Automation

Automation a Double-Edged Sword for Manufacturing Jobs

Machines replace some human workers, while boosting pay and job security for others.

by John Lovett, Times Record / October 9, 2017
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(TNS) -- Automation has created a double-edged sword for the manufacturing sector.

Although manufacturing jobs have decreased because of automation, the jobs are safer and higher paying. And for every manufacturing job created, another three or four pop up in a support field.

"Manufacturing is the future," says Randy Zook, Arkansas State Chamber/Associated Industries of Arkansas president and CEO. "Our manufacturers are passionate about finding the next generation of innovators and inventors."

Arkansas' economy relies heavily on the manufacturing industry, Zook adds, because the sector creates jobs and opportunities.

While the jobs that remain in manufacturing are higher paying than they once were, the National Association of Manufacturers anticipates a "skills gap" that will be unable to fill about two-thirds of the roughly 3.5 million manufacturing jobs that will "likely be needed."

Mervin Jebaraj, interim director of the Center for Business Economic Research at the University of Arkansas Sam M. Walton College of Business, said manufacturers nationally are seeing "record highs" on production output with fewer workers.

"The general trend in manufacturing is that it needs fewer people," Jebaraj said.

Fort Smith Regional Chamber of Commerce President and CEO Tim Allen likewise says that manufacturing jobs nationwide continue to drop because of automation, but these jobs are higher paying because they "require a whole different skill from the neck up."

Allen mentioned the new Glatfelter paper products plant at Chaffee Crossing as an example of higher tech, higher paying jobs that have been created in Fort Smith.

"With Glatfelter, and between 75 to 100 other projects, the average wage is much higher than it was 10 to 12 years ago," Allen added.

Manufacturing jobs remain a significant piece of the pie in Fort Smith, at about 16 percent, and appear to be on a slight rebound.

According to the U.S. Bureau of Labor Statistics (BLS), manufacturing sector jobs in the Fort Smith metropolitan statistical area (MSA) decreased minimally between August 2016 and 2017. And the National Association of Manufacturers anticipate growth with possible tax reform.

Focusing just on Fort Smith, employment in the city's manufacturing sector has dropped by about 8,400 jobs in the past 10 years, according to BLS. It has went from about 26,000 jobs in 2006 to about 17,600 in July. However, numbers improved in August, bumping up a couple hundred jobs to 17,800 in Fort Smith.

Although it is possible now to make more product with less people, several more years of upgrades may be needed to make up for the high number of manufacturing jobs lost in Fort Smith.

According to the U.S. Bureau of Economic Analysis, the gross domestic product (GDP) for Fort Smith area manufacturers has gone from over $2.8 billion in 2006 to about $1.5 billion in 2016. Manufacturing GDP for the entire Fort Smith MSA saw increases in 2009-2010, followed by lost gains from 2011 to 2012. The area's manufacturing GDP dipped below 2012 numbers from 2015 to 2016.

The Fort Smith MSA includes LeFlore and Sequoyah counties in Oklahoma, which could skew data because both of those counties have higher unemployment rates than Sebastian and Crawford counties in Arkansas.

The unemployment rate in LeFlore County is the highest in the Fort Smith MSA, but it has also showed gains by dropping from 7.5 percent in July 2016 to 5.8 percent in July 2017. Sequoyah County's unemployment rate dropped from 6.5 to 5.6 percent over the past year.

Crawford County's dropped from 4.3 to 3.6 percent from July 2016 to July 2017. Sebastian County's dropped from 4 to 3.6 percent in that period, while Fort Smith's has dropped from 5 to 4.2 percent.

Despite the lower number of jobs in manufacturing, both in Arkansas and Fort Smith, the overall unemployment rates for both are lower than the national average in July of 4.6 percent. Total nonfarm payroll employment increased by 156,000 in August, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported Sept. 1. Due to the destructive hurricanes in September, the BLS recently reported, the economy lost 33,000 jobs. It was the first monthly decline in employment in seven years.

Optimism ahead

On the national scale, manufacturers contributed $2.18 trillion to the U.S. economy in 2016. According to the U.S. Bureau of Economic Analysis, this figure has risen since the second quarter of 2009, when manufacturers contributed $1.7 trillion. Over that same time frame, value-added output from durable goods manufacturing grew from about $870 billion to $1.2 trillion, with non-durable goods output rising from $850 billion to $1 trillion. In 2016, manufacturing accounted for 1.7 percent of U.S. GDP in the economy.

The National Association of Manufacturers' Outlook Survey for the third quarter of 2017 also noted the movement for tax reform has led to the highest three-quarter average of manufacturer optimism ever recorded by the NAM."

"Throughout the debate on tax reform, manufacturers have been leading the charge for a bold legislative package that will spur growth and create jobs among both small and large manufacturers," NAM states.

A majority of manufacturers who took part in the recent NAM survey said a pro-growth tax reform package would make them more likely to expand their business (64.3 percent), hire more workers (57.3 percent) and increase employee wages and benefits (52.2 percent).

The survey also found optimism among small and large manufacturers reached the highest three-quarter average in the survey's 20-year history of 90.87 percent, up significantly from last year's three-quarter average of 59.77 percent.

©2017 Times Record (Fort Smith, Ark.) Distributed by Tribune Content Agency, LLC.