It's time to transform the USA with manufacturing

September 14, 2023
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What followed was a historically unprecedented expansion of industry between 1940 and 1945, which saw factories designed to produce goods like automobiles, toys and appliances instead retooled themselves to produce everything from warplanes to ammunition to countless uniforms. 

The result? Millions of jobs created, a doubling in the national GDP, and the swift end of the Great Depression and eventually, WW2. In just a few short years, the USA had created an industrial and economic miracle.

As the only major country with a completely intact industrial base and labor force by the conclusion of the Second World War, America was in prime-position to rise to superpower status and beyond. Even now, almost 80 years later, the USA remains the world’s sole hyperpower - and it’s all thanks to the manufacturing industry of the 1940s.

Despite this extraordinary success, the manufacturing industry has seen itself increasingly dismantled on US soil since the early 1980s and instead rebuilt in countries like China, Taiwan, India and Vietnam where labor and manufacturing costs have traditionally been much cheaper than those in the US, enabling ever-more-affordable consumer goods to be accessible across our country and the rest of the world.

In response, young generations entering the workforce have opted to skill in Finance, Software and other service-based industries, leaving us increasingly short of skilled welders, machinists, electricians and more with each passing decade. 

This has established a self-reinforcing pattern of decline: less skilled labor, means fewer manufacturing orders placed in the US, which reduces the number of factories and - ultimately - the number of available jobs. We’ve created a race to the bottom for the manufacturing industry.

With the US national debt reaching a staggering 124% of GDP, the conversation - and action -  on reshoring US manufacturing has been reaching a fever pitch in the last few years, exacerbated by recent events like the multi-year demand contraction and subsequent supply shock caused by the 2020 Covid-19 pandemic. 

If President Roosevelt were still with us today, he would agree: it’s time to rethink the US manufacturing industry and usher in a new, homegrown industrial revolution.

The current state of manufacturing in the US

With manufacturing giants like Tesla building their production base from scratch in the US, and tech giant Apple beginning to reshore their iPhone production, the starting pistol has been fired for reshoring and a resurgence in US-based manufacturing is coming, fast.

In 2022 alone, construction spend on manufacturing (i.e. building factories) totalled over $108 billion, which is the highest total amount on record. We spent more on factories than we spent on schools, hospitals or office buildings.

While partially driven by key government subsidies for the manufacturing of high-tech products like batteries and semiconductors, there’s also a growing desire by corporations big and small to be more resilient to shipping issues, and production lockdowns and to hold less stock at any one time. That’s difficult when your stock comes from the other side of the Pacific Ocean, but much easier if it comes from Ohio or Texas.

Manufacturing isn’t just great for companies, it’s great for the nation. Since 2017, the US National Debt has increased by 50% and shows no signs of slowing down. With these subsidies and massively increased construction spending, the Biden administration is clearly eyeing the manufacturing industry as an obvious route out of growing national debt.

Consider this: When a US corporation creates a manufacturing order abroad, they’re massively stimulating the local economy and local supply chain. Raw materials are often sourced from the country, supporting that local industry’s growth and all of the associated jobs. Heavy equipment for logging, mining and more is sourced from the local country, increasing growth in that industry too.

Then we have the factory itself producing the manufacturing order. Incoming funds are used to develop the factory and create new capabilities (resulting in new, bigger manufacturing orders). The remainder of funds which are not invested or spent on raw materials are then typically paid out to the workers and owners, allowing them to spend locally and further stimulate the local economy. The finished goods contribute to the national trade balance of that country, enhancing the power of their exports.

Scaled out to thousands of factories across millions of workers, this becomes a huge flywheel for growth and is the reason countries like China, India and Vietnam which were economically struggling mere decades ago are now economic powerhouses. 

In contrast - when a US software company, for example, becomes successful, the effect on the local and national economies is much less prevalent. The company will hire many programmers and other professionals who are often paid high wages, but they will hire exponentially less staff than an equivalent-size manufacturing company. 

While they’ll spend on the local economy, purchase consumer goods and invest in real-estate, there is minimal effect on the local supply chain, industrial capabilities and exports.

That’s not to say we should halt our advancement of technology in the US, quite the opposite! Instead, we should look to use our high-tech capabilities to reshore highly-skilled, highly-paid manufacturing jobs which can stimulate our entire national supply chain, and our national economy and begin reducing our national debt.

Apple is a perfect example of this model. Eight years ago, they provided 600,000 jobs across the US. Since then and after relocating some of its hardware production back to the US, the company has 4x the number of American roles to 2,400,000. This is a mix of their own employees, and employees of the 9,000 US-based suppliers Apple work with.

Foxconn, the China-based company which helps Apple manufacture their iPhones abroad, has over 200,000 employees in their Zhengzhou factory alone. What would our future look like if jobs like those became US-based?

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Automation is necessary for the US manufacturing industry 

That all sounds great, but there’s a catch - we’re short 800,000 workers and the reshoring of manufacturing jobs has only just begun. The National Association of Manufacturers estimates this could rise to over 2.1 million unfilled jobs by 2030.

This situation isn’t getting any better, either. For example, the average age of a Welder is 57 and more of our high-skilled workers are leaving the industry rather than entering the industry.

Even for companies abroad like the aforementioned Foxconn, there are more jobs than workers - The company is reportedly struggling to hire another 100,000 workers for their iPhone factory.

The nature of what we’re building has changed too. Cars, for example, are no longer the hunks of metal and rubber churned by US factories in the 1950s. Instead, consumers demand advanced camera systems, infotainment screens which resemble their top-of-the-line iPads and even the rims on mid-level sedans need to be diamond-cut with laser-precision

It’s no wonder that the Biden administration is racing to rebuild our high-tech manufacturing industry and birth the new millennium’s answer to Fairchild Semiconductor. 

The truth is this: High-tech manufacturing requires high-tech solutions and if the NAM stats are to be believed, then the historical production-line-esque strategy of throwing more people at the problem isn’t going to work. 

While the 2010s were rampant with fear of automation and “robophobia”, it’s clear that this is an unfounded fear and we need more humans than ever! Even in countries like South Korea where robot usage alongside human workers is rampant, they’re still creating and filling more manufacturing jobs than we are in the US. 

Automation is the new strategy. With the advent of AI and computer vision, dramatically cheaper robots and many more jobs available than workers to fill them, manufacturers are racing to bring robots online side-by-side with their human workers.

Robots allow manufacturers to exponentially increase the productivity of their employees. The welder shortage is much less of a problem when one experienced welder can oversee five robotic welders. 

The downstream effects of this are huge for employees themselves. Rather than lose their means of employment, instead manufacturing companies are investing in upskilling their workers with new skills (rewarded with bigger pay-packets), re-assigning them to more complex, interesting tasks and relying on their most experienced team members to oversee, mentor and train the younger generation.

What does this mean for the USA? Our mission as a country must be to bring robots into every aspect of our manufacturing process, allowing the menial tasks to be automated and production lines to be run 24/7 without hampering the lives and well-being of our national workforce.

The end result for America and Americans is less national debt, stronger local supply chains, higher average wages, more prosperity in our local and national communities, and a much more optimistic path for our younger generations. 

At Standard Bots, our own mission is to democratize access to robots and make automation dramatically more affordable to manufacturers than ever before. Our flagship product, RO1, moves faster and more precisely than any competing option on the market while being capable of moving much heavier payloads. And of course, RO1 is Made in the USA.

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