Insourcing, Fingers Crossed!!

[Minor Axis]

Tremendous article in the Dec12 Atlantic Magazine: The Insourcing Boom regarding GEs decision to bring appliance manufacturing back to the U.S. I found it very encouraging. Important points: it takes 5 weeks to get a product Stateside from China. Labor costs are becoming a much lower part of the cost equation when all things are considered.

Here is an example of what is lost when manufacturing is disconnected from design. And it is mentioned that when manufacturing is imported, the host country eventually forgets how to manufacture a product. I've been saying this for years! The entire article is worth reading.

To get ready to make the GeoSpring at Appliance Park, in January 2010 GE set up a space on the factory floor of Building 2 to design the new assembly line. No products had been manufactured in Building 2 since 1998. An old GE range assembly line still stood there; after a feud with union workers, that line had been shut down so abruptly that the GeoSpring team found finished oven doors still hanging from conveyors 30 feet overhead. The GeoSpring project had a more collegial tone. The “big room” had design engineers assigned to it, but also manufacturing engineers, line workers, staff from marketing and sales—no management-labor friction, just a group of people with different perspectives, tackling a crucial problem.

“We got the water heater into the room, and the first thing [the group] said to us was ‘This is just a mess,’ ” Nolan recalls. Not the product, but the design. “In terms of manufacturability, it was terrible.”

The GeoSpring suffered from an advanced-technology version of “IKEA Syndrome.” It was so hard to assemble that no one in the big room wanted to make it. Instead they redesigned it. The team eliminated 1 out of every 5 parts. It cut the cost of the materials by 25 percent. It eliminated the tangle of tubing that couldn’t be easily welded. By considering the workers who would have to put the water heater together—in fact, by having those workers right at the table, looking at the design as it was drawn—the team cut the work hours necessary to assemble the water heater from 10 hours in China to two hours in Louisville.

In the end, says Nolan, not one part was the same.

So a funny thing happened to the GeoSpring on the way from the cheap Chinese factory to the expensive Kentucky factory: The material cost went down. The labor required to make it went down. The quality went up. Even the energy efficiency went up.

GE wasn’t just able to hold the retail sticker to the “China price.” It beat that price by nearly 20 percent. The China-made GeoSpring retailed for $1,599. The Louisville-made GeoSpring retails for $1,299.

And here is a rebuttal article also posted in the Atlantic: The Insourcing Boom That Isn't.
I've not read it yet because I want to believe the former, not the latter!

 

[Accountable]

I wonder how many billions of US tax dollars will be shunted to this multi-billion-dollar company to do what they say is more profitable for them anyway. The guys at GE know how to run the game: ask for billions to help the little people a little, and promise a generous kickback, erm, campaign contribution in return.

 

[Stone]

............ Fingers Crossed!!

Interesting strategy :cool

 

[Minor Axis]

I wonder how many billions of US tax dollars will be shunted to this multi-billion-dollar company to do what they say is more profitable for them anyway. The guys at GE know how to run the game: ask for billions to help the little people a little, and promise a generous kickback, erm, campaign contribution in return.

I would think tax policy could be the stick/carrot.

 

[Accountable]

I disagree. The profit motive alone is enough. If GE doesn't want the American worker then they can go without my tax dollar. There are plenty of entrepreneurs and established companies that would fill the niche ... or would, if the gov't would lift the onerous regs that keep GE's competition from getting started. (cue the wailers with their unfounded accusations)

 

[Francis]

It has to do with companies moving to fully automated assembly floors and being able to do immediate changes to their products without it taking 3 to 6 months. Many of the companies I deal with already salivate to the thought of having plants in Asia, Europe as to save on shipping and claiming themselves green so consumers will flock to them. But today they concentrate to North America and Asia while they can ship to Europe from Asia still.

But the new movement is all about having plants that can run 24/7 without worker issues..

