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Automation will bring the robots back to USA, actually. Since robots cost the same to operate in US and they do in China, factories will shift location closer

Automation will bring the robots back to USA, actually. Since robots cost the same to operate in US and they do in China, factories will shift location closer to the markets they supply. EDIT: my point was not clear enough. I'm saying in the long-term automation will reduce the cost of labor close to zero, leaving only the cost of inputs and distribution (supply chain). Not to mention the IP risks of locating tech in China, advanced automation will make it more cost effective to shift production to be located next to the markets where those products are sold to consumers. China is well aware of this, which is why the current government policy is focused on boosting the local innovation and technology economy.

anovikov 8y ago
Except the markets they supply will also be in China as economy there is already bigger and consumption will very soon be also bigger...
- owens99 8y ago
  The economy is not bigger in China yet. Also, the competition in China will be more fierce for US companies than in domestic markets, meaning they will have less market share.
- sremani 8y ago
  China has aging population (median 41 years age) and things get further complicated by one child policy, which are not reversing even with relaxation of it. Their attempts to pivot to consumption economy did not yield much of a result. Once their shawdow financing faces a day of reckoning, we have to wait an see what their real consumption capacity is.
  - Latteland 8y ago
    That is surprisingly old for China. I looked up a random source on the internet that was close to that. Doesn't really change your point though. This article says Chinese median age in 2019 is 37.3 and us is 36.5. That's interesting that we are the same. China has the other problem of producing too many men and not enough women, leading to increasing problems of pressure. That problem of not enough women to match the men seems like it will be a worse problem. http://www.worldometers.info/world-population/china-population/ http://www.worldometers.info/world-population/china-populati... https://en.wikipedia.org/wiki/Demography_of_the_United_States https://en.wikipedia.org/wiki/Demography_of_the_United_State...
mises 8y ago
> robots cost the same to operate in the US and they do in China Nope. Labor, land, resources are all typically cheaper in china. It's also close to other manufacturing. I've read on this elsewhere; it's called "economies of proximity" or some such (I can't recall exactly). But it means you don't have to ship inputs or outputs as far.
- owens99 8y ago
  Labor? We are talking about automation. What I am saying, in your words, is automation will shift the "economies of proximity" equation to make more sense back in the USA.
  - chimpburger 8y ago
    Not everything will be automated simultaneously. In order to build a factory that is completely automated there is still human labor in building the factory itself, building infrastructure, mining and transporting materials, etc.
  - mises 8y ago
    But here's the possible issue: Chinese factories start industrializing. They stay near the others. Because everyone's still in China, the next generation will be built there. This is a big part of the reason why America winning the "AI arms race" is so important.
deogeo 8y ago
No, because it won't be a discrete shift from 100% humans to 100% robots - things will get automated in small parts. And even without that, the factories rely on the nearby supply chains. Eventually, when you'll try to move something back to the US, you won't be able to because there just won't be any ecosystem there. E.g. https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-... Classic "We moved the supply chain to China because it's cheaper --> We can't build stuff in the US - all the factories are in China!"
- owens99 8y ago
  Your points do not counter what I am saying. Infact, I agree with both of your points. The problem is, supply chains are not as entrenched as you claim. Given a long enough time horizon and advanced enough automation, robots will move back to USA. Especially consider the IP risks and political concerns WRT China. It will take a long time for all industries, some will happen before others, but there will be more vertical integration through automation and it will become more cost effective to have factories (not jobs, there will be no jobs from this) for products next to the markets they serve. This is what most economists believe, and what the Chinese government believes, which is why they are pushing to develop AI and innovation.
- randcraw 8y ago
  But factories won't physically move at all. As costs change, makers will just spend money to create new factories wherever costs are lowest -- labor, raw materials, power, regulations, shipping. The old factories (and companies) will close, as they did in the US starting in the 1960's, and new ones will arise somewhere else, usually run by someone else. The effect will be the same though: the site of manufacturing will change. But like the Star Trek transporter, no matter actually gets moved.
  - deogeo 8y ago
    Careful - that something happened in the past is no guarantee it'll happen again, especially if conditions change. > wherever costs are lowest -- labor, raw materials, power, regulations, shipping. Due to automation, labor costs will be less and less of a factor. Ocean shipping is already very cheap, and comprises a negligible fraction of the cost of most products - it's how markets in Europe are full of Chinese garlic. Raw materials can be shipped, so those are also not much of a factor. That leaves only power and regulations as factors. A smart country is likely to make sure those don't work against it, and to outsource only the most environmentally-harmful production steps. There are still tariffs, but being willing to host polluting industries is otherwise dangerously close to being the only advantage an under-developed country has left.

