Trump versus automation

On the face of it, Trump does seem to have done just that. Ford and General Motors announced they will add or keep 700 and 7000 US jobs, respectively, thanks to new investment within the US. Amazon has plans to take on 100,000 new employees over the next 18 months and even Pizza Hut has announced plans to hire up to 11,000 workers in the near future.

There is however, a view that while Trump’s staunchly nationalistic stance on job creation and pledges of high tariffs on products sold in the U.S. but manufactured overseas have had an influence on this tranche of US investment, he cannot take all the credit. Companies don’t simply create jobs because someone tells them they should; capital allocation has to be approved and there has to be a great deal of product development before new plants can be planned, and this takes time, suggesting that these moves were in the pipeline way back when the idea that Trump would become President was little more than a dystopian episode of The Simpsons.

Then there’s the matter of automation; something that Trump seems to steadfastly ignore in his plans to “make America great again”. In his farewell speech Obama acknowledged the impact that increased automation is likely to have on traditional American blue-collar careers, asserting, “the next wave of economic dislocation won’t come from overseas. It will come from the relentless pace of automation that makes many good, middle-class jobs obsolete”. In contrast, Trump doesn’t seem to have shown any inclination to address the issue at all, despite evidence that it has already undermined the decision by United Technologies not to move some 800 jobs in its Carrier arm from Indianapolis to Mexico - one of the few instances where it really did seem to be criticism from Trump that was the deciding factor in sticking to investment the US.

Rather than invest in Mexico, the company stuck with its US production facility, but decided to implement more automation as a way to cut costs. "We're going to make up the $16 million investment in that factory in Indianapolis to automate, to drive the cost down so that we can continue to be competitive," chief executive Greg Hayes is reported to have said. "What that ultimately means is there will be fewer jobs."

And therein lies a problem, not just for Trump’s America, but for economies worldwide; in order for companies to remain competitive they need to improve productivity, and the simplest way to improve productivity is to increase automation, and this is only ever going have detrimental effect on the blue-collar job sector.