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U.S. manufacturers are hiring at the fastest pace in more than a decade to keep up with new orders but sweeping technological advances could cost thousands of factory workers their jobs in years to come.

At a new factory in upstate New York, which is due to churn out its first computer chips this year, technicians are calibrating robots to ferry material from machine to machine using miles of overhead track.

“This factory is designed to be fully automated, meaning theoretically it requires no human intervention at all,” said Eric Choh, general manager at the facility run by semiconductor maker GlobalFoundries.

The company is hiring engineers and programmers who are still needed to mind the machines. But “compared to 20 years ago, today we don’t need a lot of labor,” said Choh.

Last year, factories added 237,000 jobs - the most since 1997 - and that burst in hiring is seen stretching into this year as the economy recovers from the 2007-09 recession.

But a renaissance for industrial employment is unlikely. Over the long term, factory job creation looks destined to stagnate as technology advances, and manufacturers’ role in the labor market will likely continue a decades-long decline.

A Labor Department report published on February 1 projected factory employment will drop to 11.5 million workers by 2020 - down from 11.9 million in January - despite expectations production will increase in coming years.

The projected decline in employment suggests it will be hard for President Barack Obama and Republican presidential candidates like Rick Santorum to protect factory jobs as ardently as they have promised on the campaign trail.

Factories have a special place in American hearts because they have been the gateway to the middle class for millions of workers.

Even though the United States remains a pre-eminent manufacturing power, accounting for about a fifth of global factory output, only 9 percent of its workforce is engaged in factory activity, and that percentage is falling.

Manufacturers’ share of the labor market will likely drop to 7 percent by the end of the decade, according to the government projections, down from nearly a third in the 1950s when unskilled workers played a bigger role.

“You just don’t need as many people as in the days when you were essentially running a Ford assembly line,” said James Franklin, a Labor Department economist who helped draw up the long-term employment projections.

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Graphic on U.S. manufacturing: link.reuters.com/cur76s

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TEMPORARY REBOUND

The outlook is more positive in the near-term. At GlobalFoundries’ sprawling new plant in Saratoga County, for example, Choh plans to hire about 500 more people by year’s end.

And across the country, factory payrolls will likely swell by 173,000 this year, says the Manufacturers Alliance for Productivity and Innovation, an industry research group.

Last month, Daimler Trucks announced it would hire 1,200 new workers at a North Carolina plant that makes long-haul trucks that sell well in Australia and South Africa.

But analysts say much of the recent hiring spurt is just a temporary rebound from the recession, when manufacturing output fell about 20 percent and factories laid off 2 million people.

“They probably got rid of more capacity and more employees than was necessary in retrospect,” said MAPI economist Cliff Waldman, who expects factory hiring to slow sharply next year.

Still, there are factors supporting the sector.

The U.S. dollar has lost about a third of its value since 2001, helping exporters, and U.S. producers have become more competitive.

After a decade of heightened competition with China, which devastated American industries like clothing makers, the U.S. factories that remain are more high-tech and less likely to be undercut on labor costs.

Moreover, wages in China are rising much faster than in the United States, reducing the incentive to offshore production, while the recession itself raised pressure on U.S. companies to embrace more cost-saving measures, like automation.

S & S Hinge Company, for example, has retooled its plant in Bloomingdale, Illinois, since the recession. A pair of computers runs its newest production line, which makes hinges 50 percent faster than older lines. That is helping the firm meet rising orders for parts that go into pickup truck toolboxes while reducing the need for more staff.

“We’ve upgraded our factory. We actually put in a new operating system. So it has cut the need for more bodies,” said Richard Sade, the company’s chief operating officer.

FROM FACTORIES TO SERVICES

As grim as that sounds for many workers, a future with fewer factory jobs isn’t necessarily bad for the economy.

Part of the drive to be more efficient has led factories to outsource more work, contracting services from accounting firms, consultancies and other companies.

Even though the number of workers in U.S. factories today is roughly the same as 70 years ago, jobs in business services, a sector that includes many people working indirectly for manufacturers, have grown eight-fold. The Labor Department expects business services will be one of the top job-creating industries in coming years.

