With factories swapping technology for workers during the recovery, jobs may not come back for decades.
by Joel Schectman
Looking out at the mammoth factory floor where Samsung Austin Semiconductor assembles microchips, Cyrus Bavarian realized there was one thing missing: people. Bavarian, a 24-year-old process engineer hired last spring fresh from the University of Texas, Austin, had imagined the dust-free assembly floor would be crowded with workers wearing “bunny-suits,” those white booties and hair coverings that make the employees look like surgeons. Instead he saw only robots. “There is just nobody out there. You hear the whir of machines, and you see the lights but these tools are almost just operating themselves,” Bavarian told NEWSWEEK. “It’s like The Matrix.”
Even for a high-tech manufacturer like Samsung Semiconductor, this level of automation was new. Two years earlier, at a facility now closed, workers jockeyed for space on assembly lines, much like a more traditional factory. “With these workers the automation was very limited, you basically had them hauling [silicon] wafers [for microchips] between areas. It was labor intensive,” says Burton Nicoson, vice president of fab engineering at Samsung. Those jobs required lesser skills, didn’t need someone with a college education, and paid well—around $50,000 a year. “The industry has now automated that process,” says Nicoson. At the new facility where Bavarian was hired, the factory uses robotics to move the parts instead. As a result of the automation and other business shifts, more than 500 of these mostly less skilled employees lost their jobs in 2009. Meanwhile, Samsung is expanding its Austin operations and has added 600 high-skilled, higher-paid workers like Bavarian. But while the company has brought back some of its old workers, Nicoson says most of those manual-labor jobs are gone.
The story of Samsung in Austin is becoming the story of manufacturing in America. The crush of the recession and the lagging recovery have forced factories to accelerate their use of technology, as they’ve chopped 15 percent of their workforce—or more than 2 million jobs—since 2007. “When your profit margins get smaller and you keep cutting your workforce, you need to find a way to do those jobs with either computers or robotics,” says Tom Runiewicz, an industrial economist at IHS Global Insight, a market-research company. And now that companies have learned to do tasks more cheaply using machines, analysts say many of the more lower-skill factory jobs aren’t likely to come back.
The phenomenon of manufacturers using technology to trim the workforce is not new. Between 2000 and 2007, the manufacturing sector had already chopped around 30 percent, or 3 million, of its workers as it became more technologically savvy and faced intense pressure from cheaper overseas production. But during the recession and subsequent recovery, that process of adopting technology accelerated at a breakneck pace. Productivity at these leaner factories shot up 8.6 percent in 2010, the biggest gain in 20 years. Investments in technology by companies across the economy rose 15 percent—to $590 billion—the biggest increase in almost a decade, as companies sought high-tech ways to do more with less.
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