Robotic machines weld together the frames of sports utility vehicles (SUV) during production at the General Motors Co. (GM) assembly plant in Arlington, Texas, U.S., on Thursday, March 10, 2016. The U.S. Census Bureau is scheduled to release business inventories figures on March 15. Photographer: Matthew Busch/Bloomberg
Robots weld SUVs at a General Motors plant in Arlington, Texas. After job losses, GM’s Buffalo plant has won business and raised staff levels © Bloomberg

In a workshop in downtown Buffalo, New York, a robot brings order from chaos. Jumbled metal components — halves of hinges for truck doors — are picked out of a basket a few at a time, and scattered haphazardly on a conveyor belt.

One by one, the robotic arm picks them up, waits a split-second as its software decides what to do, then places the component precisely into position on a bracket, right every time.

“These jobs are very hard for robots, but easy for humans. Random bin-picking is a tough challenge,” says Michael Ulbrich, head of Buffalo Manufacturing Works, the group that owns the robot and the workshop.

Its mission, backed by New York state, is to help local manufacturers develop new products and processes that can help them win business in fiercely competitive global markets.

The automated hinge-sorter uses high-resolution cameras and sophisticated software to do a job that has until now needed human intervention. The robot will replace workers at the truck component manufacturer that will use it. But it will also help the company stay in business and the workers will be redeployed within the organisation.

“Robots are now much more accessible to smaller companies and can deliver a much quicker return on investment,” Mr Ulbrich says. “Automation allows these companies to grow and be profitable, and to employ more people.”

Industrial decline was a central issue in the US presidential election campaign. Donald Trump’s claims that “horrible” trade deals had allowed jobs to slip away to Mexico and China helped him to victory in the rust-belt states of Wisconsin, Michigan, Ohio and Pennsylvania. In a video released on Monday discussing his plans for his first 100 days as president, Mr Trump said he wanted “the next generation of production and innovation to happen right here, in our great homeland, America”.

The appeal of his message is obvious: US manufacturing has lost about 5m jobs, or 30 per cent of its workforce, since 2000. But those numbers tell only half the story. Manufacturing has provided a declining share of gross domestic product, but factory output has kept growing, and hit record highs this year. In the third quarter it was up 32 per cent from its low point during the US recession of 2007-09, official figures show.

“Ten years ago, people said the US was going to lose its grip on manufacturing completely. Now we’re saying: ‘I’ll be darned: it hasn’t worked out that way’,” says Craig Giffi, a vice-chairman at Deloitte, the consultancy. “And as manufacturing becomes more sophisticated, it becomes possible to move more production back to developed economies.”

Recorded productivity growth in US manufacturing has been very slow in recent years, implying that the industry’s technology is stagnating. But manufacturers suggest that there is more progress going on than the data show.

“Slow productivity growth is what happens when you have a 1 per cent growth rate in the economy,” says Hal Sirkin, managing director at Boston Consulting Group. “I do think US manufacturing is going to make a comeback.”

Make in America

In places like Buffalo there is evidence that US manufacturing has a bright future. It just does not look like a future that will include millions of new jobs.

View of men as they work on fitting cockpit canopies to the fuselages of P-40 planes at a Curtiss-Wright manufacturing plant, Buffalo, New York, 1941. (Photo by Dmitri Kessel/The LIFE Picture Collection/Getty Images)
A Curtiss-Wright aircraft assembly line in Buffalo in 1941

The city, home to 260,000 people, was a manufacturing powerhouse from the 19th century until the middle of the 20th. Curtiss-Wright, the Buffalo-based company, was once the world’s largest aircraft manufacturer, but failed to rise to the challenge of the jet age. Other sectors were hit by global competition and technological change that battered the rest of US industry. In 1969, manufacturing in the Buffalo area employed more than 180,000 people.

Though it is still has a vibrant sector employing about 51,000 people, derelict houses on the city’s rundown east side bear witness to the destructive impact of industrial job losses.

Like other fading industrial regions, the Buffalo area voted for Mr Trump. Although New York state overall went for Hillary Clinton, his Democratic rival, the area around Buffalo backed Mr Trump by 50 per cent to 46 per cent.

Alongside the visible marks of decay, however, some Buffalo manufacturers are thriving. Near the city centre, on a site it has occupied for more than a century, family-owned Eastman Machine employs 122 people making cutting machines for fabrics, including simple handheld tools and advanced computer-controlled systems. It exports half its products to customers making everything from aircraft to T-shirts, and even sells well in emerging economies such as Bangladesh and Vietnam.

One of the ways Eastman stays competitive is that labour is a very small proportion of its total costs: only about 3 per cent. Rivals in China or elsewhere may pay lower wages, but that does not give them much of an advantage.

“If you can offer solutions to customers’ issues, you can continue to survive,” says Robert Stevenson, the chief executive who is the fourth generation of his family to run the company. “American manufacturing is superior in quality and reliability.”

