The conventional wisdom in the US, explaining the decline of manufacturing jobs, was that the economy was shifting from manufacturing to one that will ride the digital and services sectors. Well, president-elect Donald Trump has proven that not everyone is sanguine about the sectoral shift. A new study has provided some finer detail on the job loss, by identifying that the big decline has been in ‘routine’ jobs, namely, the jobs that engage in repeated tasks, such as machine operators, bank tellers, and so on. Americans working in these routine jobs have seen their share in the economy drop from 40.5 per cent in 1979 to about 31.2 per cent in 2014.

Trump has decided that the way to deal with job loss is to target companies that are moving the jobs overseas. He wants to discourage imports and encourage exports Instead of leaving this as a policy intent for bureaucrats to work out laws and executive orders, Trump’s style is to send out Twitter messages. And his ‘policy in 140 characters’ has been working.

Ford Motor had planned to build a $1.6 billion (about ₹10, 400 crore) plant in Mexico to manufacture small cars. After Trump’s repeated public pronouncements that it was a bad idea, Ford has now announced that it will scrap plans for the new plant and instead spend about $700 million (about ₹4,550 crore) to upgrade a plant in Michigan to make electric vehicles. The Focus small car for which the new plant was intended would now instead be made in another plant it has in Mexico.

Next in focus is GM, which is getting ready to move several jobs overseas including to plants built/expanded in Mexico. Trump tweets a message that read ‘Make in USA or face big border tax.’ GM guardedly commented that the Cruze model built in Mexico is meant for global markets and very little is brought back to be sold in the US. When Trump learned of Toyota’s plans to manufacture its Corolla in Mexico, his tweet was ‘No way!’ Toyota has said that it has no plans to reduce its manufacturing commitment in the US.

The auto industry was one of the large beneficiaries of the NAFTA, which in 1994 made the US-Canada-Mexico into one common market. The auto industry has made its supply chains global and whole modules get made in different parts of the world and shipped around till it reaches final assembly. The changes Trump wants made in manufacturing practices has not only challenged the objectives of NAFTA but thrown the supply chains of the auto companies into confusion.

How will this solve the loss of routine jobs? Only marginally, because most routine jobs are lost not because manufacturing went out of the country but because technology took them over. If you travel by air today, you probably bought your ticket on-line, chose your seat on-line while you checked in, printed out a baggage tag at the airport from a self-service machine and just dropped the bag off at a counter where one person dumped it on the conveyor belt. The ATM machines today allow you to deposit, withdraw, transfer, and everything else. The tellers and the airlines routine jobs are vanishing, even if Trump sends out twitter threats.

Meanwhile, Mexico, faced with the prospect of losing US investments, has named a former official who had been discredited for praising Trump to be their new foreign minister.

The writer is a professor at Suffolk University, Boston

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