tooling up rather than hiring

[kpotter]

I have been wondering if manufacturing companies have been investing in new machines rather than hire more people. If you hire an employee you have a cost if you buy a machine you get a deduction plus an asset. If they invest in faster more efficient machines they need fewer people which means more profit. I was at a small machine shop that makes some welded products and I couldnt believe how cheap they were I figured that even with the cheapest welder on the planet you would need to charge alot more than they were when I went in the back they had 3 robots welding and one loading and a shop monkey bringing the parts to the loader. This is a small manufacturer and is owned by a guy in his early 30s.

 

[jim rozen]

If you dig a bit you will find the NY times article from, I think saturday, that had
that exact topic. Manufacturing sites buying equipment instead of hiring, for
exactly that reason. Keepin payrolls and personel costs down.

There was another article on that same day about how the stock market was
tanking because a) consumer confidence was down, b) unemployment was rising,
c) consumer spending was down, and d) the housing market was nose-diving again.

Oddly the NY times did not seem fit to "connect the dots" between the two articles.
Seemed funny to me, they're smart folks, in the news biz and all. But apparently
functionally blind in some ways.

 

[MBG]

Why Companies Are Buying Equipment, Not Hiring People - NYTimes.com

 

[cmailco]

You don't have to pay health insurance to robots...

On a more serious note, there was a rather provocative article --maybe a year ago-- about how some companies are more profitable now, with fewer employees, than they've ever been. I believe one of them was Harley Davidson.
By being leaner and investing that money in automation, some companies have found they can service a smaller group of the more affluent and do so profitably.

Doesn't exactly create much incentive to employ more people now does it.

 

[kpotter]

I just read that artical very interesting. I wish more stuff would be written about this

 

[jim rozen]

Yes that was the one - thank you for posting the non-nyt link, as these days you
have to pay to access their stuff directly.

 

[Ox]

If you hire an employee you have a cost if you buy a machine you get a deduction plus an asset.

Biziness financing 101 via Oxman:


They are both a deduction of same value. Although the machine cost may be ammoritised over up to 7 yrs as opposed to annual payroll expences.

Pro: The asset remark can be true. (but not always)
Con: You can't lay off the equipment.

Wildcards:
1) If the market tanks (been there a cpl times in the last 10 yrs) you can lay off the employees. (Didn't have eny employees during either tank.)

2) You cannot "lay-off" the equipment without at the very least messing up your credit, and possibly losing it all.

3) When the market tanks, the equipment that you have 70% payed off may not fetch even 30% original value enymore doo to extreem downturn. I HAVE seen this scenario all too much in the last 10 yrs! The more generic the equipment - the less likely to git pinched tho. ???


Reality is that employing is safer for the short term. Likely will make you non-competative in the long run. One could run you outta biziness in the short term. The other WILL run you outta biziness in the long term.

When you decide to invest in that big purchase - it will likely make you very vulnerable in the immediate term. As time goes you can git a wee bit of breathing room. It is not 100% guaranteed, but the likelyhood is high that if you always are on the edge of falling off - eventually the market will crash while your looking over the edge.





On that note tho - I will say that I alone with enough equipment have grossed the same annual sales for many yrs now as I did when I had 3 full time guys running O/T continuously. At least as much $ has went to machine payments as would have been hired labor. Eventually it should turn the other way tho .... I hope....


---------------------

Think Snow Eh!
Ox

 

[adammil1]

On the other side of this argument is if automation is bringing the costs of doing business here in the USA way down I would think it should likely start opening up the doors to bringing a lot of work back from China considering that there costs are right now on the way up. The net effect could result in higher employment rates here and lower trade deficits.

The biggest question I wonder however is how do people get started in these types of industries? To buy heavily automated specialty manufacturing equipment you really need to have your market lined up before you buy the machine. To do so usually requires a great inside knowledge of the industry. Often such knowledge can only be gained from working for some one else inside that industry. The problem is if the shops now running said highly automated equipment only want to pay $10-15hr feeder monkeys that isn't likely to leave much spare change necessary to invest in ones own business. So what I wonder is how do all of these guys get their start?

