What’s Next for American Workers as Trade, Automation Roil Manufacturing?

When Donald Trump heralded Ford’s announcement earlier this year that it would invest $1.2 billion in its Michigan plants, it was seen by some as the fulfillment of campaign promises to “bring jobs back” and put America first.

Last week, the other shoe dropped with reports that Ford will cut 10 percent of its global hourly workforce while holding on to the tech talent it has recruited in the past few years to work on electric and self-driving cars. Bloomberg reported that the cuts were a response to lagging stock prices and CEO Mark Fields’s desire to trim company costs this year by $3 billion. (News broke early this morning that Fields is on his way out and will be replaced by Jim Hackett, CEO of Ford Smart Mobility, the automaker’s division focused on the development of self-driving cars, ridesharing programs, and other related tech-enabled initiatives.)

And on Thursday, GM said it will stop selling cars in India, once considered to be a market primed for growth, and will shed operations in South Africa by the end of the year. That announcement came a few months after the automaker disclosed plans to lay off more than 4,000 workers as demand for certain passenger cars made in the U.S. shrinks. According to USA Today, GM made the cuts in order to “focus more financial resources on regions of the world where it is profitable, especially North America and China, and focus on developing autonomous cars.”

With the layoffs, these major manufacturers continue to reshape their work forces, this time favoring technology talent over traditional blue-collar labor. The twin engines of global trade and automation driving these changes are complex and not well understood, and policy prescriptions to protect American workers have so far been inadequate, says Sarah Bauerle Danzman, an assistant professor of international studies at Indiana University whose research focuses on the politics of foreign investment in the U.S.

“There’s been a lot of confusion in the popular press over the past year about the economy, the automation boogeyman, and what we should do from a policy perspective,” Danzman says.

After the New York Times ran an op-ed in February saying robots aren’t responsible for killing the American dream, Danzman and her colleague, Brown University political science professor Jeff Colgan, took to the pages of the Washington Post seeking to clarify that position. The topics of trade and automation had been on the national consciousness in the wake of the 2016 presidential election, and they felt it was incumbent upon scholars and experts to publicly weigh in.

Trump considers himself an economic nationalist who wants to redraw international trade agreements to be more favorable to the United States. His America First approach calls for new U.S. manufacturing jobs, and on the campaign trail, he was fond of threatening to punish companies who enacted mass layoffs or moved jobs overseas.

Danzman says global economic trends are probably too complicated for pithy campaign slogans in the first place. The changes roiling manufacturing and other trade-dependent industries are likewise not simply a matter of artificial intelligence technologies growing by leaps and bounds or automation displacing workers. In any era, she says, there are those who benefit from the current economic forces, and those who are damaged by them.

What’s important to remember, she advises, is that we’ve dealt with big economic changes in this country before. We survived the transition from an agrarian society to an industrial one, and we’ll probably survive the coming changes, as well, Danzman says. She feels the government’s role should be enacting policies that can mitigate some of the pain of economic transition, and seek to even out regional inequality.

In the 1950s and ‘60s, what she calls the “golden age of industrial growth,” the problem of regional disparities wasn’t immediately apparent. Today, the urban-rural divide is stark in both economic and political terms.

“Is the rural United States just going to lose out?” she asks. “That’s a fundamental question that doesn’t get discussed often enough. The focus is on bringing back jobs without talking about the fact that most of those jobs will be on the coasts or in the cities. That mismatch is driving feelings of anxiety.”

According to a recent report by the Institute for Spatial Economic Analysis at the University of Redlands, Las Vegas will lose 65 percent of its jobs by 2025 due to automation. El Paso, TX, is expected to lose 64 percent of its jobs, and Greensboro, NC, will lose 63 percent of its jobs. Louisville, KY, and Orlando, FL, were also singled out as being especially vulnerable to automation. A Boston University/MIT study released in March determined that the Rust Belt in the middle of the country has paid the highest price for the past 20 years of automation and trade policies that pushed jobs overseas.

“We have this problem where we need to generate jobs for people, but wages for low-skill workers are at a historic low,” Danzman says. “In certain parts of the economy, it’s cheaper to hire low-wage labor and not invest in technologies that can leverage an employee’s working hours.”

That’s not likely going to be reversed by major infrastructure spending, as the Trump … Next Page »

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Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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