Sadie Keljikian, Express Trade Capital

Job creation, especially in the manufacturing industry, is a hot topic in the US right now. Since last year’s presidential campaign, there’s been an ongoing debate among politicians, business owners, and news outlets about the future of domestic manufacturing. President Trump has blamed the uptick in outsourced labor and consequent job losses on NAFTA, calling it the “worst trade deal” in American history. However, numerous sources argue that technology and automation are the real culprits.

Several sources claim that machines (not outsourcing) are responsible for about 85% of US manufacturing jobs lost since 2000. Even so, many American-run companies are bringing domestic manufacturing back in anticipation of potential legal and regulatory changes emanating from the tumultuous Trump administration, like the proposed border adjustment tax. With advances in automation spanning every industry, even farming, and robotic technology becoming more affordable, it is hard to imagine that there are as many potential jobs in domestic manufacturing as voters have been led to believe. It’s easier for candidates to make vague promises than to explain the more complex and subtle truth. Thus, politicians have been stoking voters with pledges to bring back a golden age of employment that no longer exits and is no longer feasible.

Businesses are taking different approaches in their attempts to create jobs. Some are bringing manufacturing back to the US, banking on the cache of goods labeled “made in the USA” and on US consumers to support domestic businesses by purchasing them, even at a premium compared to their imported counterparts. However, since automation has taken over so many manufacturing processes, it is unclear whether it is a viable long-term solution for employment. Others are attempting to create new jobs by consolidating the retail experience. With recent difficulty in the retail industry, particularly among stores commonly found in malls, some retailers, like Walmart, are creating a mall-like experience within their stores. Many Walmart locations now include services like eye care, dining, and salons, which keep customers in the store by providing them with services they already need.

Other sources claim that there is a serious opportunity for job creation inherent in the current rise of e-commerce. As online shopping continues to grow in popularity, retailers who focus on e-commerce are hiring new sales staff at impressive rates. What’s more, comparable jobs in e-commerce have better salaries, paid leave, stock benefits, and insurance than similar positions in their brick and mortar counterparts. Unfortunately, however, these jobs are highly concentrated in major metropolitan areas, so they don’t reach most of the geographical US.

Some experts are still holding out hope for traditional US manufacturing jobs, just not in mass-produced products. In recent years, the US has seen a rise in domestic manufacturing of custom or handmade products. While these products will never reach mass-production volumes, they appeal to the conscientious shopper who is less concerned with cost than they are with knowing where their money is going. These businesses usually use eco-friendly, fairly traded raw materials and typically work on a much smaller scale, in terms of both space and workforce. Since the products are more expensive to make, they naturally cost more for consumers. However, marketing and sales of such products typically target consumers who are willing to pay the extra cost of purchasing ethically sourced goods, so low volumes aren’t as much of a hindrance to the success of smaller scale, eco-friendly, domestic manufacturers.

In contrast with all the above perspectives, some still say that domestic manufacturing employment is already far more prosperous than most of us realize. A recent paper from the Center for Opportunity Urbanism indicates that 52 of the country’s 70 largest metropolitan locations have actually seen an increase in industrial employment since 2011. Forbes agrees and both say that while manufacturing is unlikely to disappear altogether, the issue is not that the industry is disappearing, but rather that it peaked in the 1950s and will likely never reach or surpass those levels again. Both sources blame automation for the sea change in the industry.

Whatever the case going forward, several of the country’s most prosperous industries are changing the way they do business. Many companies employ technology to cut costs and increase efficiency, often at the expense of jobs. Others simply outsource their production to countries with substantially cheaper labor costs. Might this mean that the end of significant employment in the US manufacturing sector? Possibly. The shifting landscape indicates that the new challenge for governments, manufacturers, and especially for retailers, is creating new jobs. So far, that’s job we cannot automate or replace with technology. Either way, it seems clear that, as technology continues to advance, creative destruction will continue to bedevil any semblance of a stable labor market.

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Sadie Keljikian, Express Trade Capital

The trade finance world is all abuzz about blockchain technology, which sources claim will change the industry for the better.

Blockchain, a variety of digitized ledger system originally established for Bitcoin, provides a new, simplified way of verifying and monitoring transactions. All pertinent parties can access and update data entries and must approve each transaction. Then, the system encrypts each transaction into a “block,” or digital code. The software then backs up information from each block in a short code or “hash,” and attaches it to the subsequent block. The backup hash makes any tampering with the ledger immediately evident.

A system to encrypt transactions could be incredibly useful in trade finance because of its implications for securing supply chains. Manufacturers have recently struggled with supply chain transparency. This is largely due to the fact that consumers have become more concerned with where their money goes. There is potential for dubious practices in any supply chain, but certain goods are difficult to monitor. Among these are conflict minerals, which are one of the recent concerns among consumers.

The tin, tantalum, tungsten and gold industries have recently fallen into the hands of rebel warlords. The resulting turmoil is painfully reminiscent of the diamond mines in Sierra Leone. Given the option, many consumers prefer to purchase ethically manufactured products. Blockchain allows for transparency, even in cases of complex, multinational supply chains.

With a blockchain system, the details of every single transaction are both accounted for and secure. This means that all materials, labor, and shipping costs can be ascertained through a transparent, secure tracking mechanism. Consumers who seek to avoid the products for ethical reasons will have the tools to make more informed buying decisions. Mineral purchases are listed with a “stamp” indicating origin of the mine or smelter, making background checks throughout the supply chain far simpler. Among the obvious benefits, consumers and retailers will be better able to reward producers who supervise their processes and products thoroughly. In short, the promise of more transparency and security offers the hope that consumers can make more informed decisions. Presumably, the public availability of supply chain details will make it harder for unscrupulous businesses to continue operating in obscurity.

From the perspective of the manufacturer, the effects of blockchain technology are a mixed bag. A system for tracking transactions reduces the cost of due diligence when sourcing suppliers. As a result, manufacturers, wholesalers and retailers can make more educated decisions overall. Manufacturers can also use blockchain to investigate pricing in less familiar areas of their supply chain, allowing them to negotiate better terms. This is good news for the manufacturer and, potentially, bad news for suppliers of raw materials. Suppliers may struggle to adjust prices as needed, since they will be in more direct competition with others.

On the other hand, manufacturers may not be comfortable with the public nature of blockchain systems. Although the system is secure insofar as it cannot be tampered with, the ledger is publicly available, meaning discretion will no longer be an option. The system is also fairly new, so there are not yet enough test cases to get a thorough sense of what difference it will make. For those who prize transparency above all else, blockchain seems to offer a panacea to the opacity necessary for complex, multinational supply chains. Transactional efficiency is another major advantage.

In short, blockchain technology offers a promising solution to problems with ledger accuracy and supply chain transparency. Advocates say the system will be instrumental in streamlining and modernizing international trade and finance. Only time will tell if the system will live up to expectations in practice.

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