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Comment by AnthonyMouse | Hacker News Reader

That's assuming it lasts. When you already have a factory in Mexico and now you have to pay them $16/hour, it makes little sense to immediately move it back to the US just in order to save $0 by paying US workers $16/hour instead.

But the next thing that happens is that it becomes more cost effective to automate, so you start considering that. Then you don't employ as many people, and they become skilled workers who maintain high tech robots instead of unskilled workers turning wrenches, so you're not actually paying unskilled workers $16/hour anymore.

Meanwhile the automation requires retooling, and maybe then you evaluate whether to retool the existing factory or to build a new one in a place with more skilled workers who can maintain the robots.

In year zero you just raise wages for the existing workers. In year two or five or ten, something else happens.

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> But the next thing that happens is that it becomes more cost effective to automate, so you start considering that.

Economically that is always the desired direction, but not because people cost too much. Changes to automation are incredibly expensive to build. The benefits to increased automation are increased output volume and improved quality control.

Any cost reductions that arise are almost always completely unintended. To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product. You have to consider things like marketing, regulation, distribution, and so forth that do not benefit from the same automation efforts.

> Any cost reductions that arise are almost always completely unintended.

Nonsense. Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper? That a loom costs more than the labor required for hand weaving? Or that businesses don't realize that they are?

> To the contrary increased automation actually raises costs directly proportional to changes in market pressure from the increased output volume and any supply chain changes that increase access to the product.

Hardly any manufactured product is genuinely long-term supply constrained. Output volume increases as a result of higher demand. Higher demand comes from lower prices. If automation isn't lowering prices then it isn't increasing output volume.

> Are you trying to argue that computers are not an intentional cost savings over floors full of accountants using pen and paper?

Yes. The key word there is intentional.

> Output volume increases as a result of higher demand.

Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.

> Yes. The key word there is intentional.

You're basically arguing that businesses are run by people who can't compare numbers to each other.

If automation costs less, as it often does, then businesses will adopt it because it costs less, because lowering costs increases margins (or volumes, if the lower costs are passed on).

> Indirectly. Output directly increases from higher production capacity. Wishful thinking and consumer desire do not transform manufacturing without some changes to that manufacturing.

Not indirectly. If there is demand for 5000 cars at a given price and you suddenly gain the capacity to manufacture 10,000 cars at that price, you still aren't going to manufacture 10,000 cars unless you expect somebody to buy them. Having the capacity without the demand is nothing.

And having the demand without the capacity would only cause businesses to expand capacity, whether through automation or otherwise. If it was profitable to make 5000 cars by hand and there is demand for 10,000 cars at that price then they would just hire twice as many people to make them if nothing else.

Automation in almost every case costs substantially more, but frequently results in a lower cost per unit. Comparing variable numbers is algebra but this is a calculus problem.

> Automation in almost every case costs substantially more, but frequently results in a lower cost per unit.

Which is why you amortize the up-front cost over the expected number of units adjusted for time value of money. In which case the automation often still results in lower overall costs.

> Comparing variable numbers is algebra but this is a calculus problem.

Calculus still leads to comparing numbers. Businesses know how to do calculus.

Algebra results in numbers. Calculus results in functions. Businesses that plan well know when not to invest in automation changes.

> Yes. The key word there is intentional.

In what universe is replacing floors full of accountants with a room full of computer(s) anything other than intentional?

"Oh, whoops, we bought these computers on a whim, and now all of a sudden all but a fraction of these accountants are completely redundant! Total accident, who would've guessed it?"

There is an entire world of books covering this about Toyota. Automation doesn't translate in lower costs necessarily.

Higher production volume means more material purchased, increased warehouse costs, people hired for warehousing, and everything related.

So it all depends on the organization.

The notion that car manufacturers from all the industries out there haven't already automated anything that's worth automating is something that I can't understand.

"Worth automating" isn't a simple one-time binary decision. Whether a given process is worth automating depends on the cost of automating it, and the labor costs that it will save, both of which change over time.

Japanese manufacturers at least have had similar if not higher costs on manufacturing in Japan( and Europe). And these factories still employ a large number of skilled and non-skilled workers.

I don't think a bump in salaries that puts a country in the same ballpark as existing manufacturing locations( not counting the extra costs of manufacturing in the States or in Europe) is going to be such a big push for more automation. After a certain point the versatility of human workers is still useful.

It needs to be understood that any kind of new engineering project has a risk of failure, often quite high. For example, in software, there's the infamous CHAOS report from the Standish Group that comes out every couple of years. A casual Google for the 2018 results has this quote from someone with a copy (https://hennyportman.wordpress.com/2020/01/03/review-chaos-r...)

> "The Standish Group started with a traditional metrics of success by looking at: “on time, on budget, and on target”. This means in this CHAOS Report 2018 for the year 2017: successful: 36%, challenged: 45%, failed: 19%. If they use their “modern” definition of success: “on time, on budget, with a satisfactory result.” You get almost the same results (33%, 48%, 19%)."

So, about 1/3 of IT projects are successful, including being on-time and on budget, and about 1/5 are total losses that fail to deliver any value at all. Not great odds and I'd expect the numbers are likely to be broadly similar in other engineering fields.

The decision on whether or not to embark on an engineering project (and whether to do it in-house or hire a third party) is among the most challenging duties executives have.

Toyota and Tesla found out the hard way that a lot of tasks can't be automated. Robots are still very very very dumb.

Tesla tried to go 100% automated and failed.

Those factories are just going to move out of the NAFTA area, assuming Biden doesn't win and undo everything Trump's done.

Isn't the point of the agreement that the terms are better than what you get in other areas? It doesn't help to move to China if cars from China are subject to even higher tariffs than cars made for less than $16/hour in Mexico.

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