Ford’s decision to stay in Michigan: good for U.S. workers, or robots?
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Ford’s decision to stay in Michigan: good for U.S. workers, or robots?

President elect Donald Trump has been a frequent fixture of the news cycle ever since he announced his bid for Republican nomination. As he gets closer to his White House tenure, that hasn’t changed. One of the most recent stories concerning the future Commander in Chief involves (as is often the case) Twitter.

In short, the media reported that a series of targeted tweets from ‘The Donald’, in his own inimitable style, dissuaded Ford Motor Co. from investing $1.6 billion in Mexico. Instead, the company (who flat out deny that Trump’s attention caused any reconsideration on their part) has opted to pump an additional $700 million into its domestic operations in Michigan. That’s great for U.S. jobs… right?

The Rise of the Robots
Worldwide annual supply of industrial robots in thousands of units

SOURCE: International Federation of Robotics

According to Ford, this domestic expansion will lead to 700 new jobs on U.S. soil – one for every $1 million invested. Either Ford has the best-paid staff in the world, or it’s got other plans for a big chunk of that money. Common sense dictates the latter.

According to the International Federation of Robotics, the auto industry is industrial robotics’ “most important customer”. It’s bought 40% of total global output from these machines, and, between 2010 and 2015, these sales have increased roughly 20% per annum.

Mark Gilbert, writing in Bloomberg, gives a clear explanation of why that’s the case:

‘Employing a human welder in a factory in the U.S. costs about $25 per hour including benefits, according to a 2015 study by the Boston Consulting Group; that drops to just $8 per hour for a robot, including installation, operating costs and maintenance. By 2030, "the operating cost per hour for a robot doing similar welding tasks could plunge to as little as $2 when improvements in performance are factored in," BCG said.’

In the short term, as many commentators, from Elon Musk to Oxford University researchers, have noted, things look a little dicey for low-skilled workers. How long before robots are better refuse collectors and waitresses than humans? China already has factories staffed entirely by robots; Carnival Cruise Lines has a robot bar tender on one of its ships; in Japan, ‘carer robots’ for the elderly are a real thing.

But it’s not just low-skilled physical workers who risk being left out to dry by automation. Martin Ford’s ‘Rise of the Robots’ – winner of the Financial Times / McKinsey business 2015 book of the year award, notes:

‘While lower-skill occupations will no doubt continue to be affected, a great many college-educated, white-collar workers are going to discover that their jobs, too, are squarely in the sights as software automation and predictive algorithms advance rapidly in capability. Employment for many skilled professionals -- including lawyers, journalists, scientists, and pharmacists -- is already being significantly eroded by advancing information technology. They are not alone: most jobs are, on some level, fundamentally routine and predictable.’

Disclosure
Dominion holds a number of companies involved in the trend towards automation and robotics in its Global Trends Managed Fund. 



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