An Inquiry into the Effects of Automation

EDGAR WEINBERG*

THE most intensive study since the 1930's of the effects of technological change was conducted last October, when 26 leaders in various fields testified at congressional hearings on automation.1 The hearings were aimed at developing information on the nature and implications of automation, through studies of selected industries. Major areas of inquiry included the extent of potential employment displacement, the need for training and for retraining displaced workers, and the distribution of anticipated gains in productivity. These and other related questions were discussed by qualified persons in six major fields selected as illustrative of problems which may be faced in the trend toward automation— metalworking, data processing, and the chemicals, electronics, railroad, and communication industries. The relation of the technological changes to the Nation's progress as a whole was reviewed by scientists and economists.

Summarizing its findings, the subcommittee which conducted the hearings pointed up two conclusions from the evidence: first, that "all elements in the American economy accept and welcome progress, change, and increasing productivity"; and second, that although "it is important to note that .. only a relatively small... fraction of the total labor force will be directly involved. . . no one dare overlook or deny the fact that many individuals will suffer personal, mental, and physical hardships as the adjustments go forward."2 The subcommittee found that "both organized labor and management are apparently aware of and intent upon seeing

that the human elements are not disregarded." Concern for the workers affected also underlay the subcommittee's "best and by far the most important single recommendation"-that "the private and public sectors of the Nation do everything possible to assure the maintenance of a good, healthy, dynamic, and prospering economy, so that those who lose out at one place as a consequence of progressive technology will have no difficulty in finding a demand for their services elsewhere in the economy."

This article sets forth some of the highlights of the article hearings. Representative statements by various witnesses have been grouped around six topics relating to automation: the definition of automation; its relation to past developments; trends in key industries; factors affecting the general outlook; some implications; and proposed policies.

Definition of Automation

From a review of the attempts by witnesses to define automation, it is apparent that the term "automation," like "mass production" or "mechanization," encompasses a complex of innovations and that the definitions tend to vary with the experience of each speaker.

Ralph J. Cordiner, president of the General Electric Co., expressing the engineer's viewpoint, defined automation as "'continuous automatic production,' largely in the sense of linking together of already highly mechanized individual operations. Automation is a way of work based on the concept of production as a continuous flow, rather than processing by intermittent batches of work."

Looking at current developments in perspective, Dr. Vannevar Bush, president of the Carnegie Institution of Washington, defined automation

*Of the Bureau's Division of Productivity and Technological Develop

ments.

1 Automation and Technological Change. Hearings Before the Subcommittee on Economic Stabilization of the Congressional Joint Committee on the Economic Report (84th Cong., 1st sess.), pursuant to sec. 5(a) of Public Law 304, 79th Cong., Washington, 1955.

Impressed with the "importance of continually increasing industrial productivity," the Congressional Joint Committee early in 1955 had directed its subcommittee (Representative Wright Patman of Texas, chairman) "to study the impact of automation on long-run employment and investment levels." Testimony was given during 9 days in October by 14 industrialists, 6 labor leaders, 3 Government officials, and 3 academic leaders.

2 Automation and Technological Change, Report of the Subcommittee on Economic Stabilization to the Joint Committee on the Economic Report, Congress of the United States, Washington, 1955.

broadly as covering the "relegation to a machine of the function of performing operations previously performed manually." He added that "Man now has the dream of making machines which are like himself, and which can hence become his slaves. And he has progressed a long distance toward this objective, and will progress further."

Secretary of Labor James P. Mitchell suggested that, subjectively, automation produces a fear of change. In a technical sense, he said, "the word represents technological change, which surely is nothing new."

Relation to Past Developments

In relating automation to past changes, witnesses differed over the novelty of current developments. Dr. Cledo Brunetti, director of engineering research and development of General Mills, Inc., said: “Automation, a newly coined word to describe an old, old process. . . cannot be said to have begun on any certain date, nor can it be said that it will end at any definite time. Automation is in truth but a phase of our continuing technological advance."

