The effect of automation in Manufacturing in the world

[PeteM]

See, I might be looking at that from a different perspective. . .

Seems to me that both you and Mcgyver could be right.

As Mcgyver says, it's hard to justify giving one firm in an industry a break, at the expense of its competitors.

As you suggest, there can be all sorts of policy reasons why we might want to accelerate investment and the experience curve in particular industries; in order to better compete locally or nationally in the years ahead.

 

[Mcgyver]

I think you have be specific. First my objection has zero to do with encouraging an industry. There are all kinds of good ways to encourage say pharma, but real estate taxes were suggested. If that's what you want, just make real estate for pharma X% and Y for everyone else. I think that is terrible idea (for real estate tax!) as, there are better ways to encourage the result you want as it deviates from the spirit and logic of real estate tax methodology, which is well understood,entrenched and more or less far.

However, as a bad policy as that would be (done via real estate taxes), it would be a policy - a set of rules known and open to all. That is hardly what I object to (Which I tried to be clear about, but must have failed.) The objection is politicians picking individual companies for a reward - which btw for the most part is exactly how municipal tax concession are done! A big firm has a bake off with a bunch of municipalities and they drop their drawers on taxes for 10 years for example - its done specifically for that company. i'm surprise anyone would have issue with objecting to that given the unfairness, obvious opportunities for abuse and that nothing is net accomplished job wise.

 

[SeymourDumore]

. If that's what you want, just make real estate for pharma X% and Y for everyone else.

Yupp, that is what I was trying to point out. Targeted incentives based on what is best for the locality.

I think that is terrible idea (for real estate tax!) as, there are better ways to encourage the result you want

Can you elaborate please?
But since I am in the state of Connecticut,...
How can the State of CT encourage Silicon Valley to relinquish it's stronghold on computing tech?
How can the State of CT encourage Detroit to relinquish it's stronghold on automobile tech?
How can the State of CT encourage Texas to relinquish it's stronghold on oil research tech?

In our case, we have UTC, P&W, and we have Sikorsky. We used to have GE-corporate as well.
Hartford CT used to be known as the Insurance Capital.
Why is it wrong if the state of Connecticut decides to build on that heritage ( on it's own accord ) and give freebies to continue said heritage for as long as it can?
And, in the meanwhile saying the hell with oil extraction, coal mining, solar technology, chemical research or whatever else.

 

[Mcgyver]

Can you elaborate please?

I appreciate the polite request - Spinit, this place is improving

I don't think we are disagreeing with an outcome or that government should have their hands tied, its just that how attempt to do this carries real dangers and unintended consequences

Why (imo) its a bad idea to start tweaking real estate taxes based on industry sector. New topic, its not what I objected to earlier, and it would be a legitimate policy, just not a really good one imo.

1)Real estate taxes are an extremely broad tax base, its hard to think to think of a tax with more jurisdictions. It works on two simple principals - charge based on the value, and charge based on the type of use. I think there is simple logic to that, value would roughly equate to ability to pay and use would equate to the impact to the municipality and community. Reason one, it works, its simple, its fair, is understood and given the huge number of collecting jurisdictions, there is a lot of risk tampering with that - law of untended consequences.

Secondly, the huge potential for abuse. If municipal politicians get to pick tax based on industry sector, the potential for abuse is endless. Here's $5000, lower the tax on dog leash manufacturers, Mayors BIL has GM dealership so town lowers the tax on car dealerships starting with G. It would endless and produce exactly the result you don't want - business success based on politics versus the merits of a good business.

Good bureaucracy has to transcend politicians and election cycles. Can you imagine the economic anarchy if businesses developed based on rewards from municipal politicians, and then every four years they changed it up? It would be an economic disaster, decrease global competitiveness (punishing business that are viable while propping others that are not) and have a huge human toll with a big increase in frequency of business failures (as their sector fell out of favour)

The most important reason though is it encroaches on why private enterprise models succeed vs socialist ones. Remember socialist models are those where the means of production are owned or controlled by the state. Giving politicians the ability to financially reward sectors just because they like them, starts to look like an element of central planning control. Business is suppose to succeed based on its merits, efficiency, meeting the needs of market etc, not whether its favour with a politician. Its advantage over socialism is the decentralized decision making. I believe putting that lever in politicians hands contravenes the basic reasons why the system works better than other systems. I shudder at the notion of system where the government will determine hardware is better than software say, let alone that we want an Apple and not a Microsoft. Its not what government is suppose to do.

