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Note two contradictory popular trends: 1. AI is going to replace cheap labor 2. Engineering companies are outsourcing because of cheap labor The reality is tha
by jl2718 7y ago
Note two contradictory popular trends:
1. AI is going to replace cheap labor
2. Engineering companies are outsourcing because of cheap labor
The reality is that trend #2 is orders of magnitude larger. Any reversal of that by ‘AI’ would be the biggest jobs boom in decades for western nations, and according to this article, would increase quality and therefore trade balance as well.
The other reality is that manufacturing automation with ‘AI’ is hard, takes a lot of human effort, and is a huge part of a company’s value (e.g. Tesla). Outsourcing is often selling off this value at a negative price. It is done because Wall St analysts don’t know how to price this asset.
Like it or love it, it is investment analysts that determine company culture. The good thing is that they are greedy; they may be misinformed, but they are predictable. Everything above liquidation value is held in the heads of the employees of the company. Its actually not that hard to compute, and if business schools taught this, corporate behavior would change.
- HeWhoLurksLate 7y agoThat reminds me of an article I read about the new Toyota Supra and Toyota & BMW's collaboration to create it and (either the Z4 or an M-car? Sorry, I don't remember). Anywho, the thing that was interesting to me was how much Toyota and BMW were willing to invest in what is more or less an engineer's bootcamp- like baseball teams playing out-of-league teams in practice to get better- and that that was seen as a worthy investment by the engineering team's superiors. Some companies still value engineers. That's where I want to be.
- imglorp 7y agoMaybe all true, but also note that all is not roses, at least in all engineering departments. Toyota produced a lump of buggy firmware spaghetti that cost the company more than $1B after the unintended acceleration crashes. And Beemer seems to have a dual culture where the dinosaurs are fighting its electric future (cf the i3 disaster: it still costs more than a Tesla or Bolt but has half the range; that doesn't sound like all-in).
- selimthegrim 7y agoSee my remark above.
- downrightmike 7y agoUnless you look at long term focused companies like Amazon, which is creating all kinds of value without bowing down to short term market analysts. Had Boeing looked beyond the immediate future and planned to upgrade the 737 frame, or make a new one so it could support the much larger engines, they wouldn't be in this situation. But short term costs and profits, outsourcing and negligence is running the company. Break them up until the have some competency in what they are doing.
- pytester 7y agoIf Boeing hadn't subscribed to the view that pilots were an inconvenient expense to be slowly dispensed with with ever more "sophisticated" automation like MCAS they also wouldn't be in this situation. It's uncomfortable to think about but a management fashion that silicon valley helped promulgate killed those 600 people.
- throwaway66920 7y agoBoeing didn’t create the MCAS system because they thought it was a superior design or a labor saving mechanism. They did it to compensate for bad design of the physical plane.
- pytester 7y agoAnd if the pilots had been trained to turn it off at the right time it would have been safe. They weren't (the plane was advertised as requiring no new training), and boeing made MCAS deliberately hard to turn off.
- jl2718 7y agoAmazon is a case of purposely cultivating long-term investors and analysts. Somehow they made a case that their intangible NPV is much larger than other companies with similar profits. However, history indicates that a CFO will soon take over, start outsourcing, and they will be more profitable, but their long-term investors will sell to short-term investors and give them short-term valuations (lower NPV).
- nikanj 7y ago"AI took your job" so far has mostly meant "An Indian".
- Gibbon1 7y agoDirty secret, other countries automate, the US outsources.
- jayd16 7y agoThose aren't contradictory at all. You could argue they're not even related because the labor in each situation is different. Even if they were the same, you could still have a situation where some engineering jobs go to cheap labor and some to AI so even on its face its not a contradictory.
- Iv 7y agoI think China's development stalled automation efforts for two decades. Now finally that China starts being too expensive, once investors will realize it is complicated and costly to outsource to Vietnam, India or African countries, I hope this effort will resume.