The effect of automation in Manufacturing in the world

[Spinit]

I ran a whole months worth of parts in about 10 hours using these machines. They are running slowly so they dont make a bunch of mist and I dont have to listen to the noise. Even running slow they paid for themselves in a couple months. I could take on other work but there is no reason to deal with someone beating me up on price and breathing down my neck to finish their stuff. I used to be that guy, I got tired of begging to get work done by job shops.

Yes since you were able and willing to get the machines you discover that in your case it really has become a boom. What got you to this point is also as important. Just the pressure being off of your shoulders helps a lot.Take care of your customers and retain them is where you are and also you now have all of this potential for growth before you.

 

[Spinit]

Automation has marched forward and will continue as long as it is a sustainable investment. Displaced workers must find where they can find a new way to earn a income. The American dream is much effected to the extent that generations of Americans since 1940 are said to be in decline.

Article also says that the word Luck is increasingly used today in connection with the American dream.

Is the American dream really dead?

It is scary when we see that local government will have to give massive tax breaks to attract jobs to a area. What is bad is with money given in tax cuts becomes much more cost than benefit and so the agreement is a huge loss for local government to have money to provide needed services we expect from government.

Some have made the point that these kinds of incentives should be outlawed. That might mean that such Tax breaks and subsidy from government has become a losing arrangement.

 

[plastikdreams]

Automation has marched forward and will continue as long as it is a sustainable investment. Displaced workers must find where they can find a new way to earn a income. The American dream is much effected to the extent that generations of Americans since 1940 are said to be in decline.

Article also says that the word Luck is increasingly used today in connection with the American dream.

Is the American dream really dead?

It is scary when we see that local government will have to give massive tax breaks to attract jobs to a area. What is bad is with money given in tax cuts becomes much more cost than benefit and so the agreement is a huge loss for local government to have money to provide needed services we expect from government.

Some have made the point that these kinds of incentives should be outlawed. That might mean that such Tax breaks and subsidy from government has become a losing arrangement.

It has to be amicable for both sides. Do some cities give the farm away on some deals, most likely...this is betting on other companies to come for lesser breaks. Around here this takes place in the worst areas like Newark, Patterson, Irvington, and the like. Don't hear about it much near me.

 

[Spinit]

I can not blame them really unless it costs way too high to have that arrangement. Taxes vary place to place anyway and the costs of things are different also in different areas. Before even negotiating with a large employer a city may have advantages before any negotiations take place.

 

[Mcgyver]

It is scary when we see that local government will have to give massive tax breaks to attract jobs to a area. .

its not scary, its wrong. Get your fiscal house in order and lower taxes for all (if you think that is the main thing attracting jobs) rather cutting special deals to who ever has 1) lobbied the hardest, 2) contributed to campaigns the most, 3) will lead to the best headline or 4) who simply happens to be a buddy. Its another form of favoritism and corporate welfare; taxpayers should be incensed about this and thinking capitalists everywhere should reject it. I'm creating jobs in my business, working and pay tax so the #$@#% politicians can give it to another company? All so some crooked provincial leader gets the get shovel turning ceremony headline? GRRRRRRR

 

[TDegenhart]

Tax breaks and concessions increase the tax level of the local population.

Tom

 

[CarbideBob]

Tax breaks and concessions should increase the number of people paying taxes, buying things, keeping up property values, supporting local businesses.
If not then yes, a bad investment.

Flint gave all kinds of tax breaks to GM through the 60s, 70's, 80's. and many complained it unfair.
Now we don't have these tax breaks to complain about anymore.
I think things were better in my town when we were giving millions in such breaks, corporate welfare or whatever you'd like to call it.

Very arguably they were not directly paying enough taxes to support the infrastructure they were using and it's cost to the local government.
They were however providing many paychecks that paid all sorts of taxes.
All the concessions in the world would not have changed what happened but the local effect when these non tax-paying entities left can't be denied.

Sort of a death spiral.
Money is needed but fewer to pay in. Higher tax rates are then needed but the population can't pay it.
So a government desperate to work in a budget without cash cuts corners everywhere they can, even on your water supply.
Funding for law enforcement goes down the tubes and the police force shrinks.
The local gangs take over "policing or protecting" neighborhoods. They extract a "tax" of their own for said service.