We see some of the fourth point happening at the federal and provincial/state level. I don't think its right there either (corporate wealfare), but least there are a smaller number of jurisdictions who are (hopefully) a little better than scrutinized than thousands of municipalities.

But since I am in the state of Connecticut,...
How can the State of CT encourage Silicon Valley to relinquish it's stronghold on computing tech?
How can the State of CT encourage Detroit to relinquish it's stronghold on automobile tech?
How can the State of CT encourage Texas to relinquish it's stronghold on oil research tech?

First of all, I the notion of what is a good or bad idea also needs to be viewed in a national context. As soon as you start giving companies money directly to induce a result that would not happen on its own, its a danger sign that that test may fail or at least be on shaky ground.

How would you propose to get those industries? Maybe you can't, maybe its not the best thing to get in any event. But if you want to, imo, the right approach is for jurisdictions to think in terms of the results they want and the characteristics of economic development that provide that, NOT financial inducements to industry sectors or individual firms. That's the only way to have a even playing field and keep the government out of picking ponies and pork barrel hand outs. You as a municipality or state could certainly target pharma, but do so on the merits of your competitive commercial industrial tax base, great school system, educated diverse workforce, and on so on....but keep fiscal policy transparent and even playing field

You might decide you want to attract knowledge bases business with lots of highly paid STEM workers. Brainstorm what those business want and start to figure out how to deliver it .....and in end, who cares what company you get or what sector provided it has the characteristics of the corporate citizen and employer you want?

And, in the meanwhile saying the hell with oil extraction, coal mining, solar technology, chemical research or whatever else.

I'm guessing your issue is with some result or characteristic of having these around? So deal with that, penalize infractions, don't giving drilling licenses or mining permits in any area where it could hurt things (kind of all them), regulate waste etc. I'm not saying what to do, I'm saying there is a very long list of options, with teeth, that do not involve the slippery slope of politicians picking sectors and companies. No one is saying government should not have an active role in this stuff, just that its wrong to do it via tax incentives awarded out by politicians to specific sectors

Why is it wrong if the state of Connecticut decides to build on that heritage ( on it's own accord ) and give freebies to continue said heritage for as long as it can?

Government taxing people to carry on a business not sustainable on its own? yes I see lots wrong with that.

 

[Spinit]

I mentioned the fact that historically the politicians in the United States did in fact get very involved in the building of Infrastructure. The railroads are a fascinating study in this vein. The men who became super rich were made so by their shrewdness in business while others sought out government subsidies some even based upon miles of track laid.

The down side of these subsidies were that the taxpayer was bilked (yet the railroads were completed) and even paid more for train traveling on certain lines whereas others were built with better quality, better chosen course, and for less cost. It highlighted the men who did the job right and did it on their own without subsidies and those who took the subsidies and wasted the money. Those who were ideal had costs per mile lowest. Hind sight is 20/20.

Overall there some some kind of factor which played in, that was known (The benefit of the end result) and that was interconnecting the cities in the U.S. to transportation of people , goods and services.

Land purchase was involved big time and the railroads prospered mightily. It wasted a lot of money because after it was all said and done looking back it became clear the ones who did more miles at less cost and with greater short term profits and long term excelled without subsidies. The men who accepted no money were mad as he++ about their competitors being subsidized because it effected true competition. It is a valid point today.

The whole robber baron era is down right fascinating to me and I can not get enough of it. These were men who delivered energy to the world despite their competitors were subsidized by their governments and also the fact that their oil was superior in quality!

One man had fast ships and connected to Japan and also to China. He increased exports to China which has always been a huge market and still is. The way it went for this man is that government interfered in his success and so that trade did not last.

