The Unseen Economic Power of Automation

The prices of commodities that have constant variations of excessive high value are subject to collapse and could become almost worthless, thus creating a hostile business climate. The goal of industrial manufacturing is to ensure a constant profitable price on the commodity that is being produced.

   David V MacCollum

Our early industrial leaders, such as Andrew Carnegie (1837-1919), who with his U.S. Steel Company, out-produced British dominance of steel manufacturing and was manufacturing one-fourth of our nation’s steel by 1900, thus achieving a leveling effect on the price of steel. John D. Rockefeller (1839-1937) was able to dramatically affect the price of oil, as he had control of 90% of the refineries by 1878. In 1881, Rockefeller organized the Standard Oil Trust, and within a year, had complete control on the price of all oil products in the U.S..   With the advent of the automobile industry, gasoline became a profitable prize, and in 1911, our Supreme Court ended the oil monopoly. In both the steel and oil industries, the intent was to stabilize and reduce the cost of steel and oil. It was found to be the ruthless business practices to gain control that made Carnegie and Rockefeller extremely wealthy.

During the anti-trust movement, the focus was on the evil of excessive profits. Overlooked, is the benefit of stabilization on the price of steel and oil commodities, which provided economic stability for all enterprises that depended on these products. Today, in the event of a recession, there appears to be minimal coordinated effort to cut production based on a number of reasons. Often the result creates a social impact to the labor force, which then becomes a recipe for bankruptcy as enterprise cannot survive manufacturing a product at a loss.

In the mid-1800’s, Charles Darwin (1809-1888) published his theory the natural selection On The Origin of Species. By this theory, one can conclude that the origin of species involved life forms that could best survive. It appears that the same concept applies to enterprise, but in a much accelerated time frame with the implication on  “If it cannot make a profit, the business soon fails.” Unfortunately, a welfare state does not appreciate the natural selection of profitable enterprise that needs a workforce with marketable skills.

In the 1950’s, a housing boom created a very unstable price of lumber. In the early Spring, the market price per board foot of lumber was usually three times the cost by mid-Summer. This fluctuation made it difficult for many sawmills to survive. In Southern Arizona, the price of copper has now risen to above $3.00 per pound, recovering from the recent recession when copper dropped from over $4.00 per pound down to less than $1.00 a pound. This price variation creates a very difficult economic climate for the copper mining industry. The unseen economic power of automation will soon stabilize the cost of copper. An automated open-pit copper mine, with driverless ore trucks and autonomous loading shovels combined with automated blasting is without labor and can work continuously 24 hours a day, 7 days a week. If the price of copper drops, the automated open-pit mine can slow down or stop production without laying off workers, as there are almost no workers in the open pit mine. With automation the price of copper can be stabilized because production can be controlled to ensure a profitable market cost.

There are many enterprises that provide commodities, products or services that do not have to rely on many employees. Soon to come are crewless cargo and container ships, driverless highway freight trucks and countless other manufacturers that can rely on automated technology that eliminates the need for a large workforce. As this transition gradually takes place over the next few decades, automation will require a new workforce of designers, assemblers and maintenance personnel. These skills earn higher pay than the manual labor they replace. The future looks bright, because automation that ensures for a stable market price will be creating a new professional workforce.

The unseen economic power of automation will not result in industrial monopolies such as what Carnegie and Rockefeller created. What appears to be happening is a powerful balanced economy will arise with great opportunity for innovation. The basis of this belief, one only needs to look at the economic engines that Microsoft and Apple created. Automation needs to be welcomed as a new investment source that provides a greater access to wealth for innovative people.

About David V. MacCollum 56 Articles
David V. MacCollum is a past president of the American Society of Safety Engineers and was a member of the first U.S. Secretary of Labor's Construction Safety Advisory Committee [1969-1972]. He is the author of: Construction Safety Planning (Jun 16, 1995) Crane Hazards and Their Prevention (Jan 1, 1991) Construction Safety Engineering Principles (McGraw-Hill Construction Series): Designing and Managing Safer Job Sites Jan 8, 2007) Building Design and Construction Hazards (May 15, 2005)