During a dinner with Silicon Valley executives in 2011, President Barack Obama famously asked Apple CEO Steve Jobs what he needed to do to bring iPhone manufacturing back to the US. Jobs replied: "Those jobs aren't coming back."
At the time, it seemed like a reasonable assertion. US manufacturing was in the middle of a decades-long decline, and American companies seemed unable to compete with the low labor and production costs in China. But that may be changing, some say, thanks to an unlikely catalyst: robots.
Yesterday, the Wall Street Journal reported that Google and Foxconn have been working together to develop new robotic manufacturing technologies. Experts say the partnership could have major implications for both the tech industry and the American economy, though the nature of those implications remains unclear — and an issue of intense debate.
Some see automated manufacturing as a potential boon for the US economy, a way to lure companies back to American soil with the promise of higher productivity and lower labor costs. But others fear that the push could displace the last vestiges of middle-class American manufacturing workers at a time of high unemployment and soaring inequality.
"profound economic implications."
"The pace and scale of this encroachment into human skills is relatively recent and has profound economic implications," MIT economists Erik Brynjolfsson and Andrew McAfee wrote in their 2011 book Race Against the Machine. In the book, the authors argue that technology has destroyed more American jobs at a faster pace than it's created new ones, leading to higher unemployment and stagnant median incomes despite higher productivity levels. Although they conclude on an optimistic note, arguing that technological change will yield benefits in the long run, Brynjolfsson and McAfee say its short-term effects could be devastating for American workers.
The decline of American manufacturing is impossible to ignore; according to the Bureau of Labor Statistics, the US economy lost 6 million manufacturing jobs between 2000 and 2009 alone. But rising wages in China and increased transportation costs have spurred some companies to move manufacturing back to the US. Bolstering the country's robotics industry, some say, would give the US a competitive advantage, particularly in the manufacturing of valuable high-end products like electronics and cars.
President Obama has repeatedly called for greater investment in high-end manufacturing, calling for a technological push "not seen since the height of the Space Race." Earlier this year, he announced the creation of six high-tech manufacturing hubs as part of an effort to spur domestic job growth. The White House has called for a $1 billion investment to launch 15 other technology hubs, though the plan remains contingent upon approval from Congress.
Google's involvement could mark an inflection point in robotics
Companies like Apple and Amazon have already invested heavily in automated manufacturing, but experts say Google's involvement could mark an inflection point in the robotics industry. Thus far, most manufacturing robots have been produced for very specialized purposes, and with little interoperability. Robert Atkinson, president of the Information Technology and Innovation Foundation, says that Google may do for robotics what it did for mobile software, creating a more interoperable platform that could be applied across various industries and at lower costs. Andy Rubin, the man behind Google's Android operating system, has now moved to head up Google's robotics efforts, and has reportedly been discussing new automated technologies with Foxconn Chairman Terry Gou.
"Look at what Google did for the phone," Atkinson says. "They basically built a cheap and easy-to-use, easy-to-distribute operating system with Android. That's something that by and large has not been done in robotics."
Considering their recent robot-based initiatives, it's no surprise that Google and Foxconn would choose to collaborate. Google has spent the last several months acquiring various robotics companies, while Foxconn began deploying robots en masse at its factories in 2012. Last year, the Taiwan-based company announced plans to invest $40 million in a robot manufacturing facility in Pennsylvania, with Gou saying that Foxconn wants to be part of the manufacturing "renaissance" in the US.
It's debatable as to whether this renaissance will actually come to fruition, though the costs of automated manufacturing are certainly coming down. A 2012 report from the McKinsey Group showed that the price of automated labor compared to human labor has fallen by up to 50 percent since 1990 — a trend that researchers expect to continue.
Impacts on labor markets remain unclear
Shifting manufacturing away from Asia won't be easy — especially for technology companies that rely on tightly integrated supply chains rooted in China — and the effects of automation on the American job market are still uncertain. Proponents of automated manufacturing acknowledge that some jobs may be swallowed by machines, but insist that the long-term benefits will far outweigh the losses. A robust manufacturing sector would increase productivity and fuel domestic demand, they argue, thereby creating new (albeit different) jobs for displaced workers and perhaps leveling out the US trade deficit. More domestically produced electronics and cars, for instance, would create demand for technicians and mechanics, jobs still best suited to humans.
And although the extent to which robots take hold of manufacturing remains to be seen, Atkinson and others say it's indisputable that the sector is entering a transformative phase, and that the trade-offs involved will be far more complex than a matter of "robots versus employment."
"That's not really what our choice is," he argues. "I think our choice is continued erosion of our manufacturing capabilities and the jobs that go with it, or a more revolutionary transformation."