That makes plans by Obama to give manufacturers special treatment - or to penalize them for offshoring jobs - wrongheaded, says Jagdish Bhagwati, an economist at Columbia University.

Obama last week proposed new tax breaks for manufacturers, but many economists view the decline in factory employment as a normal part of the economy’s development.

“New jobs in services constantly emerge from manufacturing,” Bhagwati said.

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India has proposed setting up a multilateral bank that would be exclusively funded by developing nations and finance projects in those countries, two government officials with knowledge of the matter said.

The plan has been circulated to the countries in the so- called BRIC group — Brazil, Russia, India and China — as well as to South Africa, an Indian government official said. A Brazilian government official confirmed the proposal.

The plan will be discussed among developing nations alongside the meeting of Group of 20 finance ministers in Mexico City this weekend, the Indian official said, asking not to be identified by name as the proposal isn

BRUSSELS

The Obama administration will release details tomorrow on its proposal to reduce the 35 percent corporate tax rate and eliminate tax breaks, said administration officials familiar with the plan.

The Treasury Department will outline the proposal, according to the officials, who briefed reporters on condition of anonymity. They didn

Japan posted a record trade deficit in January as the yen

Egypt said Saturday the criminal trial of 16 Americans and 27 others will start Feb. 26 in a politically charged case against foreign-funded pro-democracy groups that has badly shaken Cairo’s ties with Washington.

The trial represents an escalation in what has become the deepest crisis in U.S.-Egypt relations in decades. American officials have threatened to cut $1.5 billion in aid over the spat, and high-level officials have flown in to seek a solution. Egyptian authorities have responded by blasting what they call U.S. meddling in legal affairs.

The growing spat also shows the uncertain path Egypt’s military rulers are charting more than one year after a popular uprising pushed President Hosni Mubarak from power. During his nearly 30-year rule, the U.S. tolerated Mubarak’s antidemocratic policies and continued to fund his government, knowing he’d uphold Egypt’s peace treaty with Israel.

Now, the ruling Supreme Council of the Armed Forces regularly accuses “foreign hands” of backing continued protests against its rule, and the Islamist parties that control about two-thirds of the newly elected parliament have threatened to review the peace treaty with Israel.

The investigation into the pro-democracy and rights groups fits into the wider campaign against alleged foreign influence since Mubarak’s ouster.

The probe began in December, when armed security forces raided the offices of 10 nonprofit groups, shuttering their offices after carting off files and computers.

Egypt’s state news agency said Saturday the trial of 43 defendants in the case will begin Feb. 26. The report said 16 of the defendants are Egyptians and 19 are Americans, and the rest are Germans, Palestinians and Jordanians. The U.S. State Department, however, has said there are only 16 Americans facing trial.

The Americans work for four U.S.-based groups: the International Republican Institute, the National Democratic Institute, Freedom House and a group that trains journalists.

Only seven of the Americans are in Egypt, and all have been barred from travel. Some have sought refuge at the American Embassy in Cairo, including Sam LaHood, who heads IRI’s Egypt office and is the son of U.S. Transportation Secretary Ray LaHood.

Neither IRI nor the U.S. Embassy responded to requests for comment.

The report said the defendants have been charged with founding and managing offices of international organizations without Egyptian licenses and with receiving foreign funding. The groups’ operations “infringe on Egyptian sovereignty,” it said.

On Saturday, the al-Ahram state-owned daily published a report it said was based on leaked investigation files. The report accused the organizations of operating outside of Egyptian law to “affect the political process and serve a limited number of political movements in a way that serves the interests of the funders cash advances pay day loan.”

It also said the organizations’ budgets grew dramatically after the anti-Mubarak uprising _ implying a link to the continued unrest.

NDI and IRI say they have been trying to register for years, but have never received official approval _ a tactic Mubarak’s regime used to maintain power over such organizations.

Les Campbell, Middle East and North Africa director for NDI, said the charges are bogus, but that NDI would cooperate with the legal process.

“It is primarily a political issue, so we still hope that it will be resolved at the political level,” he said. “But as an organization, we’re prepared to move along through the system.”

