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Automation Won’t Destroy Trade – It Might Even Boost It

automation

Automation Won’t Destroy Trade – It Might Even Boost It

Alarm bells are ringing

Many industry observers are sounding alarms about the looming impact of automation, robots and 3D printing, which they fear will destroy jobsdisrupt value chains and maybe even reduce the need for international trade. Developing countries are particularly concerned because trade has been an avenue to economic development and growth for them. But a recent report released by the World Bank shows that the data and evidence don’t support the hype. Instead, automation, robots and 3D printing might actually increase trade as trade costs continue to fall.

Some business analysts have warned that automation and robots could disrupt and shorten global supply chains. The thinking behind the concern is that, if a computer can design it and a 3D printer can make it, then we won’t need to source it from countries abroad that have more abundant low-cost labor than we do. Instead, companies will drastically shorten their value chains, which could reduce international trade.

The anxieties have gotten the attention of development economists and developing countries. Trade and economic growth go hand-in-hand, both in economic theory and in practice. Multiple studies have shown that firms in developing countries that participate in global value chains outperform their local peers that solely focus on domestic markets. If robots eliminate the need for global value chains, this important avenue for economic development could be threatened.

Anxiety over automation may be overblown

Scare tactics about economic change are attractive because they get our attention. About 15 years ago, we saw headlines about “white collar outsourcing” (once attorneys were added to the list of jobs that could be moved offshore, the panic even spread into boardrooms). Some lawmakers called for restrictions on offshoring, and some of those calls are still alive today. But the mass exodus of white collar jobs did not occur.

The World Bank is a multilateral development agency that makes grants and loans to support capital projects and economic growth in the poorest countries. Anything that reduces the need for trade and global value chains would hit those developing countries hard, putting the automation concerns squarely on the World Bank’s radar.

In its annual World Development Report, the latest released on October 8, the World Bank does not take a definitive stance on the overall effects of automation, and it does not make any bold predictions. But it does make one thing clear: The anxiety over automation hindering trade is not supported by the data and evidence. In fact, the authors show that sectors with the largest increases in automation have also been those with the largest increases in trade. Yep, that’s right: We’re experiencing the opposite phenomenon to what so many are worried about.

Automation actually helping to expand trade

Specifically, the report shows that the percentage change in imports of parts from developing countries from 1995 to 2015 is higher in industries that are more automated. Agriculture and textiles are among the least-automated industries and have the smallest change. Metal, rubber and plastics, and automotive sectors have the highest rates of automation and the largest increases in trade.

Automation in industrial countries has boosted imports from developing countries

Why? Because automation, like robotic assembly and 3D printing, leads to an expansion in output and demand for material inputs. Automation can also lead to the creation of new tasks. So while it brings labor market adjustment pains — like technology and progress always do — automation will not necessarily reduce trade or shorten global value chains.

Meanwhile, investments in digital technologies continue to lower the costs of coordinating across long distances. These lower trade costs are expected to promote trade and lead to a continued expansion of global value chains, particularly for developing countries.

The big picture

Here’s the big picture: Change is the one thing in the economy you can count on. Improvements in how we make things and advanced production technologies are likely to continue, and workers and firms that adapt and embrace these changes are likely to outperform those that do not. But a wide-sweeping elimination of trade and global value chains due to automation and robots? Don’t believe the hype.

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The original version of this article was published in The Hill.

ChristineMcDaniel

Christine McDaniel a former senior economist with the White House Council of Economic Advisers and deputy assistant Treasury secretary for economic policy, is a senior research fellow with the Mercatus Center at George Mason University.

This article also appeared on TradeVistas.org. Republished with permission.

maker

The Maker Movement can Flourish Thanks to Trade

The Maker Movement

Life is pretty cushy. We long ago stopped having to make everything we need: forging tools, handcrafting shoes from hides and weaving textiles for clothing. Manufacturers eventually specialized where they had comparative advantage and produced at scale. Specialization led to more trade in goods and services. Today, anything we need can be obtained at the push of a computer button from almost anywhere in the world.

While much attention is being paid to the potential for new technologies to displace manufacturing workers, there’s an interesting phenomenon afoot. Bits and bytes are bringing us back to our “maker” roots by making information and technologies more accessible to everyone. The smallest inventors and producers can integrate into globally distributed production chains and sell into global markets. Basically, trade is providing us the luxury of producing again at a small scale, and it’s the art of inventing nimbly and producing small that just might help us stay globally competitive.

Re-Making our Workforce

“Makerspaces,” TechShops and FabLabs are popping up in cities all over the country and they are playing an increasingly vital role in education, workforce development, entrepreneurship and even revolutionizing advanced manufacturing.

Memberships give hobbyists, tinkerers, students and entrepreneurs alike access to tools, machines and materials to gain experience with 3D printing, CAD/CAM, electronics, robotics, plastics and composites, fabrication, welding, coding and programming, woodworking and more. Students and young workers can be exposed to industrial careers in a relatively low-cost, low-risk environment, picking up skills in weeks — not months and years. They can create portfolios to demonstrate competency in the skills employers require.

By partnering with local colleges and employers, training in Makerspaces can culminate in recognized and portable credentials that prove mastery of a specific skill or set of equipment, enabling companies to develop talent pipelines with less direct investment. Meanwhile, students are not just gaining experience working with materials and machines. They are also putting math and measurement into practice, reading blueprints, and using design software — the knowledge skills associated with modern manufacturing and foundational competencies for a wide variety of jobs that lie in between traditional “blue collar” and executive levels.

TradeVistas- Maker movement graphic

Small Batch Production

“Making” can create new pathways to working at established manufacturing companies, but it is also spawning a resurgence of custom fabricators who are positioned for small-batch or on-demand manufacturing. The current trend of “niche consumerism” is responding to demand for tailored products in small lots, even by the big brands.

