Gongol.com Archives: August 2022

Brian Gongol

August 23, 2022

Business and Finance Manufacturing evolution

Trade often takes the blame for job losses in American industry, but technological advancements are often the true root cause of disruptions in the labor market. To wit: Ford has announced layoffs of about 3,000 employees, including a substantial number of white-collar employees. ■ The company is, like most automakers, trying to pivot quickly to producing electric vehicles. Ford's all-electric F-150 Lightning pickup is a real success story in this area -- it is completely sold out for the current model year. For the company, that popularity is good news. ■ But the thing about electric vehicles is that they are less mechanically complex than autos with combustion engines. The engine requires an enormous number of moving parts; the electric motor strips all of that down to a rotor and a stator. ■ Eliminating lots of parts in the vehicle, though, has the downstream consequence of eliminating a lot of jobs. If you don't need oil and pistons and belts, then you don't need as many purchasing agents and compliance officers and engineers, either. ■ No sensible person should argue against the general thrust towards electrification of the US auto industry. Consumers will benefit from lower operating costs and higher reliability, and even the car-free will appreciate the resulting benefits from reduced pollution. That won't make job cuts more popular, though, and sensible public policy ought to have a bias in favor of helping the laid-off to help themselves to transition elsewhere. ■ Technological progress almost always comes with diffuse benefits and concentrated costs. Most people benefit somewhat, while a few people pay a high price. But it shouldn't shake us from embracing advancements. ■ in 2010, Mitt Romney wrote, "The math here is quite straightforward: replacing jobs in low-productivity industries with jobs in high-productivity businesses raises the nation's average productivity and per capita wealth." And Romney was right. Combustion-engine automobiles are, by comparison with their electric counterparts, a low-productivity business. ■ That the resulting job losses aren't necessarily in the obvious places -- like the assembly line -- should only underscore the importance of having an economic system that affords people the maximum freedom (and perhaps some gentle encouragement) to develop new, high-productivity skills not just when they're fresh out of school, but for the duration of adult life. ■ We should take instances like the Ford layoffs as encouragement to soberly consider what the framework for that kind of objective ought to be. It's not the first time that technology that is good for society overall has had harsh consequences for a few, and it absolutely won't be the last.

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