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The Future of Manufacturing

The decline of manufacturing jobs due to automation and the growth of outsourcing may paint a dire picture of the future American workforce, but as we’ve noted before, innovation offers the potential for substantial upside as well. The Economist points to some of that promise:

Ask a factory today to make you a single hammer to your own design and you will be presented with a bill for thousands of dollars. The makers would have to produce a mould, cast the head, machine it to a suitable finish, turn a wooden handle and then assemble the parts. To do that for one hammer would be prohibitively expensive. If you are producing thousands of hammers, each one of them will be much cheaper, thanks to economies of scale. For a 3D printer, though, economies of scale matter much less. Its software can be endlessly tweaked and it can make just about anything. The cost of setting up the machine is the same whether it makes one thing or as many things as can fit inside the machine; like a two-dimensional office printer that pushes out one letter or many different ones until the ink cartridge and paper need replacing, it will keep going, at about the same cost for each item. […]

The wheel is almost coming full circle, turning away from mass manufacturing and towards much more individualised production. And that in turn could bring some of the jobs back to rich countries that long ago lost them to the emerging world.

New technologies like 3D Printers and the others mentioned by the Economist could make it economical once again to produce customized, individual products much like craftsmen and cottage industries did before the Industrial Revolution. Also, by reducing labor’s share in the cost of production, these technologies could move factories back to rich countries, where they can react to changes in the domestic market more quickly than they could offshore.

The factories of the future will look very different from what we’ve become accustomed to, but they will be better: cheaper, faster, and more customizable to the needs of a rapidly-changing economy. And many of them will be built right here in the U.S. Declinist naysayers take note: rumors of the demise of American manufacturing have been greatly exaggerated.

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  • DirtyJobsGuy

    Remember “Books on Demand”? This was supposed to be the next great thing, but who wanted a poorly printed book for almost the same price. eBooks supplanted most book options today but the product remains from a fixed design. Your hammers on demand would likely still be much more expensive than conventional (but optimized) production. For things more complex than the hammer, paradoxically the design, testing and documentation of the product will force a more or less standardized product. This does not lend itself to one-off production.

    But look today at simple things like Shovels. High end shovels (there is such a thing) cost $40-80 and are mostly made in USA or Canada. Low end stuff is made in Mexico or China and sell for $20. Apple products have very little manual labor involved (single boards automatically fabricated in precision cases). They are in China because of US slow moving bureaucrats, confiscatory taxes and excessive environmental regulations.

  • Mapper @bigskyideas

    I have to admire your optimism, which is also admittedly supported by two hundred years of history. But 3D-printers are just as likely to move a lot of production out of the market and back into households. Who needs to buy from the factory if you can use a domestic 3D printer to produce something much more tailored to your own tastes at home? As costs of 3D printing fall, much manufacturing will go the way of travel agencies. You do it yourself, instead of paying others to do it for you.

    And importantly, as the historian Joel Mokyr argues, much of the reason factories developed in the first place was because the skills and knowledge needed to produce goods were beyond the ability of households to cope with in the 19th century. Factories facilitated sharing of information. Now with Google and cheap intermediate technologies, that doesn’t apply so much. As an example, my little iPad is more useful than vast hot metal newspaper printing presses of the last century, because I can distribute with a mouse click. I don’t need a sophisticated knowledge of picas and linotype and newsprint prices. Household production is easier and barriers to entry plunge.

    Most of all, though, as society gets richer the nature of needs is likely to change, away from the rivalrous, excludable goods which are easily sold in markets. The upper end of Maslow’s hierarchy of needs – connectedness, self-actualization, purpose – are harder to handle in markets because they are not easily attached to property rights. As we satisfy basic needs through the remarkable efficiency of capitalist production, those higher levels of needs and demand become more salient. And problematic from a marketing point of view.

    So even if new needs will arise, they may not work that well with our current consmer demand or labor market institutions.

    I love your blog, but the big point I think you miss is the nature of needs can change over time..

  • Jacksonian Libertarian

    And the Star Trek replicator is born “Earl Grey Tea Hot”. “My Tricorder reads that it is identical to Earl Grey Tea Captain, all the way down to the molecular level.”

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