Dr. Edwin G. Nourse, former chairman of the Council of Economic Advisers, disagreed with this conception. "[Automation] has its roots in mechanization, to be sure, but something new was added when electronic devices made possible the widespread application of the feedback principle. The three earlier phases of industrialism-mechanization, continuous process, and rationalization-all continue, but have been given a new dimension." Secretary Mitchell said: "It represents a movement certainly as old as the industrial revolution and probably older. Its latest manifestation, coming as it has in a favorable setting of growth and prosperity, has appeared with relative swiftness and in some ways spectacularly. It has come with such devices as complex automatic systems, electronic controls and regulators, feedback systems, transfer machines, conveyors, and the like."

Trends in Key Industries

Automation in metalworking is merely a general term which involves the steady development of the accuracy and power, speed and productivity of machine tools over the years, according to

M. A. Hollengreen, president of the National Machine Tool Builders' Association. As a good example, he cited the progressive automatization of metal cutting lathes from single to multiple spindle tools and thence to automatic chucking machines on which, "by the twenties, it was possible to perform 10 to 15 operations. without moving the work by hand." Electric and automatic controls and, more recently, automatic gaging devices enabling the machine to correct its own errors have been added.

Ralph E. Cross, executive vice president of the Cross Co., described the "sectionized transfermatic," one of the most recent developments in machine tool automation. First put into operation in mid-1954, this is a line of machine tools, 350 feet long, which performs 555 machining operations on engine cylinder block castings. It is divided into five sections to minimize "the time lost for changing tools and minor repairs. Any one of the sections can be stopped while the other sections continue to produce at their normal rate."

The progress of automatic equipment in the telephone industry was described by Clifton W. Phalen, president of the Michigan Bell Telephone Co. First introduced in 1920, dial-operated telephones today account for about 85 percent of the total. "Operators are now dialing directly nearly 60 percent of long-distance calls. Customers now dial directly about a quarter of all calls outside local areas." Automatic message accounting (AMA), currently being introduced, "employs punched tapes which register the calling telephone, the called telephone, the time connection was established, and the time connection ended. A machine takes the information off the tape and assembles it for each customer."

A number of innovations leading to more automatic handling of freight cars in classification yards were described by S. R. Hursh, chief engineer of the Pennsylvania Railroad. A new $34-million terminal facility, at Conway, Pa. (on the line between Pittsburgh, Detroit, and Chicago), will handle the tremendous traffic load through a system of automatic retarder speed controls, automatic switching, and similar devices.

The progress of electronic data-processing machines in scientific and clerical work was described by two officials from Government agencies which have done pioneering work in these fields. Robert

W. Burgess, director of the Bureau of the Census, indicated that the Univac, delivered in 1951, has been used effectively on the monthly population and business surveys since 1953. Cost of the current population survey has been cut in half and work that could not have previously been done because of high cost (e. g., adjusting time series for seasonal variations) is now practicable. Dr. A. V. Astin, director, National Bureau of Standards, described FOSDIC (film optical sensing device for input to computers), an automatic machine recently developed by that Bureau for translating data on the record sheets of census enumerators into a form to be fed directly into an electronic computer.

Discussing the use of electronic computers at General Electric Co., Mr. Cordiner revealed their extensive use in engineering and product development and, more recently, in payroll accounting, material control, and general and cost accounting. He also mentioned the company's plans for their application in the near future to billing, inventory and sales reports, budget preparation, and factory scheduling. "It is our feeling," Mr. Cordiner stated, "that the medium-sized computers will have the greatest usefulness for business in the immediate future."

Numerous plants in the chemical and petroleum refining industries already have introduced a high degree of continuous or automatic operation, according to Professor Thomas J. Walsh, of the Case Institute of Technology. Gases, fluids, and powdered solids are handled and processed in pipes or ducts with devices to control the flow and measure changes during the operation. Otto Pragan, research director of the AFL International Chemical Workers Union, pointed out that one indicator of the relatively high degree of mechanization is the total capital investment per production worker: $26,665 in the chemical industry compared with $12,933 for all manufacturing.