Foxconn is now switching their assembly floors in Asia to Robots getting ready for America.

http://www.theverge.com/2012/12/11/...factory-automation-manufacturing-US-expansion

If you have been to one of the more recent automotive assembly locations lately you would know they are far from what they used to be, less workers and more robots.. This is one that was filmed in 2004 so you can imagine the technology advancements done since then..

http://www.youtube.com/watch?v=3CzuQ3DtsPc

 

[Accountable]

Is the robot-building plant automated? Is the plant that builds robot-building robots automated?

It's all run by an 11-year-old kid on his iPad, isn't it?

 

[Francis]

I would imagine the robot plant can be robotically set up.

The article states it removes trivial tasks / work. The robots will never completely replace all tasks and even in a fully automated plants there requires to be QA ( Quality Assurance ) to make sure the robots do not misaligned, go offline, require maintenance and so on.

The real benefit is using the people to do quality jobs. Not just screw in screws of a cabinet.

Robots will never replace the work force. People have concepts of companies going fully automated and having no employees which is impossible.

 

[Stone]

....................
And here is a rebuttal article also posted in the Atlantic: The Insourcing Boom That Isn't.
I've not read it yet because I want to believe the former, not the latter!

From your link:

This year, the entire U.S. economy has expanded by only 2.06 percent after inflation. Manufacturing output, however, has actually fallen - by 0.54 percent.

 

[Minor Axis]

It has to do with companies moving to fully automated assembly floors and being able to do immediate changes to their products without it taking 3 to 6 months. Many of the companies I deal with already salivate to the thought of having plants in Asia, Europe as to save on shipping and claiming themselves green so consumers will flock to them. But today they concentrate to North America and Asia while they can ship to Europe from Asia still.

But the new movement is all about having plants that can run 24/7 without worker issues..

Foxconn is now switching their assembly floors in Asia to Robots getting ready for America.

http://www.theverge.com/2012/12/11/...factory-automation-manufacturing-US-expansion

If you have been to one of the more recent automotive assembly locations lately you would know they are far from what they used to be, less workers and more robots.. This is one that was filmed in 2004 so you can imagine the technology advancements done since then..

http://www.youtube.com/watch?v=3CzuQ3DtsPc

This is a common theme in the world of scifi writing. Historically manufacturing has been a main source of employment. As it evaporates, there will be serious challenges to the economy as in how will millions find meaningful employment?

Robots will never replace the work force. People have concepts of companies going fully automated and having no employees which is impossible.

But they will displace tens of millions of jobs. A factory that used to imploy 10k workers now might run with 200.

 

[Francis]

This is a common theme in the world of scifi writing.

Yes but many of what sci-fi talks about becomes reality as it has in this case.

This is a fact of reality.. The Communicator from Star Trek could be equated to the Cell Phone of today as well as the Tablet they used on the show to today's tablet you see everywhere.

Lasers where thought a fantasy in those days have been realty for doing even eye surgery, something thought totally insane.

There are many more examples.

Mass people cannot accept big change quickly.. If I was to say tomorrow everyone will pay for product with a slide of their hand of both hands over a pay swipes over the cash register most people would freak out.. But the technology is there today to implant RFID into people and scan it right from your bank account. But privacy and peoples rights groups would never accept it yet..

Historically manufacturing has been a main source of employment. As it evaporates, there will be serious challenges to the economy as in how will millions find meaningful employment?



But they will displace tens of millions of jobs. A factory that used to imploy 10k workers now might run with 200.

Manufacturing has only been a main source of employment since the Industrial Revolution.. People fear change and do not understand that employment will transition to better employment positions but that will require governments to educate the people.

This is why nations that invest in education of all the people will benefit will have much more growth.

http://en.wikipedia.org/wiki/Industrial_Revolution

It is known that people who do not have the ability or do not want to get higher education will move into the Hospitality Industry for the most part. It's just a reality of what has happened..

http://en.wikipedia.org/wiki/Category:Hospitality_industry

 

[Stone]

Yes but many of what sci-fi talks about becomes reality as it has in this case.

This is a fact of reality.. The Communicator from Star Trek could be equated to the Cell Phone of today as well as the Tablet they used on the show to today's tablet you see everywhere.