I understand that finally our trade is said to be highly desired as far as making lots of money. It is about time we were valued more. In my life it has been a decline and it is hard not to remember what happened. I am glad to see the young guys entering the trade who can actually turn a wrench and make something. For their sake I am glad . There is enough business for all countries to continue to prosper and for less developed countries to get involved.

There is still a lot of growth which needs to happen.

 

[Spinit]

Fair taxation has always been a big issue. The fact that the internet was free of the that burden to support growth was a good move.

 

[Spinit]

Today I watched the morning news and again the topic of automation in transportation driver-free transport is a huge focus. It would supposedly save trillions and make transport much safer.

On a lighter note I would not only want tax breaks but also heavy subsidies to compete with Mcguiver.

 

[Ries]

I don't know that I at all want a government pulling the strings what business is considered good and what is bad (

This reminds me of my very first girlfriend when I was a young teenager.
She told me- "Wanting isnt Getting".

What you want, unfortunately, contradicts what every single government in the history of humanity has done- that is, pick winners and losers.
Kings gave concessions to friends, European governments invented the first major companies- like, say, the Dutch East India Company, Hudsons Bay Company, or the Honorable East India Company, and gave those companies exclusive rights, government and military assistance, free real estate, government funds, and in most cases, freedom from competition.

Thats how large capitalist companies began, historically.

Since then, in every single country, there have been special laws, special tax breaks, company and industry specific regulations, government no bid contracts, loans, government banks to support specific companies and industries, subsidies, giveaways, and more.

EVERYWHERE.
ALWAYS.

There is not now, and has never been, a capitalist libertarian paradise where this does not happen.

So, while I sympathize with you wanting and not getting (I did not, in fact, get what I wanted for quite some time in that relationship), I think you have set your expectations a bit high.

Governments, both US and Canadian, as well as States and Provinces and Cities, have always, and will continue to, pick winners and losers.
Everything from selecting a single utility provider and giving them state purchased infrastructure, to setting specific tax rates that vary from company to company, to allowing lobbyists to write laws that benefit ONE single company.

This will change in the USA about the time that AOC gets elected Queen.

 

[CarbideBob]

Companies compete.
Is it wrong for local governments to do do so?
How did we end up on taxes in the question about automation and "the realities of automation in our trade? "
Any hope to steer this ship back on it's course?
Bob

 

[Spinit]

Bob I agree. Taxes and incentives are trailing off. I suppose the things that fill clear immediate needs could be obvious to discuss. These robot parts loaders are interesting things. I have seen a couple of outfits who make them showing how they program the arms to pick up a piece of material and move it to another place.

As far as automation speeding up a shop Programming and QC are areas that always seem to be overwhelmed.

 

[Mcgyver]

Companies compete.
Is it wrong for local governments to do do so?

where do you see anyone advocating they shouldn't? I think and have said they should - with transparency, equality and without prejudice. They also have a different mandate than companies, which should be obvious.

Any hope to steer this ship back on it's course?

Get us back on track with a good question or comment on the subject.....otherwise after 200 posts, its kind of been well flogged and the discussion wanders....

 

[Mcgyver]

No, mostly what government does is NOT pick winners and losers, but create the environment and framework for commerce and business to exist. Nevertheless, Its unclear what the point of all that your wrote is. Of course its gone on in the past and still does, that make it ok with you? You think corporate welfare or that the tax you pay depends on your relationship with a politician is ok? And some here, maybe you, seemingly want to invite municipal politicians in on the action?

We should be opposed to things that are unethical and wrong, the fact that you may never eliminate it entirely not notwithstanding.

This reminds me of my very first girlfriend when I was a young teenager.
She told me- "Wanting isnt Getting".

What you want, unfortunately, contradicts what every single government in the history of humanity has done- that is, pick winners and losers.
Kings gave concessions to friends, European governments invented the first major companies- like, say, the Dutch East India Company, Hudsons Bay Company, or the Honorable East India Company, and gave those companies exclusive rights, government and military assistance, free real estate, government funds, and in most cases, freedom from competition.

