Grumpa Joe's Place

Lathe operator machining parts for transport planes at the Consolidated Aircraft Corporation plant, Fort Worth, USA (1942). (Photo credit: Wikipedia)

The fashionable  rhetoric today involves a lot of BS about bringing high paying jobs back to America. This seems like just another ploy to feed the masses with what they want to hear. Libs love unions and unions like high paying factory jobs. The problem is that the unions have driven high paying jobs out of the country. Where did they go and why? Talk to Government Motors and they will tell you it is the unfair practices of their competitors who do not have to pay union benefits. They claim that benefits add $1500 of cost to each car. The UAW argues the high cost resulted from stupid business practice by the management. Meanwhile the American car makers go bankrupt and foreign car makers build factories in the USA. Hello! Is there a message here? The foreign companies settle in states with right to work laws, and away from large metropolitan areas teeming with anxious workers ready to unionize at first chance.

During my career as an engineer, I saw many factories. They made things like construction equipment, farm equipment, heavy presses for the auto industry, mining equipment, thermostats, airplanes, and electrical components. Yes, there were many good jobs in these industries. All of them suffered from the same malady, high labor costs. One of my jobs was to calculate the cost of a machine. It was a rigorous analysis dealing with making parts, applying the time to complete an operation and to multiply the time by an appropriate labor cost. When I finished, the cost went to the accountants and they began adding administrative costs, benefits, sales, inventory, and whole slew of other things which I didn’t really understand. Finally, they added profit. The machine I was so proud of turned into something no one could afford.

Cutting cost became my mantra. Each penny I could cut from a part meant the product may become salable.

After a number of jobs in heavy equipment, I settled in the electrical component industry. Over the course of forty years, my job was to cut the cost of an electrical component. The owner began by hiring people to run molding machines. He designed and made small molds to keep his investment low. As sales grew, he made bigger molds and bought larger molding machines, but they were still operated manually.

During the nineteen eighties the government  reduced capital gains taxes and the fun began. We couldn’t buy machinery fast enough to expand the business. Another thing happened. The owner shared his vision of a totally automated factory with us. It became my job to help him build a “lights-out” factory. That is a factory where there are no people just machines making product in the dark.

When I began work at this company, there were people running molding machines, handling product, inspectors examined the product for defects, people put product into plastic bags, they sealed the  plastic bags, applied labels, put the bags into shipping boxes, taped the boxes, and moved them to the shipping department. There were people tripping over themselves in a very busy and noisy environment.

In the beginning, the company had two competitors, one in the USA and one in England. When I left the company, the number of competitors was over two hundred, and most of them were in the far east. On one visit to China, my boss visited a competitor’s factory. He examined the part and could not differentiate the competitor’s from our own. The Chinese factory owner told him “we copy you because you have the best product.” The man ran a factory in a two-story building. He lived on the second floor above his factory. His molds were simple low cavitation tools. He did not use any machinery other than a molding machine, but he did use many workers. He paid them about a dollar an hour,, which was good pay in their country.

When I finally retired, I left an automated factory that was just a few operations short of  lights-out. The investment cost required to produce a single part cost between $500,000-750,000. The man in China invested $50,000 and used dollar an hour labor to do the rest.

When you here the politicians and unions demanding high paying jobs think about this: What kind of job is a high paying factory job today? What kind of people do we have ready to work? Do they have the credentials to work in a high paying jobs factory? Will those factories compete with Chinese labor?

Here are some videos to show you the difference between high paying factory jobs. The first one is an Apple factory in China, the second is a stamping plant in China (our stamping plants were never as crude or unsafe as this one), and finally a modern car manufacturer in Germany. When you watch the third video pay attention to the number of high paying workers assembling the cars.

1. Apple Factory ( a little long, but worth watching.)

2. Chinese stamping plant. Notice the six guys sitting around the die and ducking heads when the press comes down. During my 55 years of visiting factories I have never seen anything as crude or unsafe as the operation in this video in any US plant.

3. German car maker. The kind of jobs we envision when we talk about high paying union jobs.

The high paying jobs in the German factory involve skilled tradesmen far beyond the education level of the people we hope to use in our factories.

The USA is capable of matching the level of automation in the VW video above, I know, I worked to make such a process. We have the tool making, electronic, and engineering skills needed. What we don’t have are enough people who know how to read, and do simple math well enough to work on a complicated factory floor.

Related articles

• What the Factory Riots Mean for Chinese Manufacturing (wealthwire.com)
• As China Costs Rise, US Factories Return Home (huffingtonpost.com)
• Factory jobs left U.S.; factories never did (mysanantonio.com)

Filed under: Conservative, economy, family, Manufacturing, politics | Tagged: Apple, Automation, China, China Labour Bulletin, Electronic technicians, Foxconn, INformation Technologists., IPhone, Skilled workers, Tool makers, Trade union, United States, VW, Wage | 4 Comments »