When President-elect Donald Trump took credit for keeping Carrier factory jobs in Indiana, the victory came with a major downside. Carrier is still sending hundreds of jobs to Mexico, and a top executive in its parent company let slip that it would use a taxpayer bailout to finance an automation plan for its Indianapolis facility. That will result in additional, significant job cuts in just a few years.
Though painful, the Carrier episode has drawn some much needed attention to automation, a manufacturing trend of historic proportions that is already transforming labor markets. Saving a few hundred conventional factory jobs here and there will not help millions of US workers find — and keep — steady employment as this trend continues to take shape and accelerate.
Automation And The Department Of Energy
Recognizing that automation is a global, irreversible trend, the Obama Administration has been providing US industry with an R&D platform for transitioning to advanced manufacturing systems and relatedly, advanced materials.
Much of this programming funnels through the Department of Energy’s Advanced Manufacturing Office. It’s a natural fit because energy efficiency is a critical element in the industrial sector.
The news of the Carrier debacle was still fresh last week when, as if on cue, the Department of Energy announced that it would make another $35 million available for manufacturing R&D projects.
The new advanced manufacturing funding opportunity is aimed at “breakthrough” technologies in the early stages of R&D, so don’t expect to see these in your local industrial district any time soon.
The goal is to provide US manufacturers with a leg up on commercializing the next generation of cutting edge systems.
The primary focus is on saving energy, but take a look at the three main topic areas and you can see how energy efficiency dovetails with automation and other advanced systems:
1: Advanced Materials – This topic area focuses on advancing innovative materials and the devices and systems that incorporate them for energy-saving opportunities and improved functionality.
2: Advanced Processes – This topic area focuses on advancing transformational, next-generation process technologies with the potential to significantly exceed the current state of the art.
3: Modeling and Analysis Tools for Materials and Manufacturing – This topic area focuses on optimizing how manufacturers use energy and materials across the lifecycle of their products through information technology and knowledge systems
Laying Plans For Next-Generation Manufacturing
If that all sound a bit mysterious, there’s a reason for that. The funding is being made available through the Office of Energy Efficiency and Renewable Energy (EERE), which describes itself as “an organization focused on achieving aggressive and well‐defined mid‐to‐long term clean energy goals for the United States of America.”
EERE’s success lies in its focus on identifying emerging pathways that have a high probability of success, and providing financial support to help accelerate them.
That “roadmap” strategy provides for the most efficient use of taxpayer dollars for the here and now, but it has not enabled EERE to promote technologies that leap into the future:
The U.S. Department of Energy (DOE) Although this roadmap‐based approach is one of EERE’s greatest strengths, it can create challenges in recognizing and exploring unanticipated, game changing pathways and approaches which may ultimately be superior to those in our existing portfolio.
So, with this new round of funding, EERE is doing something different, looking to find new partners for new technologies that show potential for hooking up with its more traditional approach.
New Life For US Steel Industry
Steelmaking is a good example of a US industry that has been clinging to life since the 1970s, partly with the help of significant productivity improvements. The Energy Department still sees room for growth, and it has made the steel industry a particular area of focus in the new funding opportunity:
…in steelmaking, recent advances in novel steel compositions, heat treatment processes, casting techniques, and refining methods have shown that significant innovations are still possible in steelmaking despite the high maturity level of this metallurgical system. Of particular interest, applications are sought to develop and demonstrate new advances in both clean energy manufacturing processes and product development for energy efficiency in steel and iron alloys.
Electrical conductivity, thermal energy conversion, atomically precise manufacturing and advanced catalysts are among the other topics of interest.
The Energy Department is also looking for systems that deploy hydrogen as a means of reducing greenhouse gas emissions from the manufacturing sector (that goal is made possible by the emergence of renewable hydrogen).
Rise Of The Machines
The new funding opportunity also incorporates machine learning into the advanced manufacturing mix:
Machine learning is a cross‐section of computer science, statistics, artificial intelligence, and mathematical optimization. Applying machine learning techniques to the factory floor can enable increased accuracy in decision‐making and improvement in performance.
The aim is to help manufacturers use their existing facilities more efficiently, as an alternative to making economically unsustainable investments in new equipment.
Machine learning is going to become a critical factor moving forward, as the factory of the future invests more on machinery and less on labor:
Manufacturers are faced with lots of data which needs to be analyzed effectively, while making improvements via large investments in new machinery may not be economically viable. Machine learning offers a promising way for manufacturers to address these issues as they are in an excellent position to employ learning techniques with their massive resource of historical production data.
In addition to seeking out energy efficiency improvements, EERE is looking for improvements that “enable a game‐changing technology or production advancement.”
For (many) more details check out the full funding opportunity announcement (under “Advanced Manufacturing Projects for Emerging Research Exploration“).
The Inevitable March Of Technology
Unless US consumers are willing to pay a premium for American made goods on a mass scale — and they have never shown such an inclination — US manufacturers will continue to send jobs into Mexico and other low-cost labor markets.
The alternative is to cut wages, a strategy that clearly has limits. One recent example is another Indiana manufacturer, Rexnord. The company demanded and received wage concessions several years ago, but it began firming up a plan to close its 350-job factory this fall, right around the time that the Carrier episode began to heat up.
Despite a tweet of outrage from the President-elect, Rexnord finalized its plans earlier this month (oddly, or not so oddly, the Rexnord case has created barely a ripple in the media compared to the hoopla over Carrier).
The other alternative is to create more efficient systems, and that’s where automation comes in. The jobs can come back, though in fewer numbers, as illustrated by the case of Whirlpool.
Whirlpool cut thousands of jobs after merging with Maytag a a few years ago, and sent hundreds of manufacturing positions to Mexico. More recently, Whirlpool brought 80 or so manufacturing jobs back to a newly upgraded factory in the US.
Whirlpool cited the modernization along with low utility costs and a savings on shipping to US customers as factors that offset relatively high US wages.
Factory owners have been squeezing out labor in favor of productivity ever since the beginnings of the Industrial Age. The age of automation and advanced materials is just the latest iteration of a very long trend.
The question is whether or not the incoming Trump Administration has a plan helping US business to keep up with the times.
The answer will come soon. The new $35 million round of funding is contingent upon, well, funding after Trump takes office in January.
Photo (cropped): US Department of Energy.
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