Foxconn’s plans to open a high-tech plant in the US may be part of the larger revival of US manufacturing. But don’t expect American jobs to come with the boom in business.
The world’s biggest contract manufacturer, which is based in Taiwan and famously assembles Apple’s iPhones and iPads, among other products, last week described the US as a “must-go market,” and said its partners (presumably Apple) want it to make things closer to their home bases, according to a Reuters report.
It seems like a welcome fillip for the US, which has been trying to boost manufacturing. Often described as the base of the world’s largest economy, manufacturing accounts for about 12% of America’s annual economic output and 9% of its workforce. Left-leaning American US think tank the Economic Policy Institute has claimed that the US lost nearly 3 million manufacturing jobs to cheaper workers in China between 2001 and and 2011.
Now, thanks to cheap energy in the US and rising labor costs in emerging markets, America’s cost disadvantage in manufacturing is rapidly narrowing.
What does that do for US jobs? Not much. A new study by McKinsey argues that manufacturers will increasingly turn to “next-shoring,” or locating production closer to where their customers are located to satisfy local tastes and eliminate potentially damaging supply shortages. In theory, this should play well to the US economy, the mothership of global consumerism. But workers will still lose out to advanced robotics, which can perform increasingly sophisticated manufacturing operations, and 3D printers, which will be able to replace component suppliers. “Cheaper, more proficient robots that can substitute for a wider variety of human tasks are another reason companies may locate more manufacturing closer to major demand markets, even where wage rates are higher,” the report says.
What’s more, the US economy’s consumer dominance is fading with the rise of emerging market demand.
But even if consumers and producers in emerging markets end up trumping the West in attracting manufacturers, ultimately the robots win.