The Expendables by Jeff Rubin

Author:Jeff Rubin [Rubin, Jeff]
Language: eng
Format: epub
Publisher: Random House of Canada
Published: 2020-08-18T00:00:00+00:00

BLAME THE ROBOTS

When it comes to an explanation for the job losses in the United States and Canada, the industry’s default is to blame automation. The story is echoed by most of North America’s business media and by defenders of globalization in general, who claim that the primary reason behind the loss of so many manufacturing jobs in G7 economies is labour-saving technological change in the form of pervasive digitization, robotics and, now, artificial intelligence. They argue that trade deals have had little to do with those job losses, because the manufacturing job losses would have happened even if domestic industries were better protected with tariffs. If you ignore the impact that trade deals have had on relocating production, you might be inclined to agree with them. But that would be like ignoring the impact that losing your job has had on the fact that you are now unemployed.

While it is certainly true than today’s highly automated assembly plant doesn’t have nearly the same employment footprint as a plant built two decades ago, any factory is still a major source of employment. Ford’s assembly plant in Mexico, cancelled at Trump’s urging,14 was going to employ more than three thousand people, and a cluster of parts plants would have sprung up around it, hiring many thousands more workers.

The auto industry, like most manufacturing industries, is becoming more automated all the time, but that’s not the primary reason so many jobs have left the United States and Canada. Technological change has significantly reduced the number of workers needed to produce a car, but it’s the location where the car and its components are actually manufactured, and not the degree of automation, that is still far and away the biggest determinant of industry employment levels.

And if you want to know where that is, here’s a clue: over the last decade, every single new North American assembly plant has been built in Mexico. Between 2010 and 2015, Mexico’s vehicle and parts industry received a staggering $24 billion in new investment, including no less than eight new assembly plants. By comparison, the Canadian industry attracted one-fifth of that, and no new assembly plants. In 2014 alone, the Mexican industry attracted more investment than the Canadian industry saw over the entire six-year period.15

The new assembly plants being built in Mexico are just as automated as a new American or Canadian plant would be. After all, when Ford or GM builds a new plant in Mexico, they don’t substitute cheap Mexican labour for robots. The only difference is that those highly automated factories are being operated by workers who make four dollars an hour or less, as opposed to American or Canadian workers who make between twenty and thirty dollars an hour.

That’s obviously a good news story for the Mexican economy, just as it is for the profit margins of companies like GM that, if not for generous bailouts by both American and Canadian taxpayers in 2009, would not exist today.16 What is less certain is whether Charles Wilson’s claim that what is good for GM is good for his country still holds true.

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