Thats how large capitalist companies began, historically.

Since then, in every single country, there have been special laws, special tax breaks, company and industry specific regulations, government no bid contracts, loans, government banks to support specific companies and industries, subsidies, giveaways, and more.

EVERYWHERE.
ALWAYS.

There is not now, and has never been, a capitalist libertarian paradise where this does not happen.

So, while I sympathize with you wanting and not getting (I did not, in fact, get what I wanted for quite some time in that relationship), I think you have set your expectations a bit high.

Governments, both US and Canadian, as well as States and Provinces and Cities, have always, and will continue to, pick winners and losers.
Everything from selecting a single utility provider and giving them state purchased infrastructure, to setting specific tax rates that vary from company to company, to allowing lobbyists to write laws that benefit ONE single company.

This will change in the USA about the time that AOC gets elected Queen.

 

[EmGo]

No, mostly what government does is NOT pick winners and losers, but create the environment and framework for commerce and business to exist.

Maybe in Canada.

Not in the US.

 

[TDegenhart]

No, mostly what government does is NOT pick winners and losers, but create the environment and framework for commerce and business to exist.

I would like to know what and where the dividing line is. US has provided all manner of subsidies for alternate fuels. Solar (who can forget Solaria?), wind, alcohol, public transportation... Even if money is not provided, direct or taxes, talking up a project is support.

Tom

 

[Miguels244]

No, mostly what government does is NOT pick winners and losers, but create the environment and framework for commerce and business to exist. Nevertheless, Its unclear what the point of all that your wrote is. Of course its gone on in the past and still does, that make it ok with you? You think corporate welfare or that the tax you pay depends on your relationship with a politician is ok? And some here, maybe you, seemingly want to invite municipal politicians in on the action?

We should be opposed to things that are unethical and wrong, the fact that you may never eliminate it entirely not notwithstanding.

The us government picks winners all the time.
Railroads, automotive, aerospace...all have had support.
Of course it all pales in comparison to the USA building an entire foreign policy stance based on supporting Standard Oil and its successors.

 

[Ries]

The Canadian government has a history, going back over 100 years, of picking winners and losers. They used to pay steel mills to export, for example.
This was a pretty interesting part of history- in 1908, they were paying Canadian mills to export, and putting huge tariffs on British imports.
Iron Age - Google Books

then, of course, we have the whole Milk price support thing. Which includes government regulating who can produce milk, and how much they can sell it for, as well as the government paying to help market it abroad.

or, the recent Shopify deal wtih the Ontario provincial government giving them the monopoly on online sales of newly legal pot.

But there are dozens of examples going back decades.

The fact is, laws and regulations are enacted, in both the USA and Canada, at least 50% of the time, because somebody pays for them to be enacted. Which is almost always companies and business groups. And for their money, they expect advantage.
Hence, we have the US price supports for sugar, the import export bank, the pentagon (and Jared Kushner) acting as salesmen for Boeing and other military contractors, no bid contracts, laws that cover ONE company in the entire USA, and more.

And, yes, a lot of this affects automation.
The US government has paid for the development of automation, computers, and factory and manufacturing improvements in virtually every field, and has been the sole reason a lot of automation was developed to the point of being commercially viable.
Computers for artillery aiming and codebreaking, when there was no commercial justification.
Waterjets to cut titanium.
The commercial development of carbon fiber.
Satellite phones, GPS, the internet- The basic building blocks of ALL automation were non-profit government programs.


CNC machining as we know it had all the heavy lifting, financially, done by companies that were building the first NC machines for cost plus government contracts- nobody else could afford the price of those early machines.

During WW2, all the airplane fuselages and bulkheads were essentially hand crafted, riveted, and machined on manual mills.
By the mid 50s, the US government, thru the Heavy Press program, automated large size aerospace forging, building 50,000 ton and 100,000 ton presses with taxpayer dollars that eliminated all those manual machining jobs. Automation taking jobs- 1955- now.

Virtually every military aircraft to this day has parts made on those presses, along with most Boeing and Airbus planes.
The US government picked winners in that case- US companies.

