Job Losses or Job Transfers? The Changes in the Manufacturing Sector.

“The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.” (Warren G. Bennis)

There have been interesting studies for quite some time on reduced employment in the manufacturing sector in several countries globally.  Alluded to this has been the idea that maybe the jobs have been exported to other countries especially from first world countries to third world countries.

For some third-world countries, their worry has been the reducing GDP contribution of the sector. Their concerns are that there are increased cheap imports from other countries flooding the local markets forcing their homegrown sector to close shop as they lack a competitive edge.

The difference in the concepts regarding jobs is that one pact focuses on job transfers and the other points to job losses and the circumstances are as different as the concerns. In the middle is the group thought to be benefiting from the whole fiasco.

These are the countries believed to be reaping big from the job transfers as manufacturing gets moved to those countries. However, the resulting jobs created are not as many as they are anticipated, and thus, after the initial employment, there are fewer and fewer employment opportunities available.

Maybe, jobs get cut down even in those countries receiving the transfers over time not because there is a decrease in the demand but because of the progress in the sector. Some countries such as UK and USA are still manufacturing giants even though the sector is not employing as many people as would be expected.

Now that these big economies face a decline in the number of people being employed in the sector, it means that there are developments in the manufacturing sector that are necessitating those changes. Critically considering that means that the third world countries are on a disadvantaged end already.

The big question becomes why there is increased output from the manufacturing sector with an overall little job growth. And the answer lies in the revolutionary measures that have been embraced by the sector from the times past up to the present.

As factories were pushed to meet customer demand within the shortest time possible, managers embarked on finding ways to do so. The rate of meeting customer demand often known as takt time needed to be as shortest as possible.

And to achieve that, manufacturing companies started to automate their processes. Automation means little human intervention and thus birthed the obsolescence of lots of jobs especially those that were very repetitive.

Since then, the push has been to become more efficient as a way of gaining a competitive edge over the competition. Some time years back, it was acceptable for manufacturing companies to give customers lead times of weeks. Today, that has been shortened to a matter of hours.

With greater automation comes the redundancy of some processes which necessitates that some operations be combined. Take an example of years back when a production line had a machine that did the filling and the people did the labeling after in a manual system.

It was found that a labeling machine could do better. Today, it is possible to find a filling line with an integrated labeling system before or after the filling. What happens with the individuals who did the manual labeling work? Some will be absorbed in other tasks and others are laid off.

Another angle would be to look at the principles being implemented lately in many of these firms. Lean manufacturing is a concept that you may have come across which is aimed at minimizing waste and improving process efficiencies.

To achieve this, different techniques are used. But I want to focus on one that is referred to as the pull system. To implement the pull system, a value stream mapping has to be done. Value Stream Mapping (VSM) maps all the activities that are involved in the manufacturing process of a product(s).

VSM not only helps with the material and information flow but helps in showing all the value and non-value-adding activities in the process. Most companies realize that there are a lot of non-value-added activities in their processes that need to be eliminated. It doesn’t mean that the product output gets affected but rather gets increased and that may involve some activities or jobs being eliminated.

So, even in the case of job transfers, when those measures are put in place, there are hard decisions that often have to be made to eliminate some jobs. It becomes a matter of necessity rather than a deliberate action by the companies.

So is it job losses? It may sound harsh but that is what it looks like. Suppose manufacturing is being transferred to where the minimum wage is low, with automation, there is a limit even for those minimum wage hiring. With automation, even for jobs that are transferred, job losses still occur.

The only disadvantage of manufacturing transfers (offshoring), is the job losses are much more because even secondary jobs are offshored as well such as maintenance, engineering, and any other auxiliary jobs related to the main manufacturing activity.

Nevertheless, job losses are eminent the more industry 4.0 comes into play in the sector. With it though comes new job functions in as much as they may not tarry with the losses. The advantage is to the agile worker can quickly gain skills in line with the demand changes so as not to be laid off but be absorbed for new tasks that come up with new technological adoption.

For third world countries, they are at a loss because of their rate of adoption of industry 4.0 technologies. In those countries in which their manufacturing companies have embraced automation and technology-based approach, efficiency and output increase with few operating expenses making them globally competitive and thus giving them an advantage in pricing and rate of meeting customer demand.

Since those companies in third-world countries would be lagging, their job losses will be because of closing shop for failing to compete. They have to close the gap in technological advancement if they are to save even the few jobs that the sector will need to be offering.

By addressing the areas of cost, quality, and speed in their operations, manufacturing companies are pushed to do a lot of automation and adopt mechanisms that can help them achieve those three requirements albeit in a broad sense. Sometimes that necessitates job losses, but as with a revolution, lots of jobs get created.

 There are multiple job creations for the sector although not directly. So it is for us to begin figuring them out. For now, direct job losses are eminent but that is not the end. People can learn to be expert dog feeders maybe.