One in four Wisconsin jobs at high risk in a new age of robotic workers and hyper-automation

When it comes to replacing humans with robots, few companies are as enthusiastic as Foxconn Technology Group. 

In its drive to manufacture iPhones, TVs and game consoles at the lowest cost, Foxconn systematically has replaced tens of thousands of inexpensive Chinese workers with even cheaper and more productive robots.  A separate subsidiary, Foxconn Industrial Internet Co., one of China's biggest tech companies, supplies industrial robots to other businesses that want to cut labor costs.

But the topic of automation barely came up in Wisconsin after the 2017 announcement that Foxconn had agreed to build a multibillion-dollar manufacturing campus in the state. Instead, the project's backers insisted Foxconn would create 13,000 high-paying human manufacturing jobs.

It's as if the state has little appetite to talk about non-human workers and a new era of hyper-automation that economists say is already underway — a shift that will go far beyond manufacturing. 

A potent new wave of automation technologies is widely forecast to eliminate millions of American jobs in the coming years, and Wisconsin is among the most vulnerable states.

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"People don't know what's going to hit them," said Patrick Bieser, president of Milwaukee-based Northwoods Software Development Co., which handles automation projects for manufacturers and financial institutions. "We are blissfully naive that we're at a tipping point into a new automation revolution."

Assembly lines will be ground zero but a host of other occupations and industries — from delivery truck drivers to bankers and hospital workers to fast-food staff — also are at risk. In the latest leg of industrial revolution, jobs won't go to lower-cost immigrants or foreign rivals, even if that's where the nation's political debate often gravitates.

"States in the Midwest, Great Plains, and South are most exposed to automation, while ones in the Northeast, West Coast, and Southwest face comparatively less risk," according to research published this year by the Brookings Institution, a nonpartisan Washington, D.C.-based policy group.

Brookings spent more than two years compiling data on occupations, industries and regions that are ripe for automation under the current slate of technologies (not counting technologies still on the drawing boards).

Of the 50 states, Wisconsin is 10th most exposed. Nearly half of all occupational tasks performed by humans in the state (47.5 percent) can be replaced by computer-driven technologies that already exist, according to Brookings' estimates.

Wisconsin finds itself in a cluster of states with a high percentage of at-risk occupations. Indiana is the nation's most vulnerable with 48.7 percent of human employment tasks at risk. Iowa (48.0 percent) and Mississippi (47.7 percent) have similar rankings.

Put another way, Brookings estimates that 27.2 percent of jobs in Wisconsin had an automation potential of 70 percent or more. In a state with 2.9 million total non-farm jobs, that comes out to more than 800,000 jobs at high risk of elimination because of current technologies.

Cheese-making robots?

The Badger State traces its vulnerability to a handful of factors, Brookings found. They include educational attainment (less educated work forces face greater risks) and industrial composition (the state abounds in high-risk sectors such as manufacturing, assembly, agriculture, food processing, retail and food service).

What's more, Wisconsin's rural factory towns and farms are even more exposed than big urban centers, compounding the state's susceptibility. Sheboygan could see 50.6 percent of its occupational tasks at risk, Wausau 50.1 percent and Oshkosh-Neenah 49.4 percent.

"You can automate cheese-making," said Bieser at Northwoods. 

"The people who are most at risk tend to be younger, less educated, and black or Hispanic,"  Brookings concluded. 

Even humans who hang onto their non-automated jobs likely will feel new downward pressure on wages as automated competitors get faster and cheaper, according to a 2017 report from the McKinsey Global Institute research group. In a nation with an already widening wealth gap, "income polarization could continue," McKinsey found.

And by all indications, the automation age will usher in a new era of economic anxiety, Brookings found in a separate report released in March. “Even if humans resist and fear change, machines don’t care," according to a separate report from the Quarterly Technology Review of the IHS Markit research group. 

Foxconn's promises

In the case of Foxconn, it's no longer clear that the company will fulfill its job-creation promises in Wisconsin. A cloud of uncertainty has hung over the project for the past year, intensifying when the Taiwanese company complained in January that U.S. production costs were not competitive with Asia.

