According to a recent posting in the New York Times,  U.S. companies are spending 10 times more on technology than on employees. In fact, author Catherine Rampell notes, since the start of the recovery in June 2009, "spending on equipment and software has risen 25.6 percent, while companies' aggregate spending on employees has risen only 2.2 percent."


Why? One reason is the enactment of tax incentive programs for equipment purchases, the most recent being the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act (TRUIRJCA) — which includes a 100 percent depreciation bonus for 2011 and a 50 percent bonus for 2012. That, combined with the fact that the cost of technology continues to trend downward, makes large equipment purchases more affordable. Counter that with rising labor costs in the United States, notably caused by rising health care in addition to salaries and other benefits, and you’ll understand why the trend exists.

Unfortunately or fortunately, depending on which side of the issue you are on, this trend is not exclusive to the United States. I recently saw this firsthand during a recent technology tour to China. Notorious for being a low-cost labor country, even the plants visited in China boasted an increased usage of high-tech machines in the plant in order to supplement labor issues, including rising wage rates, while having the added benefit of improving their quality and speed to market.

While machines should not — and could not — completely replace the need for employees in the shop, I am an advocate of making technology affordable for plants of all sizes. And I’m not alone. Apparent at the recent AWFS Fair was a number of companies that showed computerized material handling systems designed for smaller nested-based routers, new programming options on panel saws to improve their flexibility, and even an increase in “rent to own” software and systems.

But despite all the issues, it’s still not a case of man vs. machine. We will always need a skilled workforce to run the machines and ensure that the North American woodworking industry remains a high-quality, profitable and competitive venture.

Equipment or Employees: Where Should You Invest?

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