Adam

 

[dhammer]

I just read that artical very interesting. I wish more stuff would be written about this

Could Fast Food Automation Replace Low Wage Workers? « econfuture | Future Economics and Technology

I've been harping on this subject for quite awhile.been ignored or dismissed. Finally the mainstream media(NYT) is beginning to write articles on the subject.

I see Nevada or is it Utah that is considiring making it legal for humanless vehicles to drive on state highways. The NYT reported"this could be huge"..imagine taxi services with no drivers or delivery trucks and long haul trucking sans drivers.

However very few people understand or want to understand the implication of humanless production. Robots can produce but do not consume. Production without wages invariably leads to consumption without money.

 

[specfab]

"On the other side of this argument is if automation is bringing the costs of doing business here in the USA way down I would think it should likely start opening up the doors to bringing a lot of work back from China considering that there costs are right now on the way up. The net effect could result in higher employment rates here and lower trade deficits."

That is a likely effect in the near term, but I have to wonder what will happen with a highly managed national industrial policy in the Chinese environment. It would seem that the response would be to start automating more aggressively in China as well, although it may take some time to see the full-blown manifestation of the response.

[dhammer]"However very few people understand or want to understand the implication of humanless production. Robots can produce but do not consume. Production without wages invariably leads to consumption without money."

See Kurt Vonnegut's book, "Player Piano".

 

[moonlight machine]

Yep.....did you hear, obama says ATM machines are causing unemployment!!!!!! just think how much unemployment our CNC machines are causing! We shop owners should all do our part. Lets all scrap all our machines and hire an army of guys with files. We can all be luddites like the o man.

 

[vajra78]

A cnc machine is a robot!

Face it, the population rate is going to have to decline. I believe we are ridding on some policies engineered in the middle of the last century that wanted to ensure a large working population. Automation is not the problem, essentially it allows some one with less money to now afford a product. Robots require more than a sh*t kicker to set up and operator. And I don't think they'll give your local kick-ass short production and one off fabrication shop a run either.

Also understand the difference between robots and AI, some people argue this topic like were talking about AI when were dealing robots.

A CNC MACHINE IS A ROBOT!
LET ME SAY THAT AGAIN.
A CNC MACHINE IS A ROBOT!

 

[dkmc]

Yep.....did you hear, obama says ATM machines are causing unemployment!!!!!! just think how much unemployment our CNC machines are causing! We shop owners should all do our part. Lets all scrap all our machines and hire an army of guys with files. We can all be luddites like the o man.

Your comment about cnc machines is completely true.
One cnc lathe with one operator can probably produce as much output as
3-5 manual turret lathes from the mid 1960's.

But cnc lathes aren't the problem.
Computers are the problem.
Computers have conquered man, made him their slaves, and made him do the work of several of his 1950's-1960's peers.
Think of all the secretaries and typists that have been eliminated by personal computers, fax, and copy machines.

 

[Ox]

Personally I think your all missing the mark here...

The more efficient that we are at making the neccessities of life, leaves that much energy/time/money for other things that once weren't.

Meaning that now we have more goods for sure! As well as services.

How much energy to we put towards health care now as opposed to even 1990, and before?
2 and sometimes 3 TV channels were all we got when I was a kid. How much doo you spend on cable/satelite now? How much did you spend on cell and internet in 1985 as compared to now?


Mid 90's things were picking up in manufacturing around here. Up through end of 2000. Unemployment was below 4%* locally. Almost everyone (OK - well 1 per family) was either werking O/T at their main job, or had some part time job somewhere during the evenings. Things were rolling, and the energy was infectious.

I wouldn't say that computers play any more of a role in manufacturing than they did in '99. Would you ???

CNC has not liberated manufacturing much since then. Some more robotics in some high volume instances I s'pose.

Other than smart phones and the internet - I really don't think much has changed since then. Not that effects many jobs enyway. ???

The only thing that I can think of that has dramatically changed in the US jobs wise that I know of since 2000 was the entry of China into the WTO in 2001, heavilly devestating our production machining, stamping, and small plastics industries. MUCH of those three left in what seems like a 6 month period during the recession of 2001. We assumed that when the slow times wane that we would all git busy aggin, but it never happened b/c while things were slow - the jobs left at the same time.