Lasers where thought a fantasy in those days have been realty for doing even eye surgery, something thought totally insane.

There are many more examples.

Mass people cannot accept big change quickly.. If I was to say tomorrow everyone will pay for product with a slide of their hand of both hands over a pay swipes over the cash register most people would freak out.. But the technology is there today to implant RFID into people and scan it right from your bank account. But privacy and peoples rights groups would never accept it yet..



Manufacturing has only been a main source of employment since the Industrial Revolution.. People fear change and do not understand that employment will transition to better employment positions but that will require governments to educate the people.

This is why nations that invest in education of all the people will benefit will have much more growth.

http://en.wikipedia.org/wiki/Industrial_Revolution

It is known that people who do not have the ability or do not want to get higher education will move into the Hospitality Industry for the most part. It's just a reality of what has happened..

http://en.wikipedia.org/wiki/Category:Hospitality_industry

Manufacturing has only been a main source of employment since the Industrial Revolution.. People fear change and do not understand that employment will transition to better employment positions but that will require governments to educate the people.

This is why nations that invest in education of all the people will benefit will have much more growth.

Indeed.....:thumbup

 

[Francis]

I am not sure if anyone caught the segment of 60 minutes about this, but it was bang on..

I guess the issue is that we are moving too fast at this time to keep up with the changes.

The segment did say the place that will be most affected by this is China ( Asia ) as the lowest of low paying jobs will disappear by the millions.

To think that man was not going to achieve this was lunacy as companies were constantly being pointed at for child labor.. Eventually it had to happen and so we have eliminated the issue while creating another ( how ever long that maybe to retrain those caught in the middle ).

 

[Minor Axis]

Very interesting segment on last Sunday's 60 Minute (News Show) here in the States. It is noted that when robots are cheaper than Chinese workers, GE was mentioned, manufacturing is moving back to the states. And that the economy is now larger than before the 2009 depression, but jobs are flat, have not come back because all of the growth is in automation. I feel that this will seriously challenge Capitalism and our society in the near future. Most interesting is that the automation experts from MIT mentioned science fiction with robots replacing jobs is in effect. The question is how will the economy adapt? Unknown.

See this CBS 60 Minutes video: http://www.cbsnews.com/video/watch/?id=50138922n

 

[The Man]

Well with cheaper labor prices are lower...thus we can buy more stuff creating jobs elsewhere ...these production machines are not the cause of the unemployment situation we have going on.

 

[Francis]

Well with cheaper labor prices are lower...thus we can buy more stuff creating jobs elsewhere ...these production machines are not the cause of the unemployment situation we have going on.

If you had watched the 60 minutes clip you would well understand that yes they are. Part of the reason is that manufacturing jobs have not yet shifted to other sectors yet and many of those are moving to automation..

Hence when some countries lost all manufacturing in 2000 they had a shift that the US did not ( example Canada ). We had to adapt as fast as we could to having no more manufacturing base so we moved our labor force into fields of demand.. But we did it at the government expense and while some see that as freeloading, you can't expect 45 year old people to retrain again when they are in mid life and heavy in debt. These are the hard choices a government must take and do.. But you can't shift people from dead industries to more dying industries.. It's a waste of money..

 

[Minor Axis]

Well with cheaper labor prices are lower...thus we can buy more stuff creating jobs elsewhere ...these production machines are not the cause of the unemployment situation we have going on.

What, that does not fit into you view of what is wrong with the U.S.economy relating to jobs? Here let me repeat:

And that the economy is now larger than before the 2009 depression, but jobs are flat, have not come back because all of the growth is in automation.

If you had watched the 60 minutes clip you would well understand that yes they are. Part of the reason is that manufacturing jobs have not yet shifted to other sectors yet and many of those are moving to automation..