In electronic-goods manufacturing, several developments point toward greater automation or mechanization. Dr. Brunetti described Auto-fab, a machine for assembling electronic components on printed circuit boards now being used in largescale production of computers. Don G. Mitchell, chairman and president of Sylvania Electric Products, Inc., announced that his company is developing new machines for automatically applying

hundreds of thousands of separate phosphorous dots on the face of a color television tube, with a high degree of precision.

Factors Affecting the Outlook

Although there was general agreement concerning the trend toward greater automation, opinion varied concerning the rate of introduction of new devices. Some persons foresaw rapid change because of greater expenditures for industrial research. "As a result," Walter P. Reuther, then president of the Congress of Industrial Organizations, stated, "the flow of what may be considered routine technological innovations— new production methods, new materials, and machines applicable only to specific processes or industries, and improvements in work flow-has been greatly accelerated."

In railroading, W. P. Kennedy, president of the Brotherhood of Railroad Trainmen, foresaw a stepup in automatizing freight yards because of large expected savings, excellent financial position of the railroads, and new electronic developments for the automatic handling and dispatching of freight cars. "Railroad capital spending programs. . . are expected to total $20 billion, or double the recent annual rate of investment, in the next decade."

The demand for higher living standards and the anticipated slower rate of growth of the labor force in relation to population change will be major factors accelerating mechanization, according to Don G. Mitchell. A shortage of clerical labor was cited by Howard Coughlin, president of the Office Employes' International Union, as a significant force in greater automation of office work.

The size and complexity of scientific and business problems, Dr. Astin pointed out, require greater use of new methods of data processing. "Advances [in science and technology] have now reached a stage where further progress would be impracticable or uneconomical without them."

Some complex factors that must be considered when adopting automation, were also discussed. D. J. Davis, vice president of the Ford Motor Co., in charge of manufacturing, pointed out that automatic machinery must be highly flexible, so that it can be modified without excessive cost to accommodate expected changes in design of parts. Only limited application of automation is antici

pated in Ford's assembly plants because of the scattered location of such operations, and continual changes in body structure and trim design.

Mr. Cordiner emphasized three key factors governing the pace of technological advance: The difficulty of designing workable automation; the financial risks; and the need for management to assure wider markets to justify the investment. Hence, "technological change in industry is a gradual process.'

Professor Walter S. Buckingham, Jr., economist of the Georgia Institute of Technology, pointed out that no significant application of automation seems likely in some important industries, such as agriculture, mining, construction, retailing, and professional fields, "because of the highly individualistic nature of the product, the need for personal services, the advantages of small-scale units, or vast space requirements."

Other limitations cited by Dr. Buckingham, as "more temporary, but . . . nevertheless significant at the present time," include: "(1) the high initial cost of the equipment which for the time. being at least prevents all but the larger firms from using it; (2) the shortage of highly trained operators and analyzers; and (3) the time required to analyze the problems, reduce them to equations, program the computers, and translate the answers into useful data."

Implications of Automation

There were major differences of opinion as to the economic and social effects of automation. Viewpoints regarding its impact on employment were of two general types: one emphasizing the immediate possibilities of displacement, and the other, stressing automation's expansive effects on employment.

Expressing the viewpoint of the former group, Mr. Reuther stated: "Automation, in addition to the more conventional improvements in machines and work flow, will be increasing the rate of the national economy's rising man-hour output still further. Instead of average annual productivity increases of some 3 to 4 percent, the annual rate of rising man-hour output in the national economy may reach 5 to 6 percent or more . . . [a rate] capable of displacing about 31⁄2 million or more employees each year, if the national economy fails

to expand, along with the rapid improvements in productive efficiency."

The prospects of displacement of telephone and railroad workers were set forth in some detail. Joseph A. Beirne, president of the CIO Communications Workers of America, predicted: "If telephone business continues to expand only at the modest 1954 rate, that is, annual increases of 4.6 percent in telephones and 3.8 percent in telephone calls, we estimate conservatively that by 1965 there will be anywhere from 100,000 to 115,000 fewer people employed by the Bell System."

