Interview on the David Pakman Show on the Future of Manufacturing

Recently I had the exciting opportunity to be interviewed on the David Pakman Show on American TV, where I talked about the future of manufacturing, especially in America. Our subjects of discussion ranged from “bringing jobs back,” to the presidential election, to the carbon tax and many more current issues. Here’s the full video and also the transcript:

Transcript of the Interview

Jobs Won’t Come Back from Overseas

David: I’m joined today by Chris Roser, who is a professor of production management, Toyota and McKinsey alumni, and interested in the past, present, and future of manufacturing. He writes on his blog AllAboutLean.com, and he just published a book called Faster, Better, Cheaper on the history of manufacturing. So Chris, I want to jump right in because there’s so much to talk about. First, let’s talk a little bit about your field in the context of the presidential election that we have here in the US. We’ve heard, to varying degrees from Hillary Clinton and Donald Trump, claims about bringing jobs back— manufacturing jobs from other countries, including China and Mexico. Of course, Donald Trump having sent some of these jobs to those countries to begin with, but we’ll ignore that for the time being. My critique has been that many of these jobs no longer exist due to technology and neither candidate is really talking about that. How big of an issue is technology and automation in the field of manufacturing right now?

Chris: It’s a very big issue. The work will come back, but not the jobs. Eventually when we have the automation and the robots to do all the work automated, then of course East Asia and other far-off countries have known a labor cost advantage, so you can manufacture in America too, but it won’t be with people. It will be mostly with robots.

Automation of Design and Engineering?

David: And very often when we think about manufacturing and automation, people’s minds go to factories with robots instead of people, but there’s a sort of further question that I want to explore with you, which is: What about the pre-manufacturing portion, which is the engineering part, right? I think for many people it’s harder to imagine that the engineering part will be automated, but is that also in the future?

Chris: I believe yes. Of course, at some point, we’re talking about opinions, not facts, because it’s the future, but I believe in the future it will also be possible to automate more complex and cognitive demanding tasks like engineering. To me, the human brain is a collection of neurons and signals, and it’s nothing that cannot be simulated or modeled with a computer if the computer will be powerful enough. Right now, it’s not yet, but in the coming decades, I believe it will. About when exactly, people have different opinions. Some researchers say twenty years, others say one hundred years, and some say never, but I believe at one point the computer will be able to do pretty much everything better than we do.

Least Automatable Jobs?

David: There are some tools online that have started to pop up which say enter your job and we’ll tell you how likely it is to be automated or replaced by a machine or a robot or AI in the future. Within the broader areas of manufacturing, what are the least automatable jobs in your estimation?

Chris: The least automatable jobs are probably the jobs where the customer puts value on interaction with humans. If the customer pays not for product but for something to talk to a human being, that’s a job which will probably remain non-automated for longer. And of course, right now many jobs which we have with talking with human beings, they can be automated and already are, like call centers and stuff like that. They’re already heavily automated, but if you go, for example, to a psychologist or something, I’m not sure if a computer would give the same feeling as a machine. But then, maybe I’m wrong.

Sustainable Manufacturing

David: Can we expect significant changes to more environmentally conscious or sustainable manufacturing anytime soon? And I’d also just want to broadly ask you what would that even mean to have more sustainable manufacturing, particularly when we think about the Industrial Revolution being at the sort of center of human-caused climate change on the planet. What would it even mean to move towards environmentally sustainable manufacturing?

Chris: When you say sustainable manufacturing, there are actually three things that need to be sustainable. One is the environment. The second one is relations with people, and the third one is the finances of the company, and in most cases many companies are already squeezed financially. They’ll do environmentally what is necessary, and they’ll do what will in the long run save money, but few companies are doing it just out of the goodness of our hearts. There are some, but for many companies that trust their cost value analysis to see where to put in money to save the environment, where it is forced to by law, and if they do it voluntarily, they often spend more money on advertising their good deeds than on the good deed itself.

