Three very clear trends will transform manufacturing in the coming years. Additive Manufacturing changes the fundamental ways parts are designed and created. Connected devices make operations more visible and expand the ability to run operations remotely. Automation and robotics refashion jobs as costs plummet and capabilities explode. These clear and unstoppable trends will impact all of us.
The McKinsey Global Institute (MGI) just issued an expansive new study on automation, “Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation.” The report examines employment changes across 800 occupations in six benchmark countries. They identify the content in each of those occupations that is most susceptible to automation and estimate its overall impact on those positions. MGI analysis shows that up to 32% of the workforce – some 166 million jobs – may be affected by automation and force shifts to new occupations. This issue affects all of us – not just those in manufacturing.
According to MCI, the speed of these changes depends on four factors: wage levels, demand growth, demographics, and the mix of sectors and occupations within the larger economy. Areas with higher wages can build a stronger business case for automation. The strength of economic growth and the proclivity for innovation create additional product demand that also spurs the case for automation. Regions with declining workforces and an aging population make automation easier to justify. Finally, economies with a mix of sectors and occupations most susceptible to automation can expect to see rapid change. The U.S. – and especially a state like Wisconsin – ranks high on all four dimensions and will be at the forefront of operational automation.
We’re in the crosshairs of automation change and we need to shift our focus to the most vital issue. No, it’s not lost jobs. It’s worker redeployment. Labor markets always adjust to technology shocks and this time will be no different. The MGI report agrees with the historical precedent that there will be new jobs for people to fill. We will have jobs and the displaced people needed to fill them. Therefore, our support systems must shrink the time it takes to redeploy these workers and minimize the transition friction that could cause the economy to falter and wages to stagnate.
Unfortunately, our traditional educational models and institutions are not set up to meet the challenge. Michael Chui, one of the MGI study authors said it best: “We do a good job educating people during the first 20 years of their life and a terrible job after that.” I agree. Don’t worry about our kids. They understand this technology and the need it creates for lifelong learning. The real issue surrounds retooling old dogs like me; providing on and off ramps for us to engage the education system as we need to rebuild and refresh our skills. Our present education paradigm doesn’t provide for these needs, and it certainly isn’t fast or flexible enough to respond to these new challenges.
If we’re going to succeed in this new environment, we need to change this paradigm and it will be up to business to lead the effort – not just for the greater good of society – but also for their own self-interest. Companies will need more effective redeployment of displaced workers to grow their businesses because the limited labor supply makes it necessary to engage all available workers.
Early efforts look promising in Wisconsin manufacturing. Leading manufacturers partner with our technical colleges, targeting critical needs and developing quick, targeted responses. These efforts become even more effective when backed by a bit of public funding and strong local support. Successful initiatives led by industry focus on critical, immediate needs and new ways to address them.
It’s a good start. Still, we must become quicker and more flexible. The earliest initiatives focused on chronic issues facing manufacturing operations, like the shortage of welders. The new economy will make new demands as we shift from lower-skill to more technical skill jobs and create new jobs that don’t exist today. Automation acceleration makes it even more critical to identify and quickly react to these opportunities. Company leaders must engage in catalyzing solutions that reduce transition friction.
Companies that want their organizations to survive and thrive must shape and lead these efforts. Talented workers will become the scarcest resource as Baby Boomers retire and workforce growth stagnates. Under these constraints, we will need to engage every able body to keep the economy healthy and growing. Treating workers as expendable components will no longer work. Plus, the next wave of displaced workers is likely to be older, requiring a different approach than most organizations can currently execute. We cannot afford to lose their experience and expertise. This challenge requires industry to lead a fast, flexible private-public coalition to minimize transition friction.
Are you engaged? It doesn’t matter who you are or what you do. If you are doing what you’ve always done, you’re falling behind. Feeling comfortable? If so, then you’re probably missing something critical and are at-risk. Engaged leaders are working tirelessly to transform the future and it’s bound to impact you. This situation reminds me a bit of the old gambler’s saying, “If you don’t know the easy mark at the table, it’s probably you.” Something similar is true now. If you don’t know how you will personally transform the future, you’re already obsolete.
It’s time to jump in, engage and stretch your limits so you can make progress. Stay comfortable at your own peril!