Thursday, September 17, 2015

"The End of Chinese Manufacturing and Rebirth of U.S. Industry"

I have never been impressed by China, or scared of it, unlike the hysterical. That's one American disease - to think foreign countries are going to demolish us or take us over.

This is from Forbes and was written by Vivek Wadhwa.


There is great concern about China’s real-estate and infrastructure bubbles. But these are just short-term challenges that China may be able to spend its way out of. The real threat to China’s economy is bigger and longer term: its manufacturing bubble.

By offering subsidies, cheap labor, and lax regulations and rigging its currency, China was able to seduce American companies to relocate their manufacturing operations there. Millions of American jobs moved to China, and manufacturing became the underpinning of China’s growth and prosperity. But rising labor costs, concerns over government-sponsored I.P. theft, and production time lags are already causing companies such as Dow Chemicals, Caterpillar, GE, and Ford to start moving some manufacturing back to the U.S. from China. Google recently announced that its Nexus Q streaming media player would be made in the U.S., and this put pressure on Apple to start following suit.

But rising costs and political pressure aren’t what’s going to rapidly change the equation. The disruption will come from a set of technologies that are advancing at exponential rates and converging.

These technologies include robotics, artificial intelligence (AI), 3D printing, and nanotechnology. These have been moving slowly so far, but are now beginning to advance exponentially just as computing does. Witness how computing has advanced to the point at which the smart phones we carry in our pockets have more processing power than the super computers of the ’60s—and how the Internet, which also has its origins in the ’60s, went on an exponential growth path about 15 years ago and rapidly changed the way we work, shop, and communicate. That’s what lies ahead for these new technologies. The robots of today aren’t the Androids or Cylons that we used to see in science-fiction movies, but specialized electro-mechanical devices that are controlled by software and remote controls. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. And DIY’ers are lending a helping hand. There are dozens of startups, such as Willow Garage, iRobot, and 9th Sense, selling robot-development kits for university students and open-source communities. They are creating ever more-sophisticated robots and new applications for these. Watch this video of the autonomous flying robots that University of Pennsylvania professor Vijay Kumar created with his students, for example.

The factory assembly that the Chinese are performing is child’s play for the next generation of robots—which will soon become cheaper than human labor. Indeed, one of China’s largest manufacturers, Taiwan-based Foxconn Technology Group, announced last August that it plans to install one million robots within three years to do the work that its workers in China presently do. It found Chinese labor to be too expensive and demanding. The world’s most advanced car, the Tesla Model S, is also being manufactured in Silicon Valley, which is one of the most expensive places in the country. Tesla can afford this because it is using robots to do the assembly.

Then there is artificial intelligence (AI)—software that makes computers do things that, if humans did them, we would call intelligent. We left AI for dead after the hype it created in the ‘80s, but it is alive and kicking—and advancing rapidly. It is powering all sorts of technologies. This is the technology that IBM’s Deep Blue computer used in beating chess grandmaster Garry Kasparov in 1997and that enabled IBM’s Watson to beat TV-show Jeopardy champions in 2011. AI is making it possible to develop self-driving cars, voice-recognition systems such as Apple’s Siri, and the face-recognition software Facebook recently acquired. AI technologies are also finding their way into manufacturing and will allow us to design our own products at home with the aid of AI-powered design assistants.

How will we turn these designs into products? By “printing” them at home or at modern-day Kinko’s: shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop, using new manufacturing technologies that are now on the horizon.

A type of manufacturing called “additive manufacturing” is making it possible to cost-effectively “print” products. In conventional manufacturing, parts are produced by humans using power-driven machine tools, such as saws, lathes, milling machines, and drill presses, to physically remove material to obtain the shape desired. This is a cumbersome process that becomes more difficult and time-consuming with increasing complexity. In other words, the more complex the product you want to create, the more labor is required and the greater the effort.

In additive manufacturing, parts are produced by melting successive layers of materials based on 3D models—adding materials rather than subtracting them. The “3D printers” that produce these use powered metal, droplets of plastic, and other materials—much like the toner cartridges that go into laser printers. This allows the creation of objects without any sort of tools or fixtures. The process doesn’t produce any waste material, and there is no additional cost for complexity. Just as, in using laser printers, a page filled with graphics doesn’t cost much more than one with text, in using a 3D printer, we can print sophisticated 3D structures for about the cost of a brick.