To this day, Foxconn has not specified what sort of skills it will need in the state or what products it will produce. Democratic Gov. Tony Evers, who defeated Republican Scott Walker in November, last week called the goal of 13,000 jobs unrealistic though Republicans insist it's feasible.

Whatever it does in Wisconsin, Foxconn and its legions of Asian "Foxbots" are a leading indicator of economic change that analysts say is inevitable.

But it's a vision of the future that doesn't resonate in a state built on the foundations of 19th-century industry, said Jay Bayne, a Milwaukee-based engineer, computer science professor and serial entrepreneur.

“The consciousness of the region, not just Wisconsin but the Midwest, is still stuck in the industrial age,” Bayne said.

Outside of the state's engineering and tech schools, few appear to recognize that the world has changed, said Bayne, who founded the Milwaukee Institute Inc., a data-driven nonprofit that helps Midwesterners navigate advanced technologies. He serves on the board of the Wisconsin Technology Council, a policy advisory group, holds multiple patents and developed automation technologies for firms such as Johnson Controls Inc. 

Bayne calls the promise of 13,000 high-paying human Foxconn jobs a nostalgic "myth." The only way it makes economic sense for Foxconn to manufacture consumer electronics in Wisconsin is to "automate the daylights" out of its proposed facility. "That's intuitively obvious," he said. 

And as long as so few in the state recognize what's coming, "it's going to be hard to develop coherent technical policies," he said, commenting on the broader changes that reach far beyond whatever Foxconn brings.  In Germany and China, national governments already have policies to adapt their economies to the age of automation. Beijing calls it "Made in China 2025." 

Even if states like Wisconsin will feel the change more forcefully than other states, no sector or region of the United States is immune, according to a consensus of researchers. “Sixty percent of all occupations have at least 30 percent technically automatable activities,” according to an analysis of more than 2,000 work activities across 800 occupations carried out by the McKinsey Global Institute.

"Automation will force the existing workforce into continuous education," Bayne said.

An AI revolution

Wisconsin has automated human labor for over a century. It's even home to Milwaukee-based Rockwell Automation Inc., a global leader in advanced industrial automation and "smart manufacturing."

This time, though, change is driven by a new generation of computers programmed to emulate human decision-making. Artificial intelligence, as it's known, is primed to create the most efficient and productive workforce the world has ever seen. 

AI can simulate reading, speech and facial recognition. With sensors, human-like analytics and lightning speed, AI computers talk to each other, calculate when raw materials or electricity costs are cheapest, and choose whether to forward certain pieces of data to humans. The more information they process, the smarter they become. 

“Computers today can recognize patterns and generate insights being used for fraud detection, medical diagnostics, legal research, and auditing, among others,” according to a report from the World Economic Forum. 

Robots with sensors milk cows, assist with surgery and drive cars. White-collar robots are replacing bankers, tax accountants and insurers. At law firms, computers are teaching themselves to scan legal documents in record time without any human bias. At the same time as fast-food workers are demanding higher wages, McDonald’s is rolling out cashier-replacing kiosks — similar to the touch screens that have replaced staff at airline ticket counters.

It's easy to understand the appeal of non-human workers. They don't show up late. They don't have lapses in concentration. They never take coffee breaks, vacations or sleep. They don't complain about coworkers or file grievances. They don't demand benefits or health coverage.

And compared with humans, they're much cheaper.

A 2017 survey by Deloitte found that 53 percent of companies had already started to use machines to perform tasks previously done by humans. "Payback was reported at less than 12 months," Deloitte found.

Kai-Fu Lee, the author of “AI Superpowers” and a former Google tech executive, argues that AI will displace 40 percent of the world’s workers within 15 years. “I believe (AI) is going to change the world more than anything in the history of mankind,” Lee told CBS’ 60 Minutes in January.  “More than electricity.”

