Factories May Be Coming Back To The U.S., But The Jobs Aren't: McKinsey

Trump effectively owes his election to the promise of bringing factories and manufacturing jobs back to the United States.  His relentless, targeted attacks against the 'Big 3' U.S. auto manufacturers for outsourcing jobs to Mexico was undoubtedly a key reason that he was able to shock the world and win Michigan, Wisconsin, Ohio and Pennsylvania...an accomplishment which has eluded Republicans since Ronald Reagan.

Unfortunately, while factories may once again be making a comeback in the United States, after chasing low wages all around the globe for decades, they're unlikely to bring the jobs with them.  As a new study from McKinsey highlights, if a new factory opens up in the United States you can bet it's only because most of the jobs that used to be performed by humans have since been automated.  Per Bloomberg:

American manufacturing could be poised to rebound as technological disruption shakes up global production chains, but that will offer little relief to displaced factory workers, according to new research by the McKinsey Global Institute.


Now, McKinsey sees conditions changing in a way that could favor U.S. producers: automation is weakening the case for labor arbitrage as wages rise in emerging market economies and developing market residents are coalescing into a new consumer class, among other factors.


While the U.S. could seize on those manufacturing growth opportunities, especially if the government and companies invest to make production more competitive, there are catches. Importantly, production might bounce back without bringing a lot of jobs in tow.


“Even if we rebuild factories here and you build plants here, they’re just not going to employ thousands of people -- that just doesn’t happen,” said report co-author and McKinsey Global Institute Director James Manyika. “Find a factory anywhere in the world built in the last 5 years -- not many people work there.”


Not surprisingly, the biggest beneficiary of the decimation of the America's manufacturing base has been China...which also means they have the most to lose as those jobs get automated.

Value Add


Looking at the likelihood of automation by industry, McKinsey finds that factory employment ranks near the top of the list -- behind accommodation and food services and just ahead of agriculture. Investment in re-training could help employees who are displaced, Manyika said, but it won’t happen overnight.

"It’s a bit of a heavy lift -- in the skilling, the investment in the right places, the right skills -- it’s not going to happen by itself."


Of course, this wouldn't be the first time that economists had prematurely predicted the demise of labor markets due to technological advances:

"We are being afflicted with a new disease of which some readers may not have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment" - Keynes, 1930


“Labor will become less and less important. . . More and more workers will be replaced by machines. I do not see that new industries can employ everybody who wants a job” - Leontief, 1952


Creepy_Azz_Crackaah (not verified) Arnold Thu, 06/29/2017 - 20:42 Permalink

"Factories May Be Coming Back To The U.S., But The Jobs Aren't"True... Dat.I visited the Dogfish Head brewery in Milton DE a while back.  We were brought on an elevated walkway to see the bottling/packaging floor.  I was thinking that there would be a bunch people from the Lucile Ball Show (black and white reruns)where she was on the production line stuffing her mouth with whatever she couldn't get boxed in time.Not one person on the floor.  All automated.Long robot designers/maintenance jobs.

In reply to by Arnold

JuliaS Pure Evil Thu, 06/29/2017 - 23:02 Permalink

You're silly. The game was never about you. You weren't working for your own benefit. You were working for the owner so that he didn't have to. The same owner now got a shiny new toy. He doesn't need you and he doesn't care whether you're happy or not.Private robot ownership for business purposes is possible, but even if you let machines do chores, you wouldn't be able to earn much capital with them, having to compete with bulk production robots possessed by transnational corporations.You wouldn't be able to divert spending or pick resources.As a template situation, say, you bought a gizmo that chops wood and turns it into lumber for you all by itself, start to finish. Would you be able to sell the lumber to others?The first question to ask is whether anyone in need of lumber would buy it from you, instead of getting a lumber-making robot instead. Second question is, if your machine required electricity, gasoline and water to operate (or any combination of inputs), what would be the chances of you having the best rate and availability for every input commodity in order to be able to underprice competition with the machine output? Zero!Morale of the story - owners stay as owners and slaves become hobos. No way to make money in the new world, unless you're already rich and money, like every other machine and machine product are property of yet another owner-cartel that you and I are not a part of.

