-Tim Casey, Director of Economic Development, Waukesha County Center for Growth
The Milwaukee Journal Sentinel recently published a discouraging article titled “If Foxconn builds a manufacturing plant in Wisconsin, it won’t be what many expect.” From the standpoint of someone working in that manufacturing plant, we would do well to remember that that’s not a bad thing.
The article talks about Foxconn having “smart factories” that use automation to cut costs and increase production. A lot of the negative rhetoric around automation focuses on the resulting job losses. While it’s true that automation does replace low-skilled (and sometimes dangerous) jobs, it also creates higher-paying jobs as a result. In 1950 the average wage in manufacturing (adjusted for inflation) was $14.73/hour. In 2017, the average wage was $20.72/hour (Source: U.S. Bureau of Labor Statistics).
When a company such as Foxconn invests in a robot, it now needs someone with skills to program and run the robot, which demands a higher wage. These skills can be acquired at a local technical college and most companies are willing to invest the time and money in their employees to help them get those skills. Life-long learning is part of a career in manufacturing, as it is with most careers. The number one thing our manufacturers look for in potential employees is the ability to show up to work on time. The rest can be taught.
Automation also allows manufacturers to create more output using fewer people, which is a necessary adaptation for companies in our current economy. Because the Baby Boomer generation is aging, 10,000 people per day are turning 65 in Wisconsin (Source: Pew Research Center). Our economy as a whole is facing a labor shortage in the coming years that will cripple us unless we adapt. Automation is the manufacturing sector’s way of adapting.
As James Bessen, economist, Boston University law lecturer and author of the book Learning by Doing: The Real Connection Between Innovation, Wages and Wealth recently stated in a USA Today article, “Instead of worrying about the mass unemployment a robot Armageddon could bring, we should instead shift our attention to making sure workers—particularly low-wage workers—have the skills they need to compete in an automated era.”
Studies have shown that for every job created in manufacturing, 3.4 jobs are created in supporting sectors such as finance, legal, IT, marketing, management and more to help the manufacturing industry flourish (Source: Manufacturers Alliance for Productivity and Innovation). Even if Foxconn doesn’t hire as many people as a 19th-century manufacturing facility would, the people who are hired and the people working in related industries will have more disposable income to redirect back into our local economy. But quite apart from any jobs increase in Wisconsin, there are other benefits of Foxconn investing in our state.
A Foxconn plant of this magnitude would require numerous suppliers. Some of Foxconn’s existing suppliers would be expected to co-locate from other countries to serve the new facility, and existing Wisconsin-based firms in industries such as plastics, thin-film technology, flexible printing, adhesives and electronic components could also become new suppliers.
In addition, despite any state or federal incentive packages offered to Foxconn, there will still be tax revenue generated for the state. Any increase in hiring will result in an increase in income tax revenue, and there is potential for other tax revenue increases at the local and state level as well.
We at the Waukesha County Center for Growth and the Waukesha County Business Alliance are excited about the prospect of Foxconn coming to Wisconsin. Business investment anywhere in Wisconsin is good for all of us and we should be welcoming companies like Foxconn into the state. Wisconsin is a state steeped in the manufacturing sector and if we can show the international community that we’re embracing the “seismic changes that are reshaping the global economy,” we can put Wisconsin on the international map as a destination of choice for manufacturers.
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