Businesses use more automation, fewer workers

A Toyota worker at the Georgetown, Kentucky plant
Companies are spending more on technology to increase productivity, but are not using that many workers.

More Americans are applying for unemployment benefits. First time claims jumped by 10,000 last week to more than 418,000, as layoffs continue to mount.

One thing is clear: A lot of companies are doing just fine, with fewer workers. They're going automated. CBS News correspondent Kelly Cobiella saw this for herself at a plant in Georgia.

Ron Baysden's Georgia plant is the picture of high-tech manufacturing. Robots do much of the welding, lasers cut through sheets of steel, and computers track productivity.

What you don't see is a lot of workers.

"You really have to be very conservative in your expenditures and in your hiring practices," said Bayden, "because if it turns south on you, you've got to be in a position to roll with it."

Baysden's family-run Impulse Manufacturing makes customized steel parts for everything from tractors to industrial refrigeration systems. When the recession hit, orders dried up and the company laid off nearly half of its 170 workers.

Now, business is booming. The workforce is back up to 177 and profits are up too by 60 percent. Baysden plans to spend $1.5 million of that profit on new technology and none on new jobs.

"How critical is technology to your survival?" asked Cobiella.

"Absolute," said Baysden. "Period. Absolutely critical. If you are not constantly taking advantage of the latest in programs, latest in equipment designs and the latest in processes, then you're costing advantage goes away."

The technology is proving its worth for Baysden. For example, a laser can churn out one part in 30 seconds -- work that used to take 18 men and 30 minutes to complete.

"A lot of my competitors did not survive 2009," Baysden said. "We survived because we spent a lot of money and investments in technology."

According to the Bureau of Economic Analysis, over the past two years, company spending on employees has only grown by four percent -- a sharp contrast to the 25 percent increase being spent on new technology.

"I don't think the workers really understood what was happening -- this whole evolvement of technology," said union rep Mark Wilkerson. He has watched the number of manufacturing jobs in southern states dwindle away, as jobs keep moving overseas and companies here increasingly rely on technology.

"What happens to all those people who don't have jobs now?" he asked. "That's the question that people aren't asking. What happens to those small towns, those main manufacturing jobs being there? They depended on those jobs and they're gone now."

For manufacturers like Baysden, technology makes the U.S. competitive with low-wage countries like China.

"Every day you make something a little more efficient," he said. "The companies that don't do that are like the buggy whip guys. Their industry will die."

Along with the jobs they created.