Maureen and I were fortunate enough to take a river cruise in Europe this summer. The cruise line provided numerous excursions during the week-long trip and one of the most fascinating was our trip to a BMW factory.
The world headquarters of Bayerische Motoren Werke AG (BMW) (Bavarian motor works) are located in Munich, Germany. The factory that we visited was in the beautiful city of Regensburg, Germany.
The BMW Group Plant in Regensburg is one of the most modern factories around the world. In 1986 production of cars and components started to be shipped to customers worldwide from this factory. The production lines carry eight different vehicle types at the same time, from press shop and body shop to paint shop and assembly – individually manufacturing cars for the customers. They have their own power plant on-site.
The guided tour took us through the early stages of the process through the end of the process with the car being driven on the test track. The first thing that you see after putting on the required goggles are these incredible robots working together as they weld various parts of the soon to be constructed automobile.
The guide questioned us on how much we believe each of the robots cost. He stated that our group’s guesses from a $500,000 to $1 million is a common guess, but they actually cost significantly less. He stated that the actual hardware along with the software required to program the specific use of each robot cost approximately $50,000.
The next obvious question from our group was more of a statement of how the robots were taking jobs away from humans. The guide corrected that opinion. He stated that before all the new robotic technology was installed in this factory the plant was able to produce 300 new cars a day with 300 employees.
With the new technology, the factory is now able to produce 1,400 new cars a day with 1,400 employees. So, the factory was able to add a thousand employees. The technology allowed them to be more efficient and productive by using robots to aid humans in the production process. The lifting and moving of engines and car parts by robots makes the factory jobs significantly easier. Worldwide the firm has nearly 200,000 employees.
Many people fear that the new technologies including artificial intelligence (AI) will make millions of people obsolete in the new economy. But as the tour of the BWM factory highlighted, the fears are overblown. The new technologies and artificial intelligence will open opportunities for many new jobs to be created – some of which we cannot even dream of now.
Consulting firm McKinsey and Company predicts that investments in technology including AI automation could add 20 million to 50 million jobs globally by the year 2030. The same firm said calculating job loss is more complicated because many people won’t lose their jobs outright, but they will instead switch occupations. That is what happened on the BMW assembly line.
What will change are the skills required for these new technology jobs. Most employees will have to constantly be retrained and our education system will need to be modernized to deal with these ever-changing times.
Unfortunately, we were not able to take any photos of the factory. In very German fashion, to ensure that we did not take any photos, they required us to lock up our cell phones before the tour began.
And yes – our globally diversified stock portfolio certainly includes the BMW stock. The company has meet its full year operating margin of 8% to 10% every year since 2009 and recently announced that this year would be no different even with the tariffs and the new regulations pushing them towards electric cars.
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