By Pat McGibbon, Chief Knowledge Officer, AMT
POSTED ON 8/20/2020 – “Those who cannot remember the past are condemned to repeat it.” This observation was made by philosopher George Santayana in 1905, but can help manufacturers today avoid mistakes in responding to the impacts of the pandemic. History shows that there are two likely outcomes of the current crisis which relate to manufacturing. First, automation and digital manufacturing technologies will expand sooner and faster than the manufacturing technology market as a whole over the next two years. Second, this growth spurt will lead to changes in the manufacturing workforce throughout the recovery.
University studies point to a strong relationship between recessions and sudden bursts of expansion in automation and digital tech investment. Researchers at the Universities of Zurich and British Columbia found that 88 percent of job loss over the past three recessions occurred in automatable occupations.
Evidence to corroborate this research exists in the manufacturing technology market. Computer numerically controlled (CNC) machines represented about a third of U.S. production and consumption of manufacturing technology in the years just before the 1981-82 recession. CNC machines grew steadily, but slowly, as a percentage of U.S. manufacturing technology production and consumption since the early 1970s. But during the recession, CNC machines jumped from 33 percent of manufacturing technology production to 41 percent and remained at that level until the stock market crash of 1987. CNC machines’ share of production and consumption jumped 14 points in less than two years during the recovery from the 1987 crash. Most recently, the decline and rebound of orders for robots, automation, and new technology (i.e., horizontal CNC B-axis lathes) were much less dramatic than the 60 percent drop that overall manufacturing technology orders experienced during the Great Recession of 2009. As an example, two years out from the start of the recession, robot and and CNC B-axis lathe orders were up five and 13 percent, respectively, from their 2008 levels while the manufacturing technology market was still 25 percent shy of its 2008 mark.