3D printers can already create physical mechanical devices, medical implants, jewelry, and even clothing. The cheapest 3D printers, which print rudimentary objects, currently sell for between $500 and $1000. Soon, we will have printers for this price that can print toys and household goods. By the end of this decade, we will see 3D printers doing the small-scale production of previously labor-intensive crafts and goods. It is entirely conceivable that in the next decade we start 3D-printing buildings and electronics.

In the next decade, we will see further advances. Engineers and scientists are today developing new types of materials, such as carbon nanotubes, ceramic-matrix nanocomposites, and new carbon fibers. These new materials make it possible to create products that are stronger, lighter, more energy-efficient, and more durable than existing manufactured goods. A new field—molecular manufacturing—will take this one step further and make it possible to program molecules inexpensively, with atomic precision. The materials we use for manufacturing and techniques for production will be nothing like the assembly-based processes that exist in China—and the U.S.—today.

Even if the Chinese automate their factories with AI-powered robots and manufacture 3D printers, it will no longer make sense to ship raw materials all the way to China to have them assembled into finished products and shipped back to the U.S. Manufacturing will once again become a local industry with products being manufactured near raw materials or markets.

So China has many reasons to worry, and manufacturing will undoubtedly return to the U.S.—if not in this decade then early in the next. But the same jobs that left the U.S. won’t come back: they won’t exist. What will the new jobs be? We can only guess. Autodesk CEO Carl Bass says that just as we have created new, higher-paying jobs in every other industrial transition, we will create a new set of industries and professions in this one. Look at the new types of jobs and multi-billion dollar businesses that the Internet and mobile industries created—these came out of nowhere and changed our lives, Bass says.

Carl Bass is one of the leading authorities on 3D printing and digital manufacturing, and I share his optimism that we will create an era of abundance. But I worry if we will create the new jobs fast enough and distribute the prosperity. Carl and I discussed this at Singularity University a few months ago. And I also discussed China manufacturing with The Economist China bureau chief, Vijay Vaitheeswaran. You can find these videos below.

(Click on the above link to watch the videos.)

8 comments:

Glen Filthie said...

Dammit, Captain Capitalism is smoking the same crud you are!!! It makes me want to vomit with rage when you dirty old hippies corrupt our youth!!! :)

Consider: America's science and technology have truly created the ultimate idiocracy. Look at our leaders. Obama should have been laughed out of the election race before he even stepped into it. Kerry is a joke. You know all about Jeb. Speak to me of automation and factories? Fah - our universities are churning out socialist idiots so fast, we can't find jobs for them. Those diploma mills are graduating grievance mongerers that will sew other seeds of our own destruction: the race and class wars are already in progress. Who can forget the black lady in Ferguson that had her business burned down during that racial chimp-out? I cannot see a viable factory being able to run in black dominated cities. Detroit springs to mind. Because envy is driven by stupidity, most leftists are driven by it. That is why when blacks riot - the first thing they do is attack the successful people and businesses in their very own neighbourhoods.

Although the American Idiocracy can sustain itself on its home grown idiots quite well - it is not content to do so. It is now importing more by the hundreds of thousands from Mexico and South America. These people are also envious and will destroy anyone who succeeds in America just as they did in South America.

America's expanding parasite and welfare class will not sit down and learn how to work 3D printers, CNC machines, microprocessor control systems and all the basic building blocks of the manufactory. A staggering majority of them cannot read or speak fluently. Still more do not have the mindset or the work ethics required to succeed, Bob - it has been bred out of them by entire generations of welfare.

We've seen it any number of times: technology does not trump stupidity.

A.B. Prosper said...

I'm with Glen on this one.

Also if by some miracle we manage to have an automation breakthrough, it will do nothing except make more socialism and idiocy.

Light out factories with robots make goods, robots load them onto self driving trucks, unload them at the store with self checkout

We do dispense with a lot of the labor component of cost but suddenly boom, no one out there to buy them.

