< PreviousFEBRUARY 201810 Recently, the specter of automation has cast a shadow over the manufacturing industry. Alongside gains in productivity, automation also produces widespread fear of job losses and mass unemployment. Statistical evidence, based on historical trends in automation, reveals a much less alarmist picture, while advances in the area broadly defined as Artificial Intelligence (AI) are seized upon as evidence that in the near future, human labour will be made obsolete, or worse, AI will be the catalyst of humanity’s destruction.Written by Ian McCauslandAs research into Artificial Intelli-gence has accelerated in recent years, however, there is also mounting evidence that fully autono-mous automation, whether in the form of self-driving cars or generalized artifi-cial intelligence that can perform at the cognitive level of humans or operate factories without human interven-tion, is, in fact, a very long way off. In this context, the future of automation presents an opportunity to redefine work, to automate physical or cognitive tasks that are routine, tedious, danger-ous, or dull, and put humans to work in roles that are better suited to their capabilities and skills. Historically, automation’s impact on employment has never been directly causal: not only are there other mitigat-ing factors at play, but job loss in one area may create jobs in other areas. As far back as 1994, an OECD study observed that technology “both eliminates and creates jobs,” generally destroying “lower wage, lower productivity jobs, while... creat[ing] jobs that are more productive, high-skill and better paid.” More recent studies corroborate this claim, such as a 2017 Canadian study by the C.D. Howe Institute that looked at robot density in manufacturing in various countries around the world. Its authors hypoth-esized that if automation were respon-sible for destroying jobs in the industry, high robot densities should correlate with job losses; however, their research uncovered no such correlation, conclud-ing that technological change “does not inevitably lead to a reduction in human labour” because automation either “complements human labour,” which generally “increases productivity” and “should be reflected in higher wages and overall economic gains,” or takes over “specific aspects of a job, rather than replacing it entirely.”11 MANUFACTURING IN FOCUS Susan Houseman, Senior Economist at the Upjohn Institute for Employment Research, has argued that manufacturing job losses in the United States have more to do with globalization – outsourcing production overseas – than automation. She bases her conclusion on how statistics on U.S. manufacturing are collected and interpreted, which overemphasize the manu-facture of computers and semiconductors (industries that are not only already heavily automated but also traditionally rely on outsourced labour) and consequently paint a misleading picture of output growth in the industry. The problem is that the computer industry doesn’t fit the usual interpreta-tion of productivity growth, which tends to indicate that “workers are working faster or that automation… is driving the growth.” In other words, that productiv-ity is directly proportional to output. Instead, as Houseman explains, produc-tivity growth in computer-related indus-tries “primarily reflect[s] innovations from research and development and innova-tions in the production process.” The same amount of labour can produce more value, because the product is better, more advanced, and so consumers are willing to pay more for it. To illustrate how this works in the computer industry, one need not look further than the price of Apple’s recent iPhone X (not manufactured in the U.S., of course, but this is not the point of this example): workers are producing more value (measured as output) not because they are working any faster to produce more, or are otherwise more productive in the traditional sense of producing more output with the same amount of labour, but because one iPhone X is worth 1.4 times more than the previous generation iPhone. This evidence suggests, according to Houseman, that while manufacturing in the U.S. is declining, the decline has little to do with automation as such.Advances in automation, then, may even help to reinvigo-rate the industry. Consider, for example, Foxconn’s plan, announced in July of 2017, to build a $10 billion LCD display panel facility in Wisconsin. Just one month before, in May 2017, Apple, Inc. announced the creation of a $1 billion fund to invest in “advanced manufac-turing” in the U.S., going on to invest $200 million of this fund in Corning, Inc., the company, based out of Harrods-burg, Kentucky, that manufactures the glass used for the front (and back, for newer models) of the iPhone. Given that these manufacturing plans are still in the early stages, it’s diffi-cult to know what kind of impact they will have on the U.S. economy as a whole – in 2013, Foxconn announced and then scrapped a plan to open manufacturing facilities in the U.S., so an announcement is not a guarantee that this facility will be created – but it’s certainly worth considering whether advances in automation have helped lay the foundation for this interest in bringing manufacturing facilities (back) to North America, particularly in industries that are generally considered to rely on a large pool of cheaper labour in coun-tries like China.