Looked at with a narrow view such giveaways are bad but it's a very complicated equation.
I'd take a tax free zone any day to have the 80,000 jobs back.
Bob

 

[Mcgyver]

is that a rare civilian promotion of pork barrel politics lol? Think big picture. Politics and gov is supposed to create an environment with all treated equally...not pick and chose. If lower industrial taxes are the key to attracting business, then lower them for all. Hows it not wrong for two businesses, possibly competitors, and one pays all the tax so other doesn't have to be because some government crook pointed the finger at one? What if the mayor who I know came by and gave me zero tax and you the finger, that ok with you? its just complicated?

Next up, what net is accomplished? A tax break isn't creating jobs, its moving them from one place to another. Think of the hardship in the place the plant is leaving because some politician decides to shoulder their tax burden on their citizens in the new place. The net results is NOT new jobs, its broke municipalities and citizens suffering the tax burden; as you described it the death spiral. Just make it illegal to pick favorites, tax should apply equally to all.

Knowing corporate welfare is wrong and that the rules and the law should apply equally to all is NOT a complicated equation. Its when your politicians push that aside and start doling out cash for the headlines that things get complicated. In Ontario there is a provincial law forbidding municipalities from offer tax incentives. It works very well, is never an issue and the economy has been very strong for a long time. The municipalities still compete with each and try to have the lowest industrial taxes, but its by having the lowest cost for all businesses there, not doling out to a select few. (While municipal politicians can't do that here, our past provincial crook sure did. , thats another sad tale)

I'm all for lower tax, but it should not be discretionary. There is a strong argument backed up by lots of evidence that industrial growth tends to happen in places that tax it less. So tax it less if you want industrial growth, but don't play favorites.

Tax breaks and concessions should increase the number of people paying taxes, buying things, keeping up property values, supporting local businesses.
If not then yes, a bad investment.

Flint gave all kinds of tax breaks to GM through the 60s, 70's, 80's. and many complained it unfair.
Now we don't have these tax breaks to complain about anymore.
I think things were better in my town when we were giving millions in such breaks, corporate welfare or whatever you'd like to call it.

Very arguably they were not directly paying enough taxes to support the infrastructure they were using and it's cost to the local government.
They were however providing many paychecks that paid all sorts of taxes.
All the concessions in the world would not have changed what happened but the local effect when these non tax-paying entities left can't be denied.

Sort of a death spiral.
Money is needed but fewer to pay in. Higher tax rates are then needed but the population can't pay it.
So a government desperate to work in a budget without cash cuts corners everywhere they can, even on your water supply.
Funding for law enforcement goes down the tubes and the police force shrinks.
The local gangs take over "policing or protecting" neighborhoods. They extract a "tax" of their own for said service.

Looked at with a narrow view such giveaways are bad but it's a very complicated equation.
I'd take a tax free zone any day to have the 80,000 jobs back.
Bob

 

[Spinit]

is that a rare civilian promotion of pork barrel politics lol? Think big picture. Politics and gov is supposed to create an environment with all treated equally...not pick and chose. If lower industrial taxes are the key to attracting business, then lower them for all. Hows it not wrong for two businesses, possibly competitors, and one pays all the tax so other doesn't have to be because some government crook pointed the finger at one? What if the mayor who I know came by and gave me zero tax and you the finger, that ok with you? its just complicated?

Next up, what net is accomplished? A tax break isn't creating jobs, its moving them from one place to another. Think of the hardship in the place the plant is leaving because some politician decides to shoulder their tax burden on their citizens in the new place. The net results is NOT new jobs, its broke municipalities and citizens suffering the tax burden; as you described it the death spiral. Just make it illegal to pick favorites, tax should apply equally to all.

Knowing corporate welfare is wrong and that the rules and the law should apply equally to all is NOT a complicated equation. Its when your politicians push that aside and start doling out cash for the headlines that things get complicated. In Ontario there is a provincial law forbidding municipalities from offer tax incentives. It works very well, is never an issue and the economy has been very strong for a long time. The municipalities still compete with each and try to have the lowest industrial taxes, but its by having the lowest cost for all businesses there, not doling out to a select few. (While municipal politicians can't do that here, our past provincial crook sure did. , thats another sad tale)

I'm all for lower tax, but it should not be discretionary. There is a strong argument backed up by lots of evidence that industrial growth tends to happen in places that tax it less. So tax it less if you want industrial growth, but don't play favorites.

