Manufacturing jobs and the future

It’s common today to read that technology is displacing jobs in manufacturing. Popular media stories concentrate too much on bad news such as plant shutdowns, closures and job losses. All too often academic studies focus on the falling share of the manufacturing workforce, contrast it with surging output and productivity performance, and conclude automation is a job killer.

Then there’s the speculation that artificial intelligence (AI) is well on its way of replacing humans. One recent global study by a group of Oxford economists forecasts AI will replace more than 20 million manufacturing jobs by 2030.

Well, it’s fake news, which can be dangerous when policy makers take it seriously. We can’t afford to have our governments ignore the most innovative, productive and internationally oriented sector of our economy because they think fewer jobs – and fewer votes – depend on manufacturing.

So, what are the facts? It is true fewer people work in manufacturing than 10 or 20 years ago. In 2000, 2.3 million Canadians were employed in manufacturing. The number fell to 1.7 million by 2010 where it has remained. Because of growth in the whole workforce, manufacturers who employed 15% of Canadian workers in 2000 now employ 9% of the working population. The trend is similar in all advanced industrial economies.

But that doesn’t mean manufacturing is less important as a creator of well-paying jobs. Value chains have expanded enormously over the past 20 years. In Canada and the US, manufacturers outsourcing their technical, logistical and other services requirements create more jobs indirectly. When considered together, jobs connected either directly or indirectly to manufacturing have grown more rapidly in Canada and the US than the workforce as a whole. My bet is the same holds true in other countries as well.

Open innovation, working with partners to share risks and focus on core competencies, and outsourcing to suppliers with greater degrees of expertise and specialization have all contributed to expanding manufacturers’ value chains. This is especially so when you consider the exponential increase in technological capabilities that have characterized advanced manufacturing since 2010.

Manufacturing continues to be an important anchor of value creation. As Linda Hasenfratz, CEO of Linamar and chair of Canada’s Advanced Manufacturing Supercluster likes to say, manufacturing is the ultimate integrator of technology. We need to take a broader look at the job-creating impact of manufacturing for that reason.

Countries with the highest degree of automation – those that use robotics the most, such as Japan, South Korea, Germany, France, (northern) Italy, and the Scandinavian countries – have extremely low levels of unemployment and high labour costs. With fewer people available to work in the sector, automation has not threatened jobs – it’s necessary for manufacturers to compete.

It’s a sign of things to come in Canada, the US, China, and elsewhere. According to the World Manufacturing Forum, job openings in manufacturing around the world have quadrupled over the past 10 years, but only a quarter of them have been filled.

It’s important to recognize technology is changing the nature of manufacturing jobs as it continues to automate standard tasks. Jobs are safer, healthier, less manual, more knowledge intensive and focused more on solving problems than on repetitive tasks. Leading companies are focusing on human-centred production methods. They’re using advanced technologies to help employees achieve more customer value by working more flexibly and more efficiently on tasks that require the human skills and judgment machines do not yet possess.

The World Manufacturing Forum is forecasting a significant increase in the tasks smart technologies will perform over the next 10 years. Yet, it sees a growing number of data-rich human-machine interfaces such as smart controls, collaborative robots, indicative and predictive systems and virtual reality presenting new problems for operators to solve. Some industry experts call this a Fifth Industrial Revolution that combines AI and production technologies to give workers revolutionary new productive capabilities.

Again, the point is not to displace people, but to enable them to create value in new ways, if manufacturers can keep pace with upgrading the skills of their employees and attracting the workers they need. In a recent global survey of manufacturers, more than 75% reported they were experiencing skills shortages with 56% attributing the problem to the rapid pace of technological change. More than half complained the labour market does not provide people with the needed skills.

One lesson to be drawn from the global survey is that manufacturers need to take a more active role developing new skill sets internally. Skills shortages present a greater threat to manufacturing than technology displacing jobs.

Jayson Myers, the CEO of Next Generation Manufacturing Canada, is an award-winning business economist and advisor to private and public sector leaders. E-mail jayson.myers@ngmcanada.com. Visit www.ngmcanada.com.