This already happened to Japan when they stopped being able to push their goods onto the US. Some of this was cheaper Chinese labor and such but automation is what killed the US market. No good jobs here, less customers for more expensive imports

Its also why something like 40% of the economy is government now. fewer good jobs means either economic collapse or a bigger state. I'll always bet on the latter.

The "market" than becomes SJW's bureaucrats , pensioners and welfare bums, corporate and private,

And the current "solution", more immigrants is suicide for exactly the reasons Glen stated.

In the end we have an efficiency trap.

As for a way out, assuming one had the power, you'd start with mass deportation. I think we could deport 50 million or so.

After that gradually lower the work week, tweak the tax code to favor middle/working class jobs and eventually you'd move to social credit, cut everyone a check.

The population will still decline which is natural and healthy with urbanization. Deal with it.

If that could be made to work and there are a lot of cultural reasons it might not, you'd end up with a basically mostly working class nation anyway,

The Middle dies from a lack of need for them , The poor are lifted up and the rich taxed down.

if we get very lucky, the high levels of efficiency allow the working lass to work pretty well.

if not, as Cappy Cap says "Enjoy the Decline"

Anonymous said...

That's one of the most hopeful articles you've put on your blog in a long time. I was glad to read it.

T Maker said...

Autodesk CEO Carl Bass says that just as we have created new, higher-paying jobs in every other industrial transition, we will create a new set of industries and professions in this one. Look at the new types of jobs and multi-billion dollar businesses that the Internet and mobile industries created—these came out of nowhere and changed our lives, Bass says.


Yes, that's technically correct, but misleading.

An old-fashioned car factory might employ 500 middle-class workers in one town. A 21st century car might employ five middle-class workers in the same town, supported by globalized logistics and perhaps robots.

Going from 500 jobs to 5 jobs is not a huge win for the economy.

Rusty Shackleford said...

"America's science and technology have truly created the ultimate idiocracy. Look at our leaders. Obama should have been laughed out of the election race before he even stepped into it. Kerry is a joke. You know all about Jeb. Speak to me of automation and factories? Fah - our universities are churning out socialist idiots so fast, we can't find jobs for them. Those diploma mills are graduating grievance mongerers that will sew other seeds of our own destruction: the race and class wars are already in progress. "


I'm back in school working on an engineering degree, so I spend a lot of time around college kids who are almost 20 years younger than me. People love to dump on the millennials, but they are good kids in my experience. They had the same indoctrination or worse as what I had in the public schools, so of course they are mostly liberal to some degree. They are at least a lot less nasty and cynical than my generation, and I mostly just feel sorry for them.

Aside from that, I'd just point out that white people in the US aren't really getting stupider, and the absolute number of white people isn't shrinking much. The percentage of whites who voted for a candidate like Romney was actually higher than Reagan got. This had more to do with more whites realizing that democrats and minorities are actively hostile towards them than it did with support for a crap candidate like Romney or his worthless policies. Now four years later we're close to an all out white riot with Trump.

Sure, we'll keep seeing impressive technological stuff happening in the future. Bob is right, though, that the majority of the population isn't likely to play any more a part in it than they did in Silicon Valley. What the hell they will be doing is the big question. And what happens as the technology continues to advance to the point where even more of the population is economically useless? Even if they aren't starving because of welfare and high technology, there's no reason to think that whites won't be susceptible to the same behaviour sink that blacks have been experiencing for half a century. It will probably take a very different form, but the end result is likely to be the same and will not be pretty.



Robert What? said...

Sure, manufacturing may come back to the US. But what does it matter to the average American worker whether jobs are outsourced to China or outsourced to robots? They're still out of jobs.

Rusty Shackleford said...

"Sure, manufacturing may come back to the US. But what does it matter to the average American worker whether jobs are outsourced to China or outsourced to robots? They're still out of jobs."

The best case would probably be some sort of quasi Amish/distributist scheme. If the economy no longer needs 99% of the human population, people must invent a new economy.

Bob Wallace said...

"I spend a lot of time around college kids who are almost 20 years younger than me."

The university I attended when 18 now has a three-story building devoted to engineering. When I was there it was just a department that took up half a floor. There are a lot of students, all Americans.