Sustainability is a big thing. Giving tax incentives for wealthy corporations is in principle defeating the purpose of having taxes is not very fair to wealthy or not businesses. It is like specific tax cuts also like reducing the corporate tax. When this is done it reduces taxes for the whole category equally.

It is endless it seems when started that deciding to make the practice against the law is refreshing in a real way. Sports teams will often move their team to another area if tax cuts provided expire. Each state, city, or locality have advantages and disadvantages such as energy resources, labor, educated workforce and other factors.

California (I like California) has a higher tax rate than many States yet they have a lot of very profitable businesses there in the State. It appears (or could be implied) that higher taxes attracts businesses and maybe highlights a important factor and that is lifestyle or quality of life. How tax monies are spent for the greater good of citizens is very important also and it is a selling point to attract business.

Detroit was very hot for some time yet despite all that money, profits, and high pay the city society declined. A highly responsive government which faithfully serves the public interest is a critical feature of a working society. Corruption will eventually destroy this and so respect and the enforcement of the rule of law is critical. When you mention making it (tax breaks) against the law it makes sense.

Just making tax breaks equal adds real clarity with a law and yet down the road another place may choose to give tax breaks. There must be other factors besides tax cuts which would make different places competitive quality of life being one factor I can think of.

 

[Mcgyver]

You're wading into who and what shouldn't be taxed, a whole different subject and no doubt wll be highly contentious. (btw most economists would say you really can't tax corporations, as all a tax does is reduced retained earnings which at some point down the chain has an individual as it's beneficial owner). My point was much simpler (I'd hope entirely uncontentious) than what category should be taxed, being that fiscal policy should be a framework universal applied based on criteria, not something politicians get to pick and chose which particular entities it applies to ....which is (I think) mostly the case with municipal negotiated tax incentives.

 

[Ries]

Its extremely simplistic to say that industrial growth happens in places that tax it less. That might be true, but only if all other factors were equal- infrastructure, financial system that is regulated enough to be safe and trustworthy, a working justice system, a working transportation network, educated populace, and a dozen other major factors.
But, the thing is, even in the USA, those factors are NOT the same from state to state, or even within states.

So we have plenty of examples of places with low tax rates, but so many other undesirable factors, meaning profitable industries and manufacturers choose higher tax areas because the total package makes it possible to be a more profitable business.

NYC, or California (really, the whole West Coast) or London, or Singapore, or Hong Kong- all examples of places with higher taxes, and yet, are big magnets for business.

Taxes are one factor- but, often, given how low actual net tax rates are on corporations in the USA, often a pretty minor one.
Tax rates are more of an ideological burr under the saddle than a practical concern for most US businesses.
I made more money in Los Angeles, consistently, even though the taxes are pretty high- because there was so much business going on in every field. Most people have no idea how much manufacturing goes on in LA- its enormous. There is a steel mill, and pretty much every kind of manufacturer there you can imagine. Bigger, more professional platers, or anodizers, or sandblasters, than in whole states in other parts of the country.

Certainly individuals, especially retired ones, move more based on tax rates. But Boeing, or Microsoft, or Haas, or a few dozen other of the largest and most profitable companies (and exporters) in the USA still keep building more in high tax areas.

 

[Mcgyver]

Its extremely simplistic to say that industrial growth happens in places that tax it less.

sure, but all things being equal, of course it does. I think its obvious a statement like that implies all things being equal, and equally obviously (i hope) its one of many factors. You're hardly going located your billion $$ company HQ in the Sudan because taxes are 10% lower. Having been in the advisory position to fortune 500's on making those decisions, it as absolutely guaranteed an important factor on where business locate.....along with a list of other criteria.

I guess we're saying the same thing, but a good example of how impactful lower taxes are was the development pattern in the GTA where pretty everything is the same on either side of an imaginary line vs the other, except industrial taxes. There was an exodus to the low tax area.

 

[zoto_solutions]

There are advantage and disadvantages for automation. Its good that everything is automated nowadays it makes life easier and efficient but on the downside lots of jobs for man power industry will be decrease.

 

[Ries]

sure, but all things being equal, of course it does. I think its obvious a statement like that implies all things being equal, and equally obviously (i hope) its one of many factors. You're hardly going located your billion $$ company HQ in the Sudan because taxes are 10% lower. Having been in the advisory position to fortune 500's on making those decisions, it as absolutely guaranteed an important factor on where business locate.....along with a list of other criteria.

