But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who maintain high tech robots instead of unskilled workers turning wrenches, so you're not actually paying unskilled workers $16/hour anymore.
Meanwhile the automation requires retooling, and maybe then you evaluate whether to retool the existing factory or to build a new one in a place with more skilled workers who can maintain the robots.
In year zero you just raise wages for the existing workers. In year two or five or ten, something else happens.
I don't think a bump in salaries that puts a country in the same ballpark as existing manufacturing locations( not counting the extra costs of manufacturing in the States or in Europe) is going to be such a big push for more automation. After a certain point the versatility of human workers is still useful.
> "The Standish Group started with a traditional metrics of success by looking at: “on time, on budget, and on target”. This means in this CHAOS Report 2018 for the year 2017: successful: 36%, challenged: 45%, failed: 19%. If they use their “modern” definition of success: “on time, on budget, with a satisfactory result.” You get almost the same results (33%, 48%, 19%)."
So, about 1/3 of IT projects are successful, including being on-time and on budget, and about 1/5 are total losses that fail to deliver any value at all. Not great odds and I'd expect the numbers are likely to be broadly similar in other engineering fields.
The decision on whether or not to embark on an engineering project (and whether to do it in-house or hire a third party) is among the most challenging duties executives have.
Economically that is always the desired direction, but not because people cost too much. Changes to automation are incredibly expensive to build. The benefits to increased automation are increased output volume and improved quality control.
Any cost reductions that arise are almost always completely unintended. To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product. You have to consider things like marketing, regulation, distribution, and so forth that do not benefit from the same automation efforts.
Nonsense. Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? That a loom costs more than the labor required for hand weaving? Or that businesses don't realize that they are?
> To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product.
Hardly any manufactured product is genuinely long-term supply constrained. Output volume increases as a result of higher demand. Higher demand comes from lower prices. If automation isn't lowering prices then it isn't increasing output volume.
Yes. The key word there is intentional.
> Output volume increases as a result of higher demand.
Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.
You're basically arguing that businesses are run by people who can't compare numbers to each other.
If automation costs less, as it often does, then businesses will adopt it because it costs less, because lowering costs increases margins (or volumes, if the lower costs are passed on).
> Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.
Not indirectly. If there is demand for 5000 cars at a given price and you suddenly gain the capacity to manufacture 10,000 cars at that price, you still aren't going to manufacture 10,000 cars unless you expect somebody to buy them. Having the capacity without the demand is nothing.
And having the demand without the capacity would only cause businesses to expand capacity, whether through automation or otherwise. If it was profitable to make 5000 cars by hand and there is demand for 10,000 cars at that price then they would just hire twice as many people to make them if nothing else.
Which is why you amortize the up-front cost over the expected number of units adjusted for time value of money. In which case the automation often still results in lower overall costs.
> Comparing variable numbers is algebra but this is a calculus problem.
Calculus still leads to comparing numbers. Businesses know how to do calculus.
In what universe is replacing floors full of accountants with a room full of computer(s) anything other than intentional?
"Oh, whoops, we bought these computers on a whim, and now all of a sudden all but a fraction of these accountants are completely redundant! Total accident, who would've guessed it?"
Higher production volume means more material purchased, increased warehouse costs, people hired for warehousing, and everything related.
So it all depends on the organization.
Factory workers are usually not well educated and they don’t handle money well.
A perfect example is Alberta oil sands. Many workers are extremely well paid. Most of them just spend everything and manage to get in debt with lavish lifestyle. Buying expensive cars, toys, large houses. They end up without any significant net worth and now are also hostage of their lifestyle.
There’s a term for that: lifestyle inflation.
My advice is to seek for opportunities overseas, or even in your country. For context I live in Ecuador.
In 2019 I resigned from my previous employer (an American company growing fast and short of 1000 employees nowadays). I moved to the Netherlands to work on a startup (that pays average for the Netherlands).
If you check my website (https://henvic.dev/) you can see it's not like I was inexperienced.
I was told the major reason why my request for a raise was denied was that my salary was great for where I lived in Brazil (northeast, which is poorer than São Paulo and Rio de Janeiro).
I considered the work I was doing worth way more. I started looking for new opportunities and asked to quit. This is not uncommon at all. Most of my colleagues in the tech field that are average or better have eventually moved abroad for money or started working remotely for a company overseas. Working for a company in a poor country where it has a local presence is almost always a sentence to getting paid less than you're capable of elsewhere or doing remote work.
Anyways, I think moving jobs is the best way to push for a raise, no matter where you live.