Makers can iterate quickly in response to consumer feedback or engage in rapid prototyping to optimize product design. Makers can offer these services to larger firms or they can leverage the resources of Makerspaces to keep costs down and retain control during product development, iteration and initial production of their own invention. The difficulty of communicating well with manufacturers or visiting facilities in China is a common refrain for small entrepreneurs.

Reverse Engineering

Makers and Makerspaces are attracting the attention of major corporations. GE and National Instruments were among the first to emulate Makerspaces to support open innovation on their corporate campuses. Ford Motor Company worked with a company called TechShop to build a world-class Makerspace for Detroit, becoming the facility’s anchor tenant. Affording their engineers the opportunity to cross-pollinate with other inventors and have a freer hand in direct and more rapid prototyping, Ford says that within one year, the company doubled the number of patents the company produced.

Large companies recognize that good ideas can come from anywhere, from hobbyists to amateur scientists and roboticists. Some Makerspaces cater more to small designers and inventors, but others are more like modern-day Edison workshops hosting sophisticated “experiments” employing biotechnology, nanotechnology and additive manufacturing. As such, they have become ecosystems of innovation where individuals, small businesses and large corporations can come together to incubate and accelerate ideas in a decentralized and agile network — emulating the same set of activities and interactions that were once only housed inside the corporation.

Manufacturing Renaissance?

Putting compact versions of industrial tools in the hands of millions more people means that inventors can get a “minimum viable product” out in the world faster and at much lower cost. Small and growing manufacturers can take smaller bets on the market with lower volume commitments or put a wider variety of products out for testing consumer preferences.

Specialty manufacturers that can re-tool quickly are filling an increasingly important role offering “manufacturing-as-a-service.” The Maker Movement encourages innovation through co-creation and crowdsourced designs, rapid prototyping and experimentation with new production processes. Maker facilities enable micro-factories that can service orders from anywhere in the world. Some notable inventions in Makerspaces have even transformed commerce itself. For example, millions of small businesses now use Square to take payments.

Join the Movement

Makers aren’t likely to replace mass production anytime soon, but they are an important source for training the next generation of inventors and manufacturing workers. Makerspaces are poised to drive real economic benefits for cities that embrace and support them. For example, the Brooklyn Navy Yard brings together makers, artisans, and manufacturers. The more than 10,000 people working within the complex generate some $390 million in economic output, supporting an estimated $2 billion in indirect earnings and an additional 15,500 jobs in 2011. According to the Pratt Center for Community Development, it’s a model producing similar results from across the country from Chicago to Minden, Nevada.

The famed Defense Advanced Research Projects Agency (DARPA) has supported a TechShop in Pittsburgh and provides membership for thousands of veterans. With funding from the Department of Labor, the AFL-CIO and Carnegie Mellon University partnered with TechShop Pittsburgh to create apprenticeship programs for workers and to encourage startups to manufacture locally. As Brooking’s Mark Muro has written, the Maker Movement is “a deeply American source of decentralized creativity for rebuilding America’s thinning manufacturing ecosystems…hacking the new industrial revolution one town at a time.”

#Thankstrade

Makers are able to access the materials and tools they need because of trade. Take the 3D printer, for example. The global market for 3D printers, plastics and related services have exploded in recent years. And perhaps one could even be so bold as to say that it’s the expansion of global trade that affords us the opportunity to rediscover and reinvent the art of “making” itself, which could in turn profoundly impact what we make and what we trade.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

2019 Technology Drivers Revealed in Dynamic EMS Report

A recent report from UK’s Dynamic EMS highlights the ups and downs within the supply chain and component manufacturing during 2018. From consistent acquisitions and mergers to an evergreen political environment and increased technology, the report confirms 2018 consisted of more positive than negative outcomes and predicts trends to look out for during 2019.

A key factor identified in 2018 that will impact 2019 is the  involvement with three Chinese companies, YMTC, Innotron (Hefei Chang Xin) and JHICC’s trial production of DRAMs and NAND flash. It’s reported mass production to China’s first domestic chip will occur well into the first half of the year.

EMS landscaping was confirmed with a 5 percent growth in the European regions, based on the 2017 numbers. Dynamic EMS confirmed a total of 6 percent growth in revenue paired with consistent development and customer market wins.

Technology such as Fintech, IOT, BIOT, Augmented Reality, AI, and other automation initiatives are predicted to continue demanding increased development and advancement for operations. Additionally, the company outlined 3D component printing and trade tariffs with China on the forefront for the future of 2019. More specifically, the company will carefully watch China’s involvement as a component supplier.

Source: Dynamic EMS

 

 

ExOne Expands Into Turkey, France and Eastern Europe

North Huntington, PA – The ExOne Company has appointed three new independent sales representatives in Europe for its complete product portfolio, including 3D printing machines, 3D printed products and industrial microwave systems.

The company has appointed HASMAK A. as its independent sales representative in Turkey, Kuttner S.a.r.l. as its independent sales representative in France and BL Metal s.p. as its independent sales representative in Slovenia, Croatia, Serbia, Macedonia, Bosnia and Herzegovina.

ExOne’s business primarily consists of manufacturing and selling 3D printing machines and printing products to specification for its customers using its in-house 3D printing machines.

The Pennsylvania-based company offers pre-production collaboration and print products for customers through its eight facilities in Germany, Italy, Japan, and the US, and builds 3D printing machines at its facilities in the US and Germany.

ExOne also supplies the associated materials, including consumables and replacement parts, and other services, including training and technical support, necessary for purchasers of its machines to print products.

10/24/2014