I guess we're saying the same thing, but a good example of how impactful lower taxes are was the development pattern in the GTA where pretty everything is the same on either side of an imaginary line vs the other, except industrial taxes. There was an exodus to the low tax area.

Moving 5 miles in the Greater Toronto Area is one thing- but much more common in the USA is a computer assembly firm deciding whether or not to move to rural Wisconsin, or within 100 miles of Silicon Valley, where there are subs who specialize in every obscure factor of computer parts.
Or BMW, deciding between adding capacity in South Carolina, where, over the years, 100 different subcontractor factories have sprung up, versus lower taxes in, say, Louisiana, where everything needs to be trucked in 500 miles.

all things are almost never equal.
Greater Toronto may be one of the very few areas in North America where a 25 mile move gives you everything the same except some (but certainly not all) taxes being lower.

In most cases, industrial development happens in clusters, and is based on easy access to transportation, employees, and subcontractors and suppliers.
The big tax giveaways in the USA have happened in remote, largely rural states, with generally not much else to recommend them besides tax give-aways and cheap, but unskilled, labor.

This has worked in a few cases, usually when a European or Japanese company with a long history of extensive employee training is willing to commit for long term investments- it took close to a decade for each of the Southern US auto making areas to reach the level of support and infrastructure to mean the plants were really profitable. They needed cooperation with glass factories, wiring harness plants, local community colleges, utility companies, and the local government on many levels, much more than just a single, initial tax break, or a lower net corporate tax rate- which, most corporations do not actually pay at all.

It can work when somebody like Amazon wants to build a server farm, which means very few jobs, almost no traffic, and just needs cheap real estate, cheap power, and cheap taxes. Or a distribution center, where you want a few hundred people to pack boxes for the lowest possible wage. Again, no need in either case for much infrastructure beyond a road.

 

[SeymourDumore]

its not scary, its wrong. Get your fiscal house in order and lower taxes for all (if you think that is the main thing attracting jobs) rather cutting special deals to

I don't know if it's really that cut and dry.

What if let's say I as a business owner with perhaps 80% involved in aerospace manufacturing decide that I'm too single sided, and try to break into a different market, medical for example,
and in order to do so I cut my shop rate by 10-20% for non-aerospace work.
Or, what if I find a person who I'd really need and would like to have on the team, and decide to hire him at a considerably higher wage than average, even if it means stealing it from someone's employ?

Now turn this around and look at it from the perspective of a local or state government.
What-if the state has an over abundance of low skilled labor force, but not enough businesses to absorb them.
Or perhaps there is an existing infrastructure that is necessary for the state's current operation - say roads, railroads, ports, shipyards etc. - but it is way under utilized or running a deficit even.
Or perhaps a state decides to increase it's involvement in a specific field - medical, high-tech, aerospace etc. - for the hopes of future growth.

Is it really wrong for a local or state government to take necessary steps towards achieving their goals?
And if the method of doing such is by way of tax incentives, then so what? Who is helping who? Who is being wronged?

 

[Mcgyver]

Is it really wrong for a local or state government to take necessary steps towards achieving their goals?
And if the method of doing such is by way of tax incentives, then so what? Who is helping who? Who is being wronged?

Fiscal policy is key way government achieves its objective, agreed. However policy is just that, a framework that applies too all. What I object to playing favorites, some politician picking an individual firm for preferential treatment over other firms in the same situation. That's not policy, that's pork barrel stuff. i.e. every one occupying an industrial building in municipality X pays Y psf in tax. Some politician shouldn't get to decide one particular company gets to pay 1/10 Y. That's not a policy, that is favoritism.

I don't buy your comparison to a businesses looking at getting into a new market. Businesses are suppose to act in their own interests to the exclusion of others and there is no obligation for equal treatment. Government has an entirely different mandate. Its to establish that framework applying blindly to all, not just to Bob Smith at 123 Industrial Blvd. Business, being out for itself, is free to give Bob preferential treatment, but its the worst slippery slope once we start thinking that's ok for politicians to do. If there was an analogy to business it would be you work for someone else but arbitrarily, at your discretion, and contrary to normal pricing, ring a sale up to someone, buddy, cute girl, whatever at 90% off - should the owner be ok with that?