Donald Trump, president and chief executive of Trump Organization Inc. and 2016 Republican presidential candidate, speaks during a campaign event in New York, U.S., on Monday, April 18, 2016. Trump is accused in a lawsuit of inciting a
Donald Trump wants to deliver a boost to US productivity and innovation © Bloomberg

Labour costs have been kept down, he adds, by a sharp increase in productivity achieved by more efficient working practices. “In the 1960s, 70s and 80s, work rules just strangled manufacturing. You had to have more workers than you needed,” he says. “We said to our guys: ‘We are committed to manufacturing here. But you need to change’.”

Where once, rules stipulated one worker per machine, Eastman can now have one worker running three computer-controlled machines.

It is a similar story at one of the largest manufacturing employers in the region: General Motors’ Tonawanda engine plant on the north side of Buffalo near Niagara Falls. The plant is running flat out, working three shifts a day from Sunday night to Saturday, making engines for vehicles including Chevrolet’s Suburban and Tahoe sport utility vehicles, for which sales are booming.

It is possible to walk sections of the plant’s floor and see almost no one. The 50-pound engine blocks are picked up and twirled round and worked on by robots, often out of sight.

Not every task is automated. When the plant switched to making the larger V6 and V8 engines it reverted to manual assembly. But productivity has still risen rapidly. Even now, with production booming, the plant employs 400 fewer people than a decade ago.

When Steve Finch, the plant manager, came to Tonawanda, shortly before the recession and GM’s bailout, it employed 2,100. By 2009 it was down to just 800.

“Things were bad all over, but the auto industry was the worst of the worst,” he remembers. “We have been here in western New York since 1938, and I was really concerned about whether manufacturing would survive the downturn. But we did.”

Employment is now up to 1,700. The plant competed for investment from GM, pitting it against facilities in China and Mexico, and won.

“Maybe we can’t match their wage rates. But we can narrow the gap with productivity and innovation,” Mr Finch says. “That is our strategic advantage.”

China’s competitive advantage has been eroded by rapid pay growth, which has prompted a surge of investment in automation. “China is getting more expensive,” Mr Sirkin says. “And while manufacturers can move to Vietnam and other places, the infrastructure there is extremely rudimentary.”

Even so, the companies that need low-cost labour will find it outside the US. The Reshoring Initiative, which advises companies on relocating production to the US, estimates that such moves have created 265,000 jobs since the start of 2010: about 5 per cent of the number the US has lost since 2000. The key feature of a manufacturing process that makes it suitable for reshoring — a low-labour requirement — means it will not create many jobs in the US.

No mass employers

That paradox is vividly illustrated by the flagship project for Buffalo’s manufacturing comeback: a new grey and white factory on the site of an old steelworks that will be used by SolarCity — the rooftop solar power business just acquired by Elon Musk’s Tesla Motors.

Making solar panels in the US has been hard going, in the face of competition from Chinese companies that dominate world markets. Last week, First Solar, the largest panel manufacturer in the US, said it was suspending production and cutting 450 jobs at its plant in Toledo, Ohio. If Mr Musk can make his Buffalo plant a success, it will be an impressive achievement.

But SolarCity’s plans depend on automation. It has promised to employ 1,460 in the city, but only about 500 of those are expected to be production workers.

Like Tesla’s battery “gigafactory” being built in Nevada, the project is also the beneficiary of lavish government support: SolarCity will lease the factory from New York state, which committed $750m to the $900m plant.

“These are the kind of companies that can really change the trajectory of the economy here,” says Howard Zemsky, chief executive of Empire State Development, the state agency. “The more automated they are, the more technologically advanced the processes are, and the tighter the manufacturing tolerances are, the more clearly they are aligned with America’s strengths.”

A water tower stands on top of an ADM Milling Co. processing facility in Buffalo, New York, U.S., on Tuesday, Sept. 23, 2014. The Federal Reserve Bank of New York's empire state manufacturing report for the month of September painted a picture of vibrant output, bolstered by strengthening in new orders and shipments. Photographer: Andrew Harrer/Bloomberg
Rundown factories in Buffalo, New York state © Bloomberg

Government intervention can create manufacturing jobs anywhere, at a cost. If Mr Trump were to live up to his campaign promises of imposing punitive duties on companies that move production out of the US, he could force more domestic job creation. But such moves could provoke legal challenges and retaliatory measures overseas.

Mr Stevenson does not expect Mr Trump to start a trade war, but believes some of his other proposals, including corporate tax cuts, could accelerate the US manufacturing revival.

The question for the president-elect will be whether such measures can come close to realising his promises of spectacular job creation.

Buffalo has recently enjoyed a renaissance, with a revamped waterfront, new restaurants and rising house prices. But while employment in leisure and hospitality has risen by 6,400 in the past five years according to the Bureau of Labor Statistics, employment in manufacturing is broadly unchanged.

Manufacturing remains economically important, says David Autor, an economist at the Massachusetts Institute of Technology. It accounts for about 70 per cent of all private sector research and development, and there are many jobs in design, engineering and other functions that are sustained by manufacturing facilities. But the role it plays in the labour market has changed.

“More manufacturing is going to be done here. But it won’t involve many people. It’s not going to employ those less-educated, dexterous workers who have been eliminated from the labour force over the past 15 years,” Mr Autor says. “That’s largely over.”

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