Mr. Kennedy cited specific instances of localized displacement of railroad workers as a result of modernization of classification yards. "At Hamlet, N. C., . . . the number of yardmen has been cut by 35 percent. . . . At the Union Railroad Co., Pittsburgh, approximately 250 yard employees have already been displaced. . Construction of two new yards . . . at Memphis, Tenn., and Tulsa, Okla., both of which will go into service early in 1956, will in the opinion of the local brotherhood representative affect employment in the two terminals at least 25 percent."

The general expansive implications of automation for employment were described by several witnesses. Secretary Mitchell said, "I repeat, there is no reason to believe that this new phase of technology will result in overwhelming problems of readjustment. Science and invention are constantly opening up new areas of industrial expansion. While older and declining industries may show reducing opportunity, new and vibrant industries are pushing out our horizons." Mr. Cordiner indicated four factors at work to create new and increased employment opportunities. The "chain reaction" of economic growth (due to lower prices increasing the volume of business); the expanding service industries and increased time for educational and recreational activities; expansion of industries for designing, selling, building, and installing new machinery; and the growth of entire new industries as a result of automation.

"On the horizon," Mr. Cordiner saw "an atomic energy industry, a transistor, and semiconductor industry, an industry for the production of the supermetals like titanium and zirconium, and even manmade diamonds. . . . Based on our experience with these [computing] machines. . . it may well be that the computer-derived technologies

will be a major source of new employment in the 1960's and 1970's."

Marshall G. Munce, a director of the National Association of Manufacturers, said that a certain amount of "reallocation of job opportunities" will be inevitable, but that the rate of voluntary quitting by workers in American industry is sufficiently high-2 percent per month in manufac-. turing-to avoid any widespread displacement of individuals. "By not replacing these people as rapidly as they depart, reallocation occurs by attrition alone," he said.

The rapid growth of employment in the electronic, telephone, and chemical industries was cited as illustrative of the expansive effect of automation. "Television today," according to Dr. Brunetti, "would not be a mass market were it not for use of automatic machinery in kinescope and component tube manufacturing."

While witnesses differed on the number of jobs that would be affected, there was general agreement on the nature of changes in skills and occupational requirements. Secretary Mitchell, looking at the historical record, saw a reduction in unskilled workers, semiskilled workers moving into skilled areas, and skilled workers approaching the status of technicians. "We can expect these trends to continue. Improvements in industrial technology will reduce the number of boring, routine, and repetitious jobs. And I believe we can expect that this will move all workers to a higher level of attainment and selfdevelopment. We can expect to see increased demand for workers with a high sense of responsibility and versatility, for mathematicians, engineers, and technicians of all sorts, and for scientists and researchers. The worker of the future will require better basic education and better training than he gets now."

James B. Carey, president of the CIO International Union of Electrical Workers, believed that the extent of the occupational changes that may result from automation will be comparable to that of the first industrial revolution which replaced the handicraft worker with the machine. tender or machine operator. "Automation. tends to replace the human regulation and control of machines and thereby changes the machine

operator into the supervisor of an automatically controlled operating system."

These occupational shifts have already occurred in a number of industries. At Ford's Cleveland and Dearborn engine plants, according to Mr. Davis, fewer employees engaged directly in production were employed in 1954 than in 1950, but there was a substantial increase in the number of skilled maintenance personnel. In the telephone industry, Mr. Beirne pointed out, the number of professional sales, business office, clerical, and maintenance workers had increased between 1945 and 1953 considerably faster than the number of operating employees.

A similar story was related by Mr. Pragan for the chemical industry: "In 1954, there were 2 production workers to each nonproduction worker, while in 1947 the ratio was as high as three-to-one. The predominance of automatic equipment

Automation's impact on the position of small business was also assessed. Mr. Reuther believed: "For the most part it is the large companies that will be in the best financial position to scrap old equipment and old plants, and replace them with new automated machines. . . thus increasing still more the margin of efficiency which they enjoy over their smaller competitors."

Dr. Bush, however, saw new opportunities for small units to prosper: "If large manufacturing companies turn to automation in extreme form

they also increase their own rigidity and render it more possible for the small industrial unit to prosper by reason of its inherent flexibility .. they can get close to their customers and meet their needs intelligently and they can change rapidly with the times and the trends."

Finally, the implications of automation for the stability of the economy were weighed. Mr.