Jack Buffington

The Future of Manufacturing: An End to Mass Production

Once upon a time, there may have been a fantasy of a leisure society, and a 15 h work week, but no longer. Perhaps the fantasy began to end when the first industrial robot was installed on an assembly line at a General Motors plant in New Jersey in 1961, and this love/hate fascination with automation and employment has been on our minds ever since; the largescale automation of labor has been around for over a century, even though some of us believe it’s just a recent phenomenon. It continues forward, as I will discuss in this chapter, and today, it has reached a tipping point when something needs to be done, given its impact on labor markets. A continuation of technological progress will be the easy part; the harder challenge will be the societal impact caused by a world without work.

Frictionless (Good) Materials

Thomas Malthus was a nineteenth century economist best known for predicting the demise of civilization through an increase in population that could not be met by natural resources and the means of production. His famous quote was “the power of population is infinitely greater than the power in the earth to produce subsistence for man” (Malthus and Appleman 1976). Although he predicted the demise of resources and population growth just before the Industrial Revolution when the utilization of fossil fuels led to an extension of the ability to manage large population growth (Big O), his ideas have a lasting purpose to our economic problem, even today. Since Malthus, the issue of resource exhaustion has remained a significant topic of debate, from a scare that the industrialized world would run out of coal in 1865 to the Peak Oil concern of today, and others. Yet despite the debate and economic forecasts, coal and oil prices have remained constant throughout most of the twentieth century until recently when confidence in the long-term supply became of concern (Palmer 2010). The question now is this: when do we reach the point when a material runs low and a replacement is found versus when we reach an end that leads to an economic catastrophe? When is it that an economist or ecologist a chicken little for promoting doom and gloom and when can the innovator no longer devise the next alternative in time?

An End to (Twentieth Century) Growth

Today, there are various theories regarding how long humans have existed on earth, with anywhere between 100,000 and 200,000 years as a legitimate estimate. If we play it safe and use 100,000 years, Fig. 2.1 below represents the economic activity for only 2 % of our existence as specie, with the first 98 % registering either nomadic activity, or sustenance farming of little consequence. In this narrow band of the 2 % of human activity, shown in Fig. 2.2, approximately 90 % of this short period shows little economic activity as well; it has been the last 200 years, or 0.2 % of human existence, where we can actually measure technological progress to the extent we consider today. Therefore, for almost all of human existence, life has been in a “state of nature”, outside of an industrial economy, best described by seventeenth century philosopher Thomas Hobbes as “solitary, poor, nasty, brutish, and short.” Without question, there have been great inventions through the last millennium, but to use a term from Ted Kaczynski noted in the last chapter, it was “small scale technology” of a limited application. Prior to the Industrial Revolution, most of humankind’s population was focused on matters of sustenance; in 1500, an estimated 75 % of the British workforce toiled in agriculture, and that number declined to 35 % in 1800 (The Economist 2014), and well under 10 % today. As technology got larger, moving from small scale to large scale, the machines took over in the fields, pushing the workforce into the cities to work in the factories, and then again, pushing the workers from the factories into the white collar jobs. Today, as we have discussed in this book, automation continues to displace labor through capital; the big question of this book is what to do about this paradoxical problem.

Frictionless Markets: No Supply Chain Required

The “balance of nature” view and its derivations assume that ecosystems, as integrated communities, maintain themselves in equilibrium if undisturbed by man (McGuire 2014). Many environmentalists subscribe to this theory, pointing to examples of the symbiosis that exists between plants and animals (photosynthesis), or nutrient cycles and no waste in an ecosystem, and expecting for industry to create similar systems. Often the discipline of the supply chain professional presents an equally beautiful, yet largely conceptual picture of an industrial supply chain: one of balance, harmony, structure, discipline and optimization. However, in reality there is no such thing as an ecosystem or a supply chain structure in a state of balance; rather both are varying degrees of organization across a collection of independently acting organisms or companies and workers that directly and indirectly affect one another, and emerge accordingly.

Nature’s Approach to Design

Should products be designed as has life has been? If there is something for us to learn as product designers, the question is: is life on Earth due to a design and designer, or is it a result of a mechanical, slow, sequential process of emergence? In this chapter, I will delve into science to determine whether there is something for us as product designers to learn from nature about how our products should be conceived in this new twenty-first century frictionless market, and it is much different from how we do things today. From this learning will be the beginning of how we transform our supply chains and markets in this new model, one without the frictions of large organizations.

Economic Possibilities for My (Not Keynes’) Grandchildren

In the year 2030, my oldest daughter will be 29, and my youngest daughter will be 26; it will be their economy and markets, not mine. Today, it is the youth, not a middle aged man like myself, who will be most affected by accelerating technology that leads to economic growth without a corresponding benefit to the worker. In January of 2015, the U.S. unemployment rate was announced at 5.6 %, with 2014 being the best year of job creation since 1999. However, underemployment is still almost double unemployment at 11.2 %, while the participation rate in the labor force was a 37 year low of 62.7 %, and real wages actually declined by 5 cents an hour. This is a clear picture of what has been discussed in this book: economic growth is happening without the labor force due to accelerating technology and its use. French economist Thomas Picketty correctly notes the statistics in his book Capital in the Twenty First Century, that both the wealth gap and income inequality have been steadily rising since the 1970s, but it is not due to the natural tendencies of a free market system, as he implies; rather, it is due to an imbalance, or unnecessary frictions in the existing supply chain system (Piketty and Goldhammer 2014).

2030: Frictionless Markets

In the twentieth century, supply chains were relatively simple, as is shown in Fig. 7.1 below: the original equipment manufacturer, or OEM, was at the epicenter of the process, such as Ford and GM in the twentieth century. Production held sway over the process, and OEMs used their muscle both upstream and downstream of its process in order to achieve growth. This led to a model of unprecedented economic growth and prosperity for all, as the structured supply chain relationships were kept together by the frictions of transaction costs, and the lack of any substantive competitive overseas enabled U.S. companies to use their capital for higher wages more so than capital improvements, which enabled the multipler effect: workers were paid well that led to more consumption, and more consumption led to greater production.

Frictionless markets : the 21st century supply chain

This volume models a 21st century supply chain: one that uses technology that leads to the power of the individual, not larger organizations. Author Jack Buffington explains how in the near future, each of us will be a prosumer in a peer-based economy of micro-level manufacturing with little waste and infinite customization. There are two primary schools of thought in regard to the world economy of the future; from one side is a belief that economic growth can continue in perpetuity, driven upon a cheap and plentiful energy supply. From the other point of view is a perspective that economic growth will soon end has due to a lack of cheap and plentiful oil, too much financial debt, and a damaged environment that cannot withstand more growth. Frictionless Markets proposes a third way: a 21st century model based upon an economic calculus that does assume that fossil fuels are rapidly depleting and the environment is being damaged, but does not assume that this means an end to growth, but rather, a beginning of opportunities. Frictionless Markets tells the story of why and how frictionless markets will exist by the year 2030.