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Other Voices: Let’s think of automation as a key to growth

Automation is leading to more efficient, and competitive, manufacturers and distributors. That’s a good thing for the economy.
By Reed Langton, senior application engineer, Bastian Solutions
May 21, 2013

Editor’s Note: The following column by Reed Langton, senior application engineer, Bastian Solutions, is part of Modern’s Other Voices column. The series features ideas, opinions and insights from end users, analysts, systems integraters and OEMs. Click on the link to learn about submitting a column for consideration.

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There are times that we in the material handling field come across people who are opposed to automation. This sentiment is more prevalent in times of high unemployment. Often the blame of unemployment shifts to robots, kiosks at airports, or even ATMs, which perform tasks that were previously done by people.

Automation is put in place for one main reason, to increase efficiency (higher production/lower cost). If we are increasing efficiency, for example lowering cost, it is safe to assume that the amount of labor put into the end product has decreased, and a job may have been displaced. However, I believe we need to look beyond the specific jobs displaced by automation and look at the overall effect on the economy.

For example, let’s look at the implementation of a robotic palletizer for boxes of Super Widgets. The palletizer does replace operators who were manually loading pallets. However, we have also created jobs for the manufacturer of the robot, the design engineering and most likely a technician at the facility who will service the robots.

Many times, these new jobs pay better and are less physically tasking than the jobs they replaced. However, if the project moved forward for a return on investment, at some point, it will need to lower overall cost in the production of the Super Widget.

The lowering of costs with the automation of the palletizing process has several effects.

1) It lowers the price of the Super Widget for consumers
2) It provides the opportunity for higher wages for the employees who continue producing the Widget
3) It delivers higher profits for the company that creates the Widget

Lower Price

The lower price has two effects. First, it makes local manufacturing more competitive. As the cost of production is reduced, U.S. manufacturing facilities are more competitive with international competition. That helps to keep jobs in the US.

Second, lower prices allow consumers to keep more of their discretionary income. That is income they can save, invest or use to purchase other products or services. This increases the consumer’s standard of living and it increases sales in other industries. More importantly, the overall wealth of society is increased because additional industries manufacture the other products that are purchased with the extra income.

Higher Wages

Effect number two, higher wages, will obviously increase the standard of living of the employees—and similar to the consumer paying lower prices, allow them to save or invest more, or to purchase other products.

Higher Profits

The third effect of automation, higher profits, has multiple effects. Often these profits are reinvested into the business, allowing it to expand and create more jobs. Or, that business may invest in additional automation to increase productivity, creating a virtuous cycle. Profits may also get paid out to the business owner or investors. These funds are cycled back into the economy again as savings, investments or for the purchase of other products.

The most exciting outcome is when the effects combine. It is the additional savings and investment capital, the extra discretionary income and even the freed up labor that allows for new industries to be created.

Before the 20th century, most people in the Unites States were farmers. If they were told that at the start of the 21st century, the necessary farm production could be accomplished by roughly 2% of the population and automation, the concern would be that those 2% would have all the wealth and the rest of the population would be unemployed and destitute. We know that’s not what happened. In fact, the improved technology in agriculture freed up the resources that gave birth to the industrial revolution and the technology and new industries that grew from there.

Just as farmers of the 19th century could not have imagined the new jobs that would come about from the industrial revolution, we can only guess what industries and technologies will be created by 2100. What we can be fairly sure of is that automation will help free up the resources and human creativity needed to produce them.

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About the Author

Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484 or email [email protected].

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