So long as the rules applies equally to all, no issue. Its when the rules is like this tax break is specifically for Bob and no one else that I have a problem. That's when you move from government making policy to pork barrel nonsense and what I object to. A fiscal policy of say lower industrial taxes or faster depreciation on capital spends, lower taxes for an environmental cleanup etc etc are legitimately policy not pork barrel as they don't have a politician picking and choosing which individual benefits, anyone meeting the criteria is treated equally

 

[SeymourDumore]

I don't buy your comparison to a businesses looking at getting into a new market. Businesses are suppose to act in their own interests to the exclusion of others and there is no obligation for equal treatment. Government has an entirely different mandate. Its to establish that framework applying blindly to all, not just to Bob Smith at 123 Industrial Blvd. Business, being out for itself, is free to give Bob preferential treatment, but its the worst slippery slope once we start thinking that's ok for politicians to do. If there was an analogy to business it would be you work for someone else but arbitrarily, at your discretion, and contrary to normal pricing, ring a sale up to someone, buddy, cute girl, whatever at 90% off - should the owner be ok with that?

I think we'll just have to agree to disagree about the validity of the comparison.

Sure, if Company A, B and C is in the very same line of business, then equal treatment by government is absolutely expected.
If OTOH Company A is say Caterpillar but the state is looking to boost it's presence in the pharmaceutical field, an incentive by way of tax benefits to Company B who
happens to be Pfizer is OK in my opinion.

 

[Mcgyver]

I think we'll just have to agree to disagree about the validity of the comparison.

Sure, if Company A, B and C is in the very same line of business, then equal treatment by government is absolutely expected.
If OTOH Company A is say Caterpillar but the state is looking to boost it's presence in the pharmaceutical field, an incentive by way of tax benefits to Company B who
happens to be Pfizer is OK in my opinion.

I don't know that I at all want a government pulling the strings what business is considered good and what is bad (there is SO much wrong with that) , but what if Rouche was already in the municipality? still ok to give a freebie to Pfizer but charge Rouche full fair? Or are you saying you think it ok to charge real estate taxes based on what industry they are in (vs the characteristics of their industry, i.e polluting polluting or not, retail, manufacturing, office etc )?

R Its a slippery slop when a politician gets to pick and choose like that. Why not instead figure out what fosters and attracts the type business you want and offer it to all rather than one company a politician selects? It works perfectly here. Also, as I said, Its not creating jobs, its shifting them with a clearly negative net result - unfair taxation of some companies while others have a free ride and taxes shifted to citizens and no net increase in anything.

Politicians getting to picking and choose who pays and who doesn't? If m BIL is mayor and says I don't pay but you do, I doubt that would be ok with you? Why? Its much of a stretch as when politicians have that discretion it will get dirty.

I guess i'm am fundamentally opposed to those elected to a democratic government doling money to specific individual firms they arbitrary choose. I don't think its right and I resent paying taxes into that environment.

If we brainstormed we could come up with a long list of legitimate policy items that would likely encourage pharma industry locating there. Implement those, then its blind and applies to all ......and is sustainable - those that move there do so for real reasons vs cash inducement by some politician picking their favourite company.

 

[SeymourDumore]

i'm am fundamentally opposed to those elected to a democratic government doling money to specific individual firms they arbitrary choose to. Its not right and I resent paying taxes into that environment.

.

See, I might be looking at that from a different perspective.
Crooked politicians aside, I am not thinking it's doling money to a specific firm, rather a specific industry or profile that best suits the needs of the particular area or government plan.

In your example, if Roche was already in the state, and the state has so planned that it wants to become a pharmaceutical powerhouse, made investments in the field of training, additional
laboratories etc, then sweetening a deal to convince Pfizer to relocate ... Why not?
Now if Roche pipes up and is looking to get the same or similar deal in order to stay in the state? Well, if that is the means to an end, then so be it and give it to them as well.

Let's not forget that it is a business deal after all with a quid-pro-quo. The State agrees to do X for Company A, who in turn agrees to provide Y for the State, whatever those demands be.

But again, we can simply agree to disagree.

 

[Spinit]

Historically government does pass laws to foster certain needed industries even subsidizing them to a very large extent. This was done for the so called robber barrons and likely it will continue to be the case in the future. It kicks pure capitalism right in the hind. That is the way of things and likely not to change.