If we had not spent tax dollars on those presses, the Russians, the French, and now, the Chinese, were all willing to, and their companies have benefitted.

There are no "private industry" presses of that scale except for ones that the respective governments gave to them in sweetheart deals- Can you spell "Alcoa"? There was a winner, picked by somebody...

 

[akoncurtains]

Yes Off course, The Automation in manufacturing in the world is a really good in all factors because it is making things advance and automatic which is very fascinating. So, the new steps in any field on the basis of equipment's, techniques, safety all are Good.

 

[Spinit]

The Canadian government has a history, going back over 100 years, of picking winners and losers. They used to pay steel mills to export, for example.
This was a pretty interesting part of history- in 1908, they were paying Canadian mills to export, and putting huge tariffs on British imports.
Iron Age - Google Books

then, of course, we have the whole Milk price support thing. Which includes government regulating who can produce milk, and how much they can sell it for, as well as the government paying to help market it abroad.

or, the recent Shopify deal wtih the Ontario provincial government giving them the monopoly on online sales of newly legal pot.

But there are dozens of examples going back decades.

The fact is, laws and regulations are enacted, in both the USA and Canada, at least 50% of the time, because somebody pays for them to be enacted. Which is almost always companies and business groups. And for their money, they expect advantage.
Hence, we have the US price supports for sugar, the import export bank, the pentagon (and Jared Kushner) acting as salesmen for Boeing and other military contractors, no bid contracts, laws that cover ONE company in the entire USA, and more.

And, yes, a lot of this affects automation.
The US government has paid for the development of automation, computers, and factory and manufacturing improvements in virtually every field, and has been the sole reason a lot of automation was developed to the point of being commercially viable.
Computers for artillery aiming and codebreaking, when there was no commercial justification.
Waterjets to cut titanium.
The commercial development of carbon fiber.
Satellite phones, GPS, the internet- The basic building blocks of ALL automation were non-profit government programs.


CNC machining as we know it had all the heavy lifting, financially, done by companies that were building the first NC machines for cost plus government contracts- nobody else could afford the price of those early machines.

During WW2, all the airplane fuselages and bulkheads were essentially hand crafted, riveted, and machined on manual mills.
By the mid 50s, the US government, thru the Heavy Press program, automated large size aerospace forging, building 50,000 ton and 100,000 ton presses with taxpayer dollars that eliminated all those manual machining jobs. Automation taking jobs- 1955- now.

Virtually every military aircraft to this day has parts made on those presses, along with most Boeing and Airbus planes.
The US government picked winners in that case- US companies.

If we had not spent tax dollars on those presses, the Russians, the French, and now, the Chinese, were all willing to, and their companies have benefitted.

There are no "private industry" presses of that scale except for ones that the respective governments gave to them in sweetheart deals- Can you spell "Alcoa"? There was a winner, picked by somebody...

The industries subsidized were deemed critical to National interests and so government can bring to bear money to support it. As a rule it must be done on a case by case basis and fall to those who have responsibilities where they can do this. It does not always work very well as far as being cost effective.

Things like special interest and also corruption are always things which make the whole deal bad. It underlines the need for good government with checks and balances in a world where governments are effectively playing this high stakes game. There will always be great businessmen who achieve in spite of these factors and they are the ones who amaze. That is the best way encouraging true competition.

Granted there are so very many advancements in automation and tech which were not possible without the commitment of the government. For these types of tech the tech itself was very likely a secret one that the private sector would not understand or would feel was not a good investment.

 

[hanermo]

The US tax policy stuff and local gov. allowances is definitely relevant.
I think the system is broken, myself, but ..

Re: automation think of apple iphones.
(I posted this elsewhere).

200M++ units per year, ordered in advance by apple.
65 machining ops per case.
Video online, yt.
Milled.
Lasered tiny holes for light to come out of leds, maybe 200 holes size human hair.

The 6$ cost foxconn gets for work, 9$ total, means == 6.5/65 == 0.10$ per-op machining cost@20% profit.

