As a US presidential candidate, Donald Trump made keeping manufacturing jobs in the country a key economic issue. He promised to bring back jobs from China, Mexico, Japan, and elsewhere; he pledged to force companies from Ford to Apple to Nabisco to open or re-open factories on American shores; and he vowed to revive the coal and steelmaking industries. His promise to create industrial jobs was key to his electoral victory.
Still, many were—and remain—deeply skeptical of Trump’s plans. Mark Cuban, internet entrepreneur and frequent thorn in the side of the president, says that bringing back manufacturing will backfire and lead to overall job losses. Instead, he says, the US ought to invest in robotics to compete with China. “We have to win the robotics race,” he says. “We are not even close right now.” (For what it’s worth, Trump’s labor secretary Steven Mnuchin recently disagreed, saying robots aren’t even “on my radar screen.”)
Cuban is on the right track, but the fact is that it’s too late to go head-to-head with China on building robots alone. We can’t compete with China’s robot revolution. But we can complement it.
We know what productivity growth requires: investments in new technology. For previous generations, this was factories full of machines, first powered by steam and then by electricity. More recently it was the arrival of computers, which changed how work was organized within and across firms.
We often perceive the impact of new technology imperfectly and with a lag, and today is no different. We can see a wave of hardware and software innovations underway — technologies such as 3D printing and distributed ledgers will allow manufacturing and finance to become more dispersed — but it is hard to know exactly where it will take us.
Stephanie L. Woerner, Research Scientist at the MIT Sloan Center for Information Systems Research
From MIT SMR Custom Studio
Realizing value through the Internet of Things (IoT) may begin with simple goals, but it can also catapult a business toward new horizons. The level of commitment to completing the journey really depends on the presence of four factors:
Translating Threats Into Opportunity.
A major driver in IoT initiatives is finding a new source of revenue in the face of changing industry trends. In CISR’s survey of 352 CIOs, respondents with the highest levels of IoT commitment generated 50% of their revenues from products introduced in the past three years. These CIOs see firsthand how quickly disruptive change can occur.
Consider Schindler Holdings AG, which manufactures, installs, and maintains escalators, elevators, and moving walkways. In this increasingly price-sensitive industry, maintenance accounts for 75% of operating profits. This prompted Schindler to use IoT to not only improve equipment maintenance through the data generated by its elevators but also to reposition itself as a service provider that helps customers with building management using this data. To move in this direction, it developed a Web-based customer portal and a mobile app to provide real-time insights.
It is widely understood that China needs to move from an investment-intensive growth model to one based on science, technology and innovation. But before I take up this subject, let me take a detour to tell a tale of two countries.
Both countries are small. One has a population of 5.5 million people; the other has a population of 8 million. In both countries, the dominant ethnic group is about 75 per cent of the population and minority groups make up the rest.
Both countries are rich. One country has a per capita gross domestic product of US$52,000 and the other country has a per capita GDP of US$35,000.
Both countries have faced existential security threats from the outside and armies in both countries have mandatory conscriptions. One country was actually kicked out and evicted by its now much larger neighbour, because the union would have threatened the political dominance of the main ethnic group. The second country is located in a region surrounded by hostile nations.