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OM in the News: The Hidden Automation Agenda

February 1, 2019

The Milwaukee offices of the Taiwanese electronics maker Foxconn, which plans to replace 80% of the company’s workers with robots in 5-10 years

In public, many CEOs wring their hands over the negative consequences that A.I. and automation could have for workers. They talk about the need to provide a safety net for people who lose their jobs as a result of automation. But in reality, writes The New York Times (Jan. 26, 2019), many are racing to automate their own work forces to stay ahead of the competition, with little regard for the impact on workers.

All over the world, executives are spending billions of dollars to transform their businesses into lean, digitized, highly automated operations. They see A.I. as a golden ticket to savings, perhaps by letting them whittle departments with thousands of workers down to just a few dozen. A 2017 survey by Deloitte found that 53% of companies had already started to use machines to perform tasks previously done by humans. The figure is expected to climb to 72% next year. Investment bank UBS projects that the A.I. industry could be worth $180 billion by next year.

The author of “AI Superpowers” predicts that A.I. will eliminate 40% of the world’s jobs within 15 years. He said that CEOs were under enormous pressure from shareholders and boards to maximize short-term profits, and that the rapid shift toward automation was the inevitable result. But other experts have predicted that A.I. will create more new jobs than it destroys, and that job losses caused by automation will probably not be catastrophic.

The CEO of the Chinese e-commerce firm said last year that “I hope my company would be 100% automation someday.” The World Economic Forum estimates that of the 1.37 million workers who are projected to be fully displaced by automation in the next decade, only 1 in 4 can be profitably reskilled by private-sector programs. “The choice isn’t between automation and non-automation,” said the director of M.I.T.’s Initiative on the Digital Economy. “It’s between whether you use the technology in a way that creates shared prosperity, or more concentration of wealth.”

Classroom discussion questions:

  1. What can A.I. do to help OM functions?
  2. Will A.I. replace as many jobs as some predict?
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