Economics of Sustainability

David: So if we were to—I’ll get into some more specific questions in a second—but if we were to say subsidies aside and sort of government incentives aside, generally speaking in the world of manufacturing, is more sustainable manufacturing more expensive typically?

Chris: That’s a good question. It can balance out to plus minus zero. It depends on the exact case. In some cases, when it actually saves money, they’ve done it long ago. Like car makers, they save every piece of scrap metal and melt it down to recycle it because it just makes sense money-wise, so in that respect, sustainability is already good business sense and most people wouldn’t really call it ecologically friendly because it’s just done anyway because it saves money. But other things that cost more money are things which companies are more hesitant with, and I believe it’s a task of politicians and the customers and the population channel to put a pressure to motivate those companies to become more environmentally friendly.

Incentives for Green Production

David: Right, because very often when we think in the US, I think the carbon tax is sort of an example where people say the only way to really incentivize more environmentally friendly behavior is to artificially make it more expensive to be environmentally unfriendly, so to speak. Now what the critics of that idea say is that you’re not considering the cost of the negative externalities of the environmentally unfriendly actions, and I’m wondering, is this even something that we can really fine-tune and do specifically from a financial standpoint? Can we really measure the negative externalities of manufacturing in an objective way, or will there always be disagreement about exactly what the financial value there is?

Chris: It’s difficult to measure financial value and the cost, and also, whenever you put an external influence or external matching on it, companies also try to avoid it or try to find a way out of it, and I’m not even talking about Volkswagen Dieselgate as a particular case. But imagine you’re a company and you’re into logging and you’re seeding new forests. You would’ve done this anyway, but nowadays you probably make a little bit money on the side by selling it as a new tree, as carbon friendly. Even so, it may not grow that many additional trees, but only it looks better for the company that buys the carbon rights from the trees that one company is planting.

More Jobs through Automation?

David: Interesting. The last thing I want to touch on a little bit: I’ve read a few articles and they’re admittedly not backed by the most precise and extensive sort of data, but there have been a few articles I’ve read which suggest that for the US specifically, the move towards automation and robotics and artificial intelligence may actually be good in the sense that, and you sort of alluded to this at the beginning when you said when it’s the machines doing the work, it’s no longer drastically cheaper to have the machines do the work overseas than in the United States, and there’s a possibility—and I have no idea whether the numbers actually bear this out. There’s a possibility that if you move all of the work back to machines in the US rather than people in Asia and other parts of the world, that you might actually bring some ancillary jobs back to the United States. The maintenance of the machines, for example. Maybe some more of the engineering would be brought in-house, or some more money would be freed up for engineering and creative jobs because the machines are now doing the work. Is there anything to that idea, or is it really sort of unreasonable?

Chris: It’s really hard to get solid and reliable data about those kinds of things. Most models are little bit more of a wild guess than an estimate, but I believe in the medium term, it will increase the participation of the workers or it will provide more jobs for exactly the people you mentioned—for the people who maintain, install, and build the robots. There will be more jobs for some in the medium term, and of course in the long run, in maybe fifty or one hundred years, they may get automated too. But it’s in the medium-term that I think will bring jobs back to America which otherwise would have never come back.

Closure

David: Absolutely fascinating. I will remind you the book is Faster, Better, Cheaper. We’ve been speaking with the book’s author, Chris Roser, who is a professor of production management. Thanks so much for talking to us about this.

Chris: Thanks, David.

Comments

Wow, my first TV Interview 🙂 . It was quite exciting, and I liked the conversation. The response with comments on YouTube was also good. I especially liked Timothy O’Brien’s comment: “Outstanding conversation! Please have him back for more I’m amazed at how many comments it has generated.” Well, I wouldn’t mind …

Another comment was on my accent: “I can’t pin down his accent. Alabama or Ireland?” For all of you to know, it is Swabian-German 🙂 .

In any case, I have to work on my camera angle. Surely there must be some tricks to make me look lean and sexy. In any case, go out and organize your industry!