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A Robot Tax Is a Very Bad Idea

The U.S. needs more factory robots, not less.

In last week’s recap, I recounted how Alec Ross, author and technology policy advisor, had speculated that robot design, development and manufacturing would be critical to future economic well-being worldwide. What I didn’t share was some of the background he provided that calls into question whether United States is positioning itself to be a leader in the robotics industry and the impact robotics will have on U.S. manufacturing jobs going forward. 

John Hitch has authored two recent articles on the robotics industry—a July 17 article, Reconciling Robot-Induced Anxiety and Admiration and an August 14 article, Manufacturing Obscurity is a Fate Worse than the Robopocalypse. These articles provide detail on these two questions above, and I highly recommend you read them. Here is some of the information they present.

  • In 2017, U.S. companies lagged behind world leaders in installation of factory robots. In fact, China led the way with their manufacturers buying 138,000 robot units. Our country (33,192) was fourth after Japan (45,566) and South Korea (41,373).
  • The two largest robotic manufacturers in this country are foreign-owned. They manufacture the bulk of robots sold in the U.S. Specifically, they are Swiss-based The U.S. doesn't have a single major homegrown industrial robot manufacturer.

According to Hitch, while there are hundreds of robot startups flourishing across the country, this hasn’t translated into large-scale industrial robot manufacturing.

What about Jobs?

Hitch also cites both a recent Oxford Economics report that predicts automation and robots will displace 1.5 million additional jobs in the United States by 2030 and an Automation Readiness Index that listed the United States had ninth place in how prepared it was in terms of training, education and governmental policies.

One of the people interviewed for Hitch’s articles makes an ominous point, saying, “Right now, robots are being fed the worse jobs. It’s only a matter of time before they take the better ones.” It is true that technical colleges are adjusting their curriculums to align with the need for new job skill. The question, though, is whether this will be enough to offset the efforts of foreign governments in prepping their manufacturing workforce for the robotics age. For instance, Germany is providing $78 million in annual cash grants for workforce development and apprenticeships. As Hitch points out, “Robots taking American jobs isn’t the biggest threat; other countries making the workforce of the future is.”

Finally, Hitch points out that in this country, it is the small- and mid-sized manufacturing firms that are most lagging behind their foreign counterparts. Since small- and medium-sized manufacturers make up the bulk of most supply chains, this begs the question on how to get U.S. supply-manufacturers to make investments in more modern manufacturing equipment.

Economic Un-Development

During my career, I’ve played a hand in several supply chain-based economic development initiatives. In fact, for my efforts, I’ve received both state and federal accolades. So I think it’s reasonable to assume that I have some knowledge about what works relative to successful economic development as well as what doesn’t.

A September 5 article on IndustryWeek’s partner website, Materials Handling & Logistics, asks, Will Taxing Robots Slow Automation?

I can provide a short answer to that question: YES. Especially for this country’s small- and medium-sized supplier-manufacturers that are already lagging in adopting them.

The robot tax is pitched as a disincentive to replace human workers with robots and a way of recovering some economic loss from lost jobs.

Paul Ericksen's columns are part of IndustryWeek's Supply Chain Initiative.

People who read my column know that I am an advocate of our government having skin in the game in economic and workforce development efforts.  But in this instance, there could be nothing worse than a robot tax above and beyond what corporations are taxed today. Why? Because the tax would do the opposite of what needs to be done for us to become a worldwide leader in robotic technology. What needs to be done is jumpstarting our nation’s efforts in robotics by encouraging investment in it.

Let’s look at the type of government involvement I do think is called for that wouldn’t have such an unintended consequence.

Toyota and Training

A couple of weeks ago, I alluded to Toyota’s state-of-the-art manufacturing training program. Toyota trains people both so they can be more effective in their current positions and to prepare them for the jobs of the future. They train both high school students wanting to transition to a career in manufacturing as well as longer-term employees. In addition, they offer the same training to supplier firms—at last count, 400 across 13 states. Many people in industry believe Toyota sets the benchmark for manufacturing training programs in the country.

A September 11 article, Toyota’s Apprenticeship Program to Serve as National Model for Training, brought some good news. In an effort to help fill America’s manufacturing skills gap, Toyota Motor North America has joined with the Manufacturing Institute, a division of the National Association of Manufacturers (NAM), to offer Toyota’s successful program as a model for other companies through what is called The Federation for Advanced Manufacturing Education Program. Participants can obtain a two-year industrial degree known as the Advanced Manufacturing Technician program.

Toyota and NAM should be applauded for this initiative. However, this program is not specifically targeted to support American’s prominence in future important economic areas like robotics, at least relative to the focused training available in some foreign countries. And training participation will be haphazard, only open to companies that elect to participate in this new Federation.

With minor tweaking, this program could present a solution to even out the impact of this training model.  To make this happen, the government would need to step forward to financially sponsor worker training specifically targeting emerging technology areas such as those outlined by Alec Ross in his book. This would require a more progressive national economic development policy, as well as politicians adopting a different perspective on government involvement in industry.

In my mind, America’s governmental policies have for too long been influenced by uber- Free Marketeers who say they don’t want government to pick the “winners and losers.”  All too often, however, the reality of this approach has resulted in positioning foreign manufacturers to be winners and U.S. manufacturers to be losers. Leveraging Toyota’s and NAM’s groundbreaking efforts is an obvious solution. Governmental funding would not only facilitate a more national—rather than company—impact, but also start preparing employees for times when people employed in today’s industries will need new skills to be employable.

Paul Ericksen is IndustryWeek’s supply chain advisor. He has 38 years of experience in industry, primarily in supply management at two large original equipment manufacturers.

TAGS: Supply Chain
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