On the firm's corporate Web site, Nobutoshi Torii capsulizes the history of industrial robots.
The world's first industrial robot was developed in the U.S. by Unimation Inc., based on American engineer George Devol's patents. In 1961 Condec Corp. — which had purchased Unimation the preceding year — delivered the world's first production-line robot, to a General Motors Corp. factory in Trenton, N.J.
The technology was then transferred to other continents and advanced further. By the late '70s, Nobutoshi said, Japan, Europe and North America respectively had developed their own servo-controlled industrial robots.
“However, the U.S. government was concerned with the unemployment rate, 7 percent at that time, and gave no investment or support for the development of robotics. Without government support, companies were reluctant to take the risk either to apply or develop robots. It was a strategic mistake,” Nobutoshi said.
Japan, on the other hand, made robotics the foundation of its industrial development from the 1980s forward, which led to the boom of the Japanese electronics and automotive industries.
Nobutoshi's notes may be just one side of the story; nevertheless, he reflects on some realities that U.S. manufacturing faces.
At a time when Chinese competition enjoys government incentives on automation equipment, what are the highest priorities for U.S. manufacturing?
Maybe there is a second chance, after all.
Sun is a Plastics News assistant managing editor and Asia specialist. She is also author of “The China Blog” on PlasticsNews.com.