anovikov 8y ago

Except the markets they supply will also be in China as economy there is already bigger and consumption will very soon be also bigger...

owens99 8y ago
The economy is not bigger in China yet. Also, the competition in China will be more fierce for US companies than in domestic markets, meaning they will have less market share.
sremani 8y ago
China has aging population (median 41 years age) and things get further complicated by one child policy, which are not reversing even with relaxation of it. Their attempts to pivot to consumption economy did not yield much of a result. Once their shawdow financing faces a day of reckoning, we have to wait an see what their real consumption capacity is.
- Latteland 8y ago
  That is surprisingly old for China. I looked up a random source on the internet that was close to that. Doesn't really change your point though. This article says Chinese median age in 2019 is 37.3 and us is 36.5. That's interesting that we are the same. China has the other problem of producing too many men and not enough women, leading to increasing problems of pressure. That problem of not enough women to match the men seems like it will be a worse problem. http://www.worldometers.info/world-population/china-population/ http://www.worldometers.info/world-population/china-populati... https://en.wikipedia.org/wiki/Demography_of_the_United_States https://en.wikipedia.org/wiki/Demography_of_the_United_State...

mises 8y ago

> robots cost the same to operate in the US and they do in China Nope. Labor, land, resources are all typically cheaper in china. It's also close to other manufacturing. I've read on this elsewhere; it's called "economies of proximity" or some such (I can't recall exactly). But it means you don't have to ship inputs or outputs as far.

owens99 8y ago
Labor? We are talking about automation. What I am saying, in your words, is automation will shift the "economies of proximity" equation to make more sense back in the USA.
- chimpburger 8y ago
  Not everything will be automated simultaneously. In order to build a factory that is completely automated there is still human labor in building the factory itself, building infrastructure, mining and transporting materials, etc.
- mises 8y ago
  But here's the possible issue: Chinese factories start industrializing. They stay near the others. Because everyone's still in China, the next generation will be built there. This is a big part of the reason why America winning the "AI arms race" is so important.

deogeo 8y ago

No, because it won't be a discrete shift from 100% humans to 100% robots - things will get automated in small parts. And even without that, the factories rely on the nearby supply chains. Eventually, when you'll try to move something back to the US, you won't be able to because there just won't be any ecosystem there. E.g. https://www.nytimes.com/2019/01/28/technology/iphones-apple-china-made.html https://www.nytimes.com/2019/01/28/technology/iphones-apple-... Classic "We moved the supply chain to China because it's cheaper --> We can't build stuff in the US - all the factories are in China!"

owens99 8y ago
Your points do not counter what I am saying. Infact, I agree with both of your points. The problem is, supply chains are not as entrenched as you claim. Given a long enough time horizon and advanced enough automation, robots will move back to USA. Especially consider the IP risks and political concerns WRT China. It will take a long time for all industries, some will happen before others, but there will be more vertical integration through automation and it will become more cost effective to have factories (not jobs, there will be no jobs from this) for products next to the markets they serve. This is what most economists believe, and what the Chinese government believes, which is why they are pushing to develop AI and innovation.
randcraw 8y ago
But factories won't physically move at all. As costs change, makers will just spend money to create new factories wherever costs are lowest -- labor, raw materials, power, regulations, shipping. The old factories (and companies) will close, as they did in the US starting in the 1960's, and new ones will arise somewhere else, usually run by someone else. The effect will be the same though: the site of manufacturing will change. But like the Star Trek transporter, no matter actually gets moved.
- deogeo 8y ago
  Careful - that something happened in the past is no guarantee it'll happen again, especially if conditions change. > wherever costs are lowest -- labor, raw materials, power, regulations, shipping. Due to automation, labor costs will be less and less of a factor. Ocean shipping is already very cheap, and comprises a negligible fraction of the cost of most products - it's how markets in Europe are full of Chinese garlic. Raw materials can be shipped, so those are also not much of a factor. That leaves only power and regulations as factors. A smart country is likely to make sure those don't work against it, and to outsource only the most environmentally-harmful production steps. There are still tariffs, but being willing to host polluting industries is otherwise dangerously close to being the only advantage an under-developed country has left.