“Manufacturing job losses in the United States may have more to do with globalization – outsourcing production overseas – than automation.”FEBRUARY 201812 Here, a question arises: given the explosive advances in Artificial Intelligence since the beginning of the decade, should we not expect a disruption from new forms of automation that break with the above-mentioned trend, combining advanced artifi-cial intelligence with robotics? Are we facing what Klaus Schwab, founder and executive chairman of the World Economic Forum, calls, in his book of the same name, the fourth industrial revolution, characterized by widespread (internet) connectivity, big data, and artificial intelligence? These technological advances are assumed to enable the automation of cognitive tasks in addition to physical ones.There is reason to suppose, however, that this trend will continue. In the first place, the field that predominates in artificial intelligence – so much so that it tends to be synonymous with it – is machine learning (ML), which allows computers to isolate and extract patterns within data and make predic-tions based on these patterns without being programmed, by way of typical, procedural instructions. ML powers the voice assistant in your smartphone (natural language processing), image recognition, search engines, and recommendations on services such as Spotify, Netflix, and Amazon.Fundamentally, machine learning is a form of statistical analysis and it is only as good as the data it has at its disposal, all other things being equal. So the fact that ML has developed along-side the massive accumulation of data made possible by the current state of internet connectivity, known colloquially as Big Data, is not a coincidence; it is extremely useful in sifting through this data to glean patterns and trends. But it requires, particularly in the context of supervised learning, training data to reveal the salient features it should be looking for. In other words, there is, implicit in this relationship between machine learning and its data, the need for human intervention.Rodney Brooks, former director of the MIT Computer Science and Artificial Intelligence Laboratory and founder and CTO of Rethink Robotics, has recently written a number of essays that serve to temper the current hype around the perceived rapid progress in the field of AI, that is assumed to be on a very real-istic path toward surpassing human intelligence. His company builds industrial robots that can be ‘trained’ and operated by ordinary people through a combination of hardware and intuitive software. The model of interest here is called Baxter – which is like the iPhone of industrial robots. In a 2013 TED Talk, titled “Why We Will Rely On Robots,” he tells the story of Mildred, a long-time factory worker who was able to program and work alongside Baxter within an hour. Brooks’ vision for robots like Baxter is for factory workers to move from working on the assembly line to becoming robot trainers. Mildred has, in fact, a deep knowledge of what kinds of actions need to be performed on the assembly line, and Baxter’s user interface facilitates the transfer of this knowledge from worker to robot, not in order to replace her but to take over the more repetitive and tedious aspects of the job. By con-sidering the human context in which the robot will be embedded, Brooks’ creation lays the foundation for a redefi-nition of work, rather than an outright replacement of it, and comprises an engineering solution guided by a real-istic understanding of the capabilities of AI.In an October 2017 article for MIT’s Tech-nology Review, “The Seven Deadly Sins of AI Predictions,” Brooks refers to Amara’s Law (coined by Roy Amara, an American researcher and scientist, who co-founded the Institute for the Future in Palo Alto): “We tend to overes-timate the effect of technology in the short run, and under-estimate the effect in the long run.” Brooks illustrates this ‘law’ through the development of GPS in 1978. Although it started as a U.S. military project to deliver munitions, and didn’t manage to make good on its intended purpose until Operation Desert Storm in 1991, it is used today in ways that one would never have imagined from the vantage point of the 80s and early 90s, when the technology was in its infancy.We are currently witnessing this “overestimation” of advances in the field of machine learning, so much so that it is difficult, at times, to see the forest for the trees. Rather than getting too far ahead of ourselves, it is worth considering instead how automation can be used to facilitate greater productivity and efficiency by working in collaboration, rather than in competi-tion, with humans. Playing to the strengths of technology and understanding its limits allows for more effective uses of auto-mated and human labour alike. Above all, though, it is worth remembering that while particular jobs may come and go as tools become more sophisticated and refined, there is still work to be done.