Don’t kid yourself. Those manufacturing jobs that politicians keep prattling on about are never coming back. Most of them no longer exist.
It might be the worst-kept secret of the New Gilded Age. Robots are replacing humans on factory floors at an unprecedented rate. And the process will only accelerate as new technologies proliferate, like the Internet of Things and Artificial Intelligence.
On the other side of the world you can already see this happening in real time. Motherboard tells the story of MIT-educated Gerald Wong. Currently two-thirds of all manufacturing at his Cambridge Industries Group factory is handled by robots. Wong’s goal is to replace every worker in the 86,000-square foot Shanghai facility.
He told MIT Technology Review, “It is very clear in China: People will either go into automation or they will go out of the manufacturing business.”
|Robots are replacing humans on factory floors at an unprecedented rate.|
He may be understating his case. In a competitive global marketplace, productivity reigns.
This is something more-developed countries learned two decades ago while investing in automotive manufacturing. South Korea, Germany, Japan and the United States are already well into the deployment of robots. In the boom-bust automotive cycles, they had no choice. To put a number on it all, analysts track industrial robots per 10,000 workers. The numbers range from 478 for South Korea to 164 for the United States.
China is way back at just 36, so it is investing heavily to catch up. MIT Technology Review reports the industrial province of Guangdong will spend $150 billion to help factories install industrial robots. This models similar relationships formed in Germany between the government and industrial manufacturers.
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Now machines are getting smarter, too. The Internet of Things will bring awareness across the network. Artificial Intelligence will infuse robots with the smarts to tackle tasks that occasionally fall outside of the ordinary.
The trend is so important it is even permeating popular discourse. Celebrity investor Mark Cuban addressed an audience this week at the SXSW Conference in Austin Texas.
“Whatever you are studying right now, if you are not getting up to speed on deep learning, neural networks, etc., you lose,” said Cuban, according to Fortune. “We are going through the process where software will automate software, automation will automate automation.”
That’s why all the bluster about bringing back manufacturing jobs is nonsense. Photo ops aside, manufacturing jobs are not set to rise across corporate America. In the global marketplace, it would be competitive suicide.
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Vicious economic cycles and globalization fostered the automation super cycle. The New Gilded Age is an accelerant. It’s easier than ever before to realize an immediate return on investment in new productivity technologies.
Investors should seize the opportunity. Every sector will be touched. These are the stories and stocks I highlight in my Pivotal Point Trader service every week. This is an exciting time to be an investor.