Looking at the videos, thinking of You (us, anyone) machining an alu case to exacting aerospace tolerance for 0.10$.
No way.
A lot of the ops are quite slow, sandblasting, milling, many.

My opinion / pov is that like PCs in the past, IT in the past, internet operators => users in the past, automation scales up to near-zero marginal costs per unit per operation.
This is generally good as in goods get much cheaper to make, and can be "better" technically.

It is much better to have automated trucks delivering goods, vs drivers.
Robo-taxis at 1/10 the cost for 5$ to the airport vs 50$, etc.
To the economy, companies, and consumers.

But what will we do with the truck drivers, taxi drivers, excess machinists ?
The machinists will mostly be ok, but should they then pay for the truck drivers, taxi drivers, and endless similar manual workers pensions at 45 yo ?

Should we allow the corps who automate everything to make excess profits, and use them to pay off shareholders, while the remaining machinists and high-skills or high tech workers pay for the pensions the others already paid for but did not get ?

E.g. GM workers paid for their pensions, 30-40 years.
The money was not safely handled or stored, GM and big auto looted it.
The GM worker laid off after 20+ years has a right to the pension, that his salary was garnished for, for decades.

E.g.
Truckers / taxi might not have pensions.
But they (taxi, or big rig trucker) might have a value in the medallion aka permit, of 400k$.
They paid off a 300k loan over decades.
Is it right to take this away, after they paid taxes for 30 years ?

I don´t have an "answer" as such.

But I think "no-automation" is silly, as is no-benefits for those displaced.
Where the GDP benefits from the automation, a slice of it should, imo, be allocated to benefit those disadvantaged.
It is also much cheaper to cure in advance than treat later, by about 20x.

 

[Spinit]

The US tax policy stuff and local gov. allowances is definitely relevant.
I think the system is broken, myself, but ..

Re: automation think of apple iphones.
(I posted this elsewhere).

200M++ units per year, ordered in advance by apple.
65 machining ops per case.
Video online, yt.
Milled.
Lasered tiny holes for light to come out of leds, maybe 200 holes size human hair.

The 6$ cost foxconn gets for work, 9$ total, means == 6.5/65 == 0.10$ per-op machining cost@20% profit.

Looking at the videos, thinking of You (us, anyone) machining an alu case to exacting aerospace tolerance for 0.10$.
No way.
A lot of the ops are quite slow, sandblasting, milling, many.

My opinion / pov is that like PCs in the past, IT in the past, internet operators => users in the past, automation scales up to near-zero marginal costs per unit per operation.
This is generally good as in goods get much cheaper to make, and can be "better" technically.

It is much better to have automated trucks delivering goods, vs drivers.
Robo-taxis at 1/10 the cost for 5$ to the airport vs 50$, etc.
To the economy, companies, and consumers.

But what will we do with the truck drivers, taxi drivers, excess machinists ?
The machinists will mostly be ok, but should they then pay for the truck drivers, taxi drivers, and endless similar manual workers pensions at 45 yo ?

Should we allow the corps who automate everything to make excess profits, and use them to pay off shareholders, while the remaining machinists and high-skills or high tech workers pay for the pensions the others already paid for but did not get ?

E.g. GM workers paid for their pensions, 30-40 years.
The money was not safely handled or stored, GM and big auto looted it.
The GM worker laid off after 20+ years has a right to the pension, that his salary was garnished for, for decades.

E.g.
Truckers / taxi might not have pensions.
But they (taxi, or big rig trucker) might have a value in the medallion aka permit, of 400k$.
They paid off a 300k loan over decades.
Is it right to take this away, after they paid taxes for 30 years ?

I don´t have an "answer" as such.

But I think "no-automation" is silly, as is no-benefits for those displaced.
Where the GDP benefits from the automation, a slice of it should, imo, be allocated to benefit those disadvantaged.
It is also much cheaper to cure in advance than treat later, by about 20x.

Yes pensions are not really protected. Add t that they are now very rare. 401K's could be a lot better as can be Social Security. Automation advances will be amazing.