Automation Helps Businesses Grow

When driving through southern Germany on a hot summer day in 2018, the prosperity of the region appears to be indestructible. These people have been hard at work for generations. They're good at what they do. They like to make things and make them well. They're serious about innovation in hundreds -- and have built thousands of small- and medium-sized companies -- and some big ones. Things are under control. The South's wealth is manifest, inequality is comparatively low, trust in institutions is high, and workers and management still mostly trust each other. People are well-educated, the vocational training system works as well as the high schools. In some places, kids still learn to read Latin just because they can.

One Sunday afternoon this summer, when I entered the small Bavarian town of Neuburg (paddling, on a river boat, but that's a different story), about half of the local population appeared to be happily taking a bath in the Danube, the local fire brigade watching over them. The apocalypse, decidedly, was not happening here. Not on these guys' watch.

But I had reasons to foster gloomy thoughts about whether any of this is going to be in danger anytime soon. First, prophets of doom are everywhere these days, enumerating reasons for imminent civilizational collapse. Second, I work in the automation industry.

What I do fits one of the prophets' narratives: I enable robots to perform tasks that so far only humans could do. The type of automation my company offers will put everyone out of work, say the prophets of doom. Was I a cynic to join Neuburg's super-relaxed citywide summer swim? I don't think I was. On the contrary, to me, automation is what made it possible.

Whether we need to worry about automation is not a new debate, neither in the U.S. nor in Germany. It hasn't been brought about by digitalization, or recent developments in robotics or AI. As early as 1962, Der Spiegel, Germany's leading newsweekly, reported on the dangers of automation, talking of "the dead halls" -- factories with no humans left in them, while telling stories of awesome productivity gains in the same piece. Going further back, there's “This is Automation,” a 1955 educational film by GE on advances in automation in manufacturing and how it already helped to create jobs. Some 60 years later, key themes in the movie – the enthusiasm and the worries – all sounds stunningly familiar.

So the same basic arguments have been exchanged ever since the idea of production automation took hold. Engineers and managers have argued that producing more, at lower cost and with better quality, will benefit everyone while allowing workers to move from repetitive manual labor to managing complexity: use their hands less and use their brains more. The press, looking for the dramatic angle, have always argued that people will be put out of work, period, as any substitution of jobs happens slowly and over generations. Both of these stories are true.

What convinces me is that the region's factories are amongst the most thoroughly automated on the planet. Not far from Neuburg, just a day's boat journey up the Danube, is Ingolstadt, home of Audi. I've done business with Audi, and I've seen its production lines. It's not that Audi employees went on a big strike to protect their jobs when robotic automation became a major thing in the 1970s. They decided the robots were instrumental in building better cars, hence were to be welcomed. They’ve done well ever since.

On the other hand, regions that emphasized protecting workers from efficiency gains through automation (and better management techniques) seem to have done less well. The British industrial base is still strong, but has clearly suffered in the 70s and never fully recovered. British car companies, with a few niche exceptions, are mere shadows of their former selves. They still make cars but they don't do it the British Leyland way anymore. They do it the BMW and the Ford way.

My takeaway from these observations: the same anti- and pro-automation arguments have not changed over the decades. But, historically, those who automate their processes are able to achieve something that those who don’t automate have difficulty doing—thrive. The ant-automation model—where everyone makes a bit of everything, slightly worse and more expensive than it could be done through automation—may not be ideal.

Automate. Make whatever you make as good as you can possibly make it. Then watch them come and buy. I am actually convinced automation isn't putting my Bavarian friends out of work. Automation allows them to continue to enjoy their beers on the banks of the Danube – and not have to worry about an apocalypse.