“It is worth considering how automation can be used to facilitate greater productivity and efficiency by working in collaboration, rather than in competition, with humans.”13 MANUFACTURING IN FOCUS FEBRUARY 201814 Written by Pauline MüllerWhen Regal Plastics’ Visionary and Chief Network-ing Officer, Wayne Gono, heard his son, Chad, speak about how they needed to make the wholesale plastics industry sexier, he knew they were onto a good thing. Wayne and his wife Patsy gave Chad the go-ahead and the results are phenomenal. “If you were to walk into our place today, you wouldn’t know whether you’d walked into a 1960s discotheque, a bar, or a movie theater. When your customers tell you that they love your store so much that it wouldn’t really matter what you charge them, because they’d still buy, you know you’re on the right track. That’s exactly what happened at Regal Plastics, Texas, not so long ago. 15 MANUFACTURING IN FOCUS In fact, you wouldn’t know what you’ve walked into – and cus-tomers are loving it,” says Wayne. Regal Plastics specializes in what is better known as performance plastics. Rather than single-use plastics like bottles and plastic bags, the company focuses on durable plastic. “We provide the types of plastics the world can’t do without – plastics necessary for office machinery, spacecraft, automotive, aircraft, medical, construction, architectural, that kind of thing,” says Wayne. While Regal Plastics is mainly a distributor of sheet, rod and tube, about 40 percent of the business is composed of fabrication, where these items are turned into useful specialty items, POP display, and custom tailored plastic solutions. The company works with a lot of acrylic glass, Lexan, HDPE, amongst other materials.Wayne’s father-in-law started Regal Plastics at the advice of two businessmen that were friends. Don had lost his job as a salesman when the company he was working for went out of business and he found himself without a job. One of those friends was the founder of Regal KC, the other was the owner of Regal Shreveport. They encouraged Don Walker to start a Regal Plastics in Dallas; that eventually grew into having a location in San Antonio, Houston, Austin and then Ft Worth. Don and his wife took almost every bit of their life’s savings and started the business when Don was around 45 years old and had a wife and three children at home. Regal Plastics has thrived ever since, and today the second and third generations work shoulder to shoulder. Wayne and Patsy didn’t know much about running a plastic distribution company when they took over the business from his father-in-law in 1996. But what they didn’t know, they learned fast. They surrounded themselves with excellent people who could help guide them and take the business to the next level. “Typically, when the founder of any company hands the reins to the next generation, they give them the responsibility but they don’t relinquish the authority. That makes it very difficult for the entire company, especially when you’ve got somebody in charge who only has the responsibility, but not the authority,” says Wayne. “Dad” was alive when he turned the business over to us, but we were fortunate. He gave us both the responsibility and the authority. He never questioned anything we did, nor the decisions we made.” While his dad gave them counsel deep into his last days, Don always supported everything they did. Wayne and Patsy attri-bute their success to this wisdom. Wayne and Patsy bought his father’s and siblings’ stocks after his dad’s passing about eight years ago. Four years ago, their two kids announced their “We provide the types of plastics the world can’t do without – plastics necessary for office machinery, spacecraft, automotive, aircraft, medical, construction, architectural…”FEBRUARY 201816 interest in joining the ranks. “We were all in agreement that the time was right,” he says.The family had an unwritten rule that their kids were welcome to join the business, but two things were required of them: they had to give college a try, and then they had to do some-thing else for three to four years afterwards. “We didn’t want our children to just walk into this business without experience,” says Wayne. This gave their children the opportunity to gain experience in other fields and, of course, the life skills they acquired during this period proved to be invaluable. The kids’ decision was a big moment for Wayne and Patsy. “We suddenly had an exit strategy and also we knew exactly what we had in both our children. Everything worked out perfectly,” he says.The two millennials’ contributions were an eye opener for their parents. The minute they got the go-ahead and the author-ity from their folks, Regal Plastics soared. To date, they’ve led the company through three major growth processes, which, as Wayne says, rocked the company’s world in a very, very good way: Culture Index, Lean Manufacturing, and EOS, Entrepre-neurial Operating System. The whole experience is so exciting that Wayne and Patsy cannot help but enjoy watching what this extraordinary generation gets them into. “Regal Plastics takes its social and environmental responsibilities seriously.”FEBRUARY 201818 It makes him proud to see his children succeed. About the early days Wayne says, “We’re a very devoted Christian family, and so we probably spent as much time on our knees praying about where God was going to take this little business as we did anything.” He believes that taking wise counsel from people and from the Bible was what really propelled them until the kids joined the team. To Wayne, the family’s faith is their legacy that helped grow the business, but he warns that the biggest pitfall can be complacency. When the kids joined, they started asking spot-on questions that the couple hadn’t consid-ered in almost a decade. Their answers culminated in a brand new, younger team of fresh minds with younger hearts and more energy. This was when every-thing started to shift. Wayne and Patsy feel very fortunate that their children pointed out the danger they were in, in terms of their comfort zone. “They woke us up,” he says.Next >