An interesting article by James R. Hagerty in the Journal yesterday tells how lots of manufacturers, including Raytheon, GE, and Harley are installing tons of gear to monitor every element of their processes, from the speed of fans in a paint booth to the number of times a screw is turned as it’s being inserted.

These are all examples of instrumentation, which we can very loosely define as ‘adding sensors so that more aspects of a process can be measured as it’s being executed.’ An instrumented process throws of mountains of data, which can be used for three main purposes.

The first is making automatic real-time adjustments. As the WSJ article describes, “At Harley-Davidson Inc.’s newly renovated motorcycle plant in York, Pa., software keeps a constant record of the tiniest details of production, such as the speed of fans in the painting booth. When the software detects that fan speed, temperature, humidity or some other variable is drifting away from the prescribed setting, it automatically adjusts the machinery.”

The second main purpose is after-the-fact analysis of all the data to troubleshoot, find improvement opportunities, etc.. The WSJ again: “Recently, by studying the data, Harley managers determined that installation of the rear fender was taking too long. They changed a factory configuration so those fenders would flow directly to the assembly line rather than having to be put on carts and moved across an aisle.”

And finally, instrumentation is hugely valuable for control; it can go a long way toward ensuring that only the right people are involved, and that they’re using only the right parts and tools. At Raytheon, “The system is designed to prevent any operator from performing a process for which he or she isn’t certified. Before using a sealant, the operator must flick the tube under a bar-code reader so a computer can verify it is exactly the right sealant. The computer also knows exactly how much torque should be applied by any wrench or screwdriver. And operators aren’t permitted to use the wrong wrench.”

The upshot of all this, as Erik Brynjolfsson and I highlighted in our Harvard Business Review article on Big Data last fall, is that stuff that was formerly an art becomes a science, and guesswork is replaced by precision. So ‘Instrument, analyze, tune’ has become the modern manufacturing mantra.

In all ways except one, this is great news. It’s great because it increases the quality and consistency of the products we buy, and lowers their prices (rework and waste are expensive for manufacturers, and instead of eating the costs they pass them on to us). I want the things I use to be perfectly crafted. The way to accomplish this today is, paradoxically enough, not by employing more craftsmen, but instead relying ever more heavily on machines and data.

The one issue here has to do with those craftsmen; we just don’t need them as much, or need as many of them, in an instrumented world. As the article points out, “Semiconductor and other high-tech companies were early adopters” of the ’Instrument, analyze, tune’ mantra; the precision required by their processes didn’t permit any alternatives. And their factories now aren’t full of people. In fact, they look very much like something out of a science fiction movie, with a few people in weird clothes walking down hallways full of humming machinery. As I watched this video, I kept waiting for the alien to jump out, or the virus to spread.

So while I’m thrilled about Big Data coming to manufacturing (and soon to just about all other sectors of the economy), I’m concerned that it will increase and accelerate the ‘hollowing out‘ of the workforce already underway.

Do you share my mix of optimism and pessimism here? If you see things differently, why? Leave a comment, please, and let us know.

 

 

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New Jobs Data, Same Old Story…

by Andrew McAfee on May 9, 2013

A couple months back I drew a graph of the employment rate, workforce participation rate, and employment-to-population ratio and argued that the unemployment rate was going down not because people were going back to work in huge numbers, but instead because they were dropping out of the labor force. I said:

The simplest and, I believe, best explanation for what’s going on here is that the US economy is adding just enough jobs each month to keep up with population growth. This explains why the red line is flat. But since we’re not adding jobs any faster than that, the principal reason the employment rate appears to be going up is, unfortunately, that the workforce participation rate is going down.

Here’s the same graph updated with data through April. I read it as telling exactly the same story.

 

As Binyamin Applebaum wrote about the latest numbers in the NYT:

The American economy continues to add jobs in proportion to population growth. Nothing less, nothing more…

the decline of labor force participation – the technical term for the share of adults working or searching – is primarily the result of a bad economy.

Baby boomers are aging into retirement. Even before the recession, the government projected in 2007 that participation would decline to 65.5 percent by 2016, from 66 percent. But the April rate of 63.3 percent means the labor force has lost roughly five million additional workers.

Furthermore, the projections were wrong. Participation has actually risen among people older than 55. The decline is entirely driven by younger dropouts.

The federal government counts 11.7 million Americans as unemployed. The real number, it follows, is more like 17 million.

Meanwhile post-tax corporate profits are at all all-time high, and the Dow just passed 15,000 for the first time. I point these stats out not to rail against capitalism — I really, really like capitalism — but simply to reiterate that I think technological unemployment is finally upon us.

Any ideas on how to address it without wrecking the things — innovation, productivity growth, price decreases, etc. — that are working pretty well?

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Technology’s Real Benefits (Hint: They’re Not Economic)

May 3, 2013

A couple recent articles, one in the WSJ by Dennis Berman and one in the NYT by Eduardo Porter, have raised the question of why all the amazing technologies we have these days aren’t showing up more strongly in the productivity and GDP growth statistics. This is both a really important question, and one that [...]

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One More Industry Where Employment is Dropping as Output Rises

April 24, 2013

Mona Vernon, senior director of emerging technology at Thomson Reuters (and a former RA of mine) pointed me to an amazing Bloomberg chart of the day showing that “ the number of people employed in New York City in “securities and commodities contracts intermediation and brokerage,” which includes investment banking and securities dealing, fell to about 101,200 in [...]

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Head-to-Head at TED

April 24, 2013

My colleague, coauthor, and friend Erik “The Iceland Cometh” Brynjolfsson went up against Bob “Flash” Gordon onstage at TED earlier this year. It was one of the highlights of the conference for me, and the videos are now up. Bob went first, giving his provocative view of why economic growth, as we know it, might be [...]

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Boston After the Bombs

April 16, 2013

Hi everyone, The only thing I can personally say about the bomb attacks yesterday is that they were LOUD. I was in a cab at Huntington Avenue and Exeter St. when they went off. They sounded too loud to be benign, and sure enough within seconds Twitter was filling up with reports of explosions along [...]

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Why I For One Welcome Our New Robot Underlings

April 9, 2013

Imagine a world where the robots did all the work.  They tend the crops, sew the clothes, cook the food, drive the trucks, and work on all the assembly lines in all the world’s factories. In this world, everything would be a lot cheaper because labor costs would drop to zero. In fact, there’d be [...]

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Here’s the Difference Between Repeating Slogans and Understanding a Concept

March 27, 2013

If you want to see the difference between sophisticated and unsophisticated thinking and writing about technology’s effects on the workforce, look no further than two recent posts, both from the conservative side of the house. First is a March 25 piece by Luca Gattoni-Celli called “Steve Kroft: Philistine,” the main points of which are all stated [...]

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What Should Our Logo Be?

March 26, 2013

We’re running a 99designs contest to help us design the logo for MIT Sloan’s new Initiative on the Digital Economy, and need your feedback. If you’ve got a minute today, please take our poll:   And if you’d like to submit a logo, there’s still time – we’re picking finalists tomorrow. It’s a private contest; [...]

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Why Should We Care About Rising Inequality?

March 6, 2013

I’ve been asked this question by a few people recently, none of them hardhearted let-them-eat-cakers. If I’m hearing them right, they’re asking two simple yet profound questions: Why should we care if those at the top have a lot (and more all the time), as long as those at the bottom have enough? And because [...]

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