What Robots Mean for the Future of American

What Robots Mean for the Future of American Manufacturing

Industrial automation offer more than just labor saving productivity. According to industry insiders, can bring jobs back to the U.S., improve factory productivity, and help manufacturers adapt to changing consumer preferences. It seems there is nothing can’t do.

Ulrich Spiesshofer, CEO of ABB, is excited about the potential for reshoring—bringing manufacturing back to the U.S. from low cost countries. He thinks automation technology can help U.S. factories get production costs to Chinese levels. “[Reshoring] is happening now,” Spiesshofer says. “We are with smartphone manufacturers to bring back jobs to the U.S.”

He declined to say which smartphone manufacturer he was referring to. When Barron’s asked

(AAPL) about assembling iPhones in America, Apple representatives said the company spends $50 billion annually in the U.S., but wouldn’t comment on its long term manufacturing plans. Most iPhones are currently assembled in Shenzhen, China. Apple’s partner
Hon Hai Precision Industry

(2317.Taiwan), also known as Foxconn, has broken ground on a plant in Wisconsin that is supposed to build smartphone displays.

But how can robots save American jobs if the Chinese can just adopt the same technology? The answer lies in relative wage rates. The robot costs the same for Chinese and American alike. That shrinks the Chinese labor cost advantage. The average U.S. factory worker makes about $16 per hour. That rate in China is more like $2 to $4 per hour.

(ABB) global head of robot systems Mike Larsson told Barron’s on a tour through the company’s Auburn Hills facility in Michigan. Changing consumer attitudes mean that manufacturing has to adjust to a lower-volume, high-customization paradigm. That’s a shift from the high-volume, low-customization demands of the 1980s.

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If the “paradigm shift” feels abstract, think about the action figures you played with as a child. One body type with different hair painted on. Today, our kids enjoy a greater variety of toys at the same (or even a lower) price. Variety is a for manufacturing enterprises.

Or consider that in General Motors’ (GM) Orion, Mich., factory, the company makes electric Bolts, gas powered Chevy Sonics, and Cruise autonomous test vehicles. “Flexibility is key to getting fixed costs down so we can make all these different products on one assembly line,” says GM director of global manufacturing engineering integration Dan Grieshaber.

Robotic technology is also at the forefront of the push for smarter factory assets—or the Industrial Internet of Things.

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