You wunna look for lost jobs, that's the only real thing that I know of that happened since the 4% unemployment days of 2000.



* At 4% unemployment - there are many people werking that don't want a job, but kinda like the idea of a paycheck. Otherwise unemployable people had jobs.






edit:


The Greater Cleveland area is dooing good at around 7% currently, and they can think their big medical base for that!

I don't recognize the werst countys that hold on at 14%. Not sure where they are at.

Our 4 county corner of the state is running from 9-11% on Aprils numbers yet, and there are a LOT of people that are not here at all enymore! Many empty houses where folks up and left to find werk elsewhere. Some even left the car in the garage... "It's your problem now." So if you add all those folks - our numbers would be even higher.
(To actually compare employed people and/or pd man hours then to now instead of unemployment for those currently here.)



--------------------

Think Snow Eh!
Ox

 

[dhammer]

Computers are the problem.
Computers have conquered man, made him their slaves, and made him do the work of several of his 1950's-1960's peers.
Think of all the secretaries and typists that have been eliminated by personal computers, fax, and copy machines.

Right you are..the use of computers is a game changer. We are living through a revolution in production and the changes this revolution will bring will be as great or greater than the change from muscle power to steam power.

Computers and robotic production are not PROBLEMS..they are a blessing. We have the capability to eliminate the boredom and drudgery of the mechanical assembly line. However the benefits of this huge increase in productivity is not being shared..the benefits are going to a very small segment of the population. This is the PROBLEM.

Assembly line workers are replaced by robots, truck drivers might soon be replaced by robots, teachers will soon be replaced by robots, fast food workers, secretaries, health care workers, machinists, retail clerks. Whole sections of the working class will soon be economically superfluous..i.e they are not needed and therefore their schooling, healthcare, old age pensions etc will have to go.

The change from electro mechanical production to digital production is the root cause of all the upheaveal we are witnessing. Everything else is just eyewash.

 

[moonlight machine]

Your comment about cnc machines is completely true.
One cnc lathe with one operator can probably produce as much output as
3-5 manual turret lathes from the mid 1960's.

But cnc lathes aren't the problem.
Computers are the problem.
Computers have conquered man, made him their slaves, and made him do the work of several of his 1950's-1960's peers.
Think of all the secretaries and typists that have been eliminated by personal computers, fax, and copy machines.

I guess what I was saying just blew right by you!!!!!!!!!

 

[vajra78]

Assembly line workers are replaced by robots, truck drivers might soon be replaced by robots, teachers will soon be replaced by robots, fast food workers, secretaries, health care workers, machinists, retail clerks. Whole sections of the working class will soon be economically superfluous..i.e they are not needed and therefore their schooling, healthcare, old age pensions etc will have to go.

Are you software architect because you just wen't into the clouds man. Once again we are talking about robots not AI.

 

[vajra78]

Sorry, actually this is about tooling and how it takes away jobs. It's a game changer and some shops would fire us for even posting on here. How do you make more with less is what it comes down too. Frankly what are saying when complaining about automation, control the market?

 

[CarbideBob]

Assembly line workers are replaced by robots, truck drivers might soon be replaced by robots, ........

The change from electro mechanical production to digital production is the root cause of all the upheaveal we are witnessing. Everything else is just eyewash.

kpotter,
See where this leads?
You and your kind investing in CNC machining rather than hiring skilled artisans are ruining humanity and destroying civilization as we know it.

Then on top of it your machine acts up just to let you know it is in charge.
When you talk about ripping it's guts out it starts working again.
A coincidence or .... hmmm, maybe that jumble of wires has crisscrossed in just the right combination and it knows more than you realize.
Perhaps you should burn it before it's intentions spread to other machines around the planet.

Your shop could become known as the start of the downfall of mankind, making us all slaves to the computer.
The place were the evil AI first evolved.
I know it will happen cause I saw it in the movies and read about it on the internet.

Do ya feel bad now.
Bob

 

[vajra78]

Yeah, I'm turning a new leaf moving my shop to Africa and starting production with hand tools. Speaking of Africa seriously underserved market that needs cheap products. Man I should be a CEO. Dam I am, just a powerless one.