The appeal of automation, at least in the view of employers, only grows at a time when Wisconsin employers struggle to fill jobs with capable humans, said Kurt Bauer, chief executive of Wisconsin Manufacturers & Commerce, the state’s main business lobby group. Baby boomers are retiring and a younger generation doesn't want factory jobs.

With the next recession, analysts predict the robot workforce will move further into the mainstream as employers look to cut costs and maintain productivity. 

But Bauer says a changing economy also will open up new job prospects. "People assume that automation, robotics and AI will eliminate jobs," he said. "It will. But other jobs will be created. You will need more programmers."

Foxconn's 'lights out' plants

Known for its bare-knuckled quest to sink costs, Foxconn has decades of strained relations with its human workforce. Foxconn has been castigated for sweatshop-like labor standards, and enough Chinese workers have killed themselves that Foxconn added suicide-prevention nets to its Chinese production facilities. 

Foxconn points with pride to its "lights out" factories in China, like its Shenzhen plant in southern China, which are so automated they don't need any humans.

When he speaks in Asia, Foxconn chief executive and founder Terry Gou makes no secret of his ambitions to automate. "If we can't change, we'll be left behind," Gou told his own workers last year. And as sales have slowed for the iPhone — one of Foxconn's main made-in-China products — Gou has been expanding his "smart factory" automation division, Foxconn Industrial Internet, which is seen as a growth sector. 

When Gou issued shares for the subsidiary last year,  it became the largest tech company listed in mainland China. 

But in Wisconsin, Gou hardly mentioned automation.

Analysts who find Foxconn's plans to manufacture in high-wage Wisconsin puzzling typically conclude that the company's decision is a hedge against tariffs, which President Donald Trump has threatened to impose.

“The biggest challenge facing Foxconn is a U.S.-China trade war,” Gou has told his shareholders.

It was Gou who negotiated with the administrations of Trump and Walker, the two men who take credit for luring the Asian electronics manufacturer to Wisconsin. 

Commenting on Gou's public comments in Wisconsin, Bayne said: “He was brilliant in manipulating Walker and Trump with the jobs statement. He knew that’s the song they wanted to hear.”

John Schmid reports on how Wisconsin’s people and communities are confronting the impact of globalization and economic disruption for the Journal Sentinel's Ideas Lab. Email: john.schmid@jrn.com. Twitter: @GlobalMilwaukee

How we did this story

John Schmid has covered the economics of automation for more than a decade, including trips to China to report on industrial advances on the mainland.

In 2010, Schmid reported on "smart" automobile factories" in India — which were even more automated at the time than American auto works. In 2014, he reported on efforts by Milwaukee-based Rockwell Automation Inc. to position itself as a leader in the "Internet of Things" industrial revolution. In 2015, he wrote about factory controls so advanced that plant managers can operate factory equipment remotely, shutting off pumps or speeding up production lines — from their mobile phone apps.

This story brings the reader up to speed on the next leg of industrial change. In the past two years, a number of policy think tanks have examined the coming wave of automation, including two exhaustively researched reports by McKinsey Global Institute, an arm of the McKinsey & Co. consultancy — one in January 2017 and another in December 2017.

Schmid also reviewed a 2015 report from The World Economic Forum that looked at the question, "How will automation affect society?" Other reports reviewed included one by the Deloitte consultancy and the IHS Quarterly/Technology Review. 

Schmid's analysis relied heavily on a series of reports from the Brookings Institution, a nonpartisan Washington, D.C., policy think tank, and interviews with the local and national experts.

In order to calculate the vulnerability to automate occupations, industries and regions, Brookings spent more than two years combing through data from the Massachusetts Institute of Technology; McKinsey; U.S. Census Bureau; U.S. Bureau of Labor Statistics; the EMSI Labor Market research group, and Moody’s Corp. Those Brookings reports, dissecting different aspects of automation, appeared in January ("How machines are affecting people and places"); and March ("A governor’s policy playbook to address disruptions from automation and artificial intelligence"). More recently, Brookings analyzed how automation and job fears affect the political environment ("Automation perpetuates the red-blue divide," March).