In reply to by Pure Evil

Is-Be Sonny Brakes Thu, 06/29/2017 - 21:33 Permalink

These companies are sucking their own dicks.

Concisely and poetically put, sir. Who is going to buy their output? Other robots?Your downvoter needs to engage his right hand brain that deals with metaphors. He displays all the maladies covered by Dr. Iain McGilchrist on YouTube. He is not alone, it affects most.Here is his disease being explained at Schumacher college.https://youtu.be/oXiHStLfjP0

In reply to by Sonny Brakes

Dumpster Elite Thu, 06/29/2017 - 20:49 Permalink

"...won't bring back many jobs."
Well, let's see, is "not many jobs" more or less than zero jobs? This article is yet more "How can we take a shit on Trump today?" And who the fuck is the "McKinsey Global Institute?" Why, at one time, they employed Chelsea Clinton...because she is such an amazing employee. That should tell you all you need to know about this bullshit hit piece.

JuliaS Dumpster Elite Thu, 06/29/2017 - 23:44 Permalink

The best job is self-employment. What stands in the way of everyone working for themselves is the education system, which destroyes self-reliance and does it best to prepare kids for non-existing factory jobs. Keep in mind, that the modern school came to us from 17th century Germany and France, where fossil fuel industrialists were beginning to convert cities into manufacturing hubs. School was a simulated mini-factory where kids would pick up literacy (just enough to pull levers), discipline (responding to bells, grades etc.) and it would also give parents a babysitter for the soon-to-be worker, while they themselves worked in factories.Oh, and there's another obvious obstacle to everyone working for themselves - the biggest one. The government! If you're successful, they'll tax that optimism right out of you. They're the biggest enemy of private enterprise - them and the banks which are part of the same organization.People who do the least amount of work in existence - bankers, somehow own everything in existence... and then some, thanks to the interest rates.Solution to all out problems and a way to embrace technological revolution while directly benefiting from it would involve...... many miles of rope and a couple thousand lamp posts.

In reply to by Dumpster Elite

cherry picker Thu, 06/29/2017 - 20:49 Permalink

One of these years, if you don't have permission to be alive, they will do away with you.I see signs of that recurring.We have film, photographs and written words illustrating what happens to certain undesireables less than one century ago.  The gas chamber was engineered to murder as many as possible in a short time.  The propaganda convinced many victims that going to one of these camps would offer jobs and a better way.Like sheep, they allowed themselves to be herded until what was left of them was cremated.Don't think it won't happen again....

FlatEarth Thu, 06/29/2017 - 20:58 Permalink

Then the Fed needs to cut taxes to about 0% and let workers that make under $100K keep all of their money. It's all about the money after the work week. And the labor market will be fine if the Fed Govt stays the frick out of it. Public Unions and Politicians gotta go, they are the biggest welfare recipients in the Nation; they get paid with TAX-PAYER DOLLARS.  All the Wealth that the several government entities steal (via 'taxes and fees"), and feel entitled to,  comes from the Private World; the Public World is a parasite upon the Private World and couldn't exist otherwise. Just look at this gov't-run HealthCare Fiasco -- Just PRIVATIZE the Industry. The Government only knows how to leech and destroy -- they are not Creators.

novictim Thu, 06/29/2017 - 21:11 Permalink

So automation is not slowing down.  But why would you not INSIST on factories coming back to the USA brining with them all the TAX REVENUE?  And it is not as though NO JOBS accompany a HEAVILY AUTOMATED FACTORY! 

Anon2017 Thu, 06/29/2017 - 21:13 Permalink

Robots don't need health insurance, don't take vacations, don't go on strike and don't demand a boost in the minimum wage. But what is good for an individual buiness is likely to cause major dislocations for the country as a whole. 

rejected Anon2017 Thu, 06/29/2017 - 21:25 Permalink

But they break and require expensive maintenance.Robots are also expensive but Uncle Sugar hands out your money to factories that robotize or do other improvements.  They can also be wrote off on taxes for a certain period of years.  WE are helping the corporations eliminate us.Like Solar panel rebates that got people to buy but once the rebates are dropped the market crashed.

In reply to by Anon2017