Hence when some countries lost all manufacturing in 2000 they had a shift that the US did not ( example Canada ). We had to adapt as fast as we could to having no more manufacturing base so we moved our labor force into fields of demand.. But we did it at the government expense and while some see that as freeloading, you can't expect 45 year old people to retrain again when they are in mid life and heavy in debt. These are the hard choices a government must take and do.. But you can't shift people from dead industries to more dying industries.. It's a waste of money..

This is where the "liberty", "patriots" crowd does not believe that government has a roll. Let them, let society sink or swim on their own. Who cares, until it's me? (lol) This as very primitive thinking. My mantra, is that societies don't become advanced until it's more about "we" than "me".

Most surprisingly the MIT guys felt that the Chinese worker are the ones who are going to take the big fall. While it remains to be seen, it will be interesting for China if that happens.

 

[The Man]

If you had watched the 60 minutes clip you would well understand that yes they are. Part of the reason is that manufacturing jobs have not yet shifted to other sectors yet and many of those are moving to automation..

Hence when some countries lost all manufacturing in 2000 they had a shift that the US did not ( example Canada ). We had to adapt as fast as we could to having no more manufacturing base so we moved our labor force into fields of demand.. But we did it at the government expense and while some see that as freeloading, you can't expect 45 year old people to retrain again when they are in mid life and heavy in debt. These are the hard choices a government must take and do.. But you can't shift people from dead industries to more dying industries.. It's a waste of money..

I actually watched part of it on TV when it aired.
Automation is nothing new...its merely efficiency...doing the same with less labor hours.
The latest technology is nothing new as far as jobs are concerned.
Lets go back in time for a moment...No factories ,,no automation...many labor hours..things were expensive as a result.
With efficiency..things are cheaper...thus giving us extra money to buy more stuff.
We used to pound nails to shape by hand.
Used to build cars without assembly lines.
As far as food and many products it has always been do more with less man power.
Conveyer belts fall under "automation" for example.
Hell automatic presses have been around for decades.
Products are related in price to labor..always have been ...same for many services.

This is nothing new....why gold is high and the dirt that surrounds it is cheap.
Now if we had a way to "automate" the process where gold was easy grabbing just like the dirt...then gold would be dirt cheap.
Demand for gold would go up thus requiring the extra labor as a result....as a result the "job loss" is not linear as a result.
Not to mention....and as always said..when people have more money in their pocket they can go buy other stuff which creates more jobs.

The 60 minutes show cherry picked off some places that were efficient and showed a robot that could be trained to do tasks...big deal.
Technically a freight train would be the biggest job stealer of all with that logic....2 guys hauling thousands of tons of freight...rather than several hundred guys with horse and wagon.

Technically this efficiency they shown on 60 minutes is good for the economy not bad...as it lowers prices ..giving us more money to spend..forcing others to become more efficient....As said with lower prices we can buy more stuff which creates more jobs.

I guess we could always put a halt to assembly lines, freight trains, tractor trailers,and factories run by electricity...{sarcasm}...what happens..everything will be high as hell and no one will have anything.

 

[The Man]

What, that does not fit into you view of what is wrong with the U.S.economy relating to jobs? Here let me repeat:

And that the economy is now larger than before the 2009 depression, but jobs are flat, have not come back because all of the growth is in automation.



.

Inflation...and population growth...has been going on for centuries.

 

[Minor Axis]

Inflation...and population growth...has been going on for centuries.

And? So?

Technically this efficiency they shown on 60 minutes is good for the economy not bad...as it lowers prices ..giving us more money to spend..forcing others to become more efficient....As said with lower prices we can buy more stuff which creates more jobs.

I don't think you get it. No one is arguing that efficiency is bad for companies, but you fail to realize or acknowledge that the market place consists of a balance of sellers and buyers. And that if most of your prospective buyers are unemployed, it kind of puts a damper on the whole capitalism concept. This is why the jobs market is currently flat. In the long run, the economy may find other places to employee the displaced, but maybe not. And if they were once employed by manufacturing it is highly likely that any replacement job will not pay as much as the manufacturing job previously with the ultimate effect of depressing the economy, and making for unhappy citizens.