Campbell also acknowledged that his group became more active after Mubarak’s fall because of the unprecedented political activity in the country.

“Why wouldn’t our activities have increased in the period after the revolution?” he asked. “That is completely normal. There is nothing even remotely sinister about it.”

Egyptian officials are forging ahead in spite of intense U.S. efforts _ and pressure _ to end the crisis.

President Barack Obama, Secretary of State Hillary Rodham Clinton and Defense Secretary Leon Panetta have urged top Egyptian officials to drop the investigation. Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey did the same in a Cairo visit last week, and U.S. Sen. John McCain will lead a Congressional delegation to Egypt in the coming days.

U.S. officials have said the issue could block the delivery of Egypt’s annual aid package of more than $1.5 billion _ $1.3 million in military assistance and $250 million in economic assistance. That aid is linked to Egypt’s adherence to its 1979 peace agreement with Israel, sparking fears that a failure to break the impasse could put the treaty in jeopardy, destabilizing the region.

That’s why administration officials are hesitant to push too hard. Ending aid to Egypt would also look bad one year after Egyptians calling for greater democracy forced Mubarak from power.

But Egyptian legal expert Nasser Amin said that taking the case to trial could provide a way out, because a judge could throw the case out, requiring neither side to back down.

“The case isn’t legally sound,” he said. “There is no strong evidence, and any judge who looks at this case will see that it is more political than legal.”

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U.S. Secretary of State Hillary Clinton and former White House economic adviser Lawrence Summers are two leading candidates to succeed World Bank President Robert Zoellick when he leaves in June, said two people familiar with Obama administration discussions.

The U.S. promised a candidate

China pledged to invest in Europe

The stock market shook off its worries about Greece on Monday and got back to its routine of little-by-little gains.

The Dow Jones industrial average climbed 80 points _ nothing flashy, but enough to regain most of what it lost Friday. Before that, stocks had notched three days in a row of small increases.

The gains were broad-based, with nine of 10 stock categories in the Standard & Poor’s 500 rising, led by financial stocks. Bank of America gained 2.7 percent, best among the 30 stocks in the Dow. Utilities declined by a whisker. European stocks rose.

For once, investors had the Greek parliament to thank. On Sunday it approved sharp cuts in civil service jobs, welfare and the minimum wage, required by international leaders for a $170 billion bailout that Greece must have to avoid defaulting on its debt.

Other details of the bailout still need to be finalized, though. And rioting while Greece’s parliament voted was a reminder that its financial problems are not solved. Germany also indicated it would take time before approving the bailout.

The Greek debt deal amounts to a default because creditors will get less than they are owed, said Peter Cardillo, chief market economist for Rockwell Global Capital.

Still, “orderly default is better than a chaotic default, which would lean on the whole eurozone and the global economy as well,” he said, referring to the 17 countries that use the euro currency.

Cardillo said market gains may be muted for a while because of the social unrest in Greece and because stocks have already risen this year. The Dow is up 5.4 percent, the Standard & Poor’s 500 7.5 percent.

In afternoon trading, the Dow was at 12,881, less than 10 points shy of its highest close since before the 2008 financial meltdown. The S&P rose 10 points to 1,352. The Nasdaq composite rose 27 points to 2,931.

The Greek debt deal appeared to take some pressure off U.S. banks. Moody’s Investors Services said the $25 billion settlement between mortgage lenders and states over foreclosure practices is a negative for all five major banks involved.

Still, most major banks, which have varying levels of exposure in Europe, gained on Monday. JPMorgan Chase was up 1.4 percent and Citigroup 0.3 percent. Financial stocks have been the best performers in the S&P this year, gaining 13 percent.

The biggest gaining group of stocks on Monday was industrials, up 1.1 percent.

Shares of ATM maker Diebold Inc. rose 11 percent after it reported strong sales to banks, a sign they may be willing to spend more to upgrade their technology.

Apple crossed $500 per share for the first time, with a 1.5 percent rise to $501. Apple had been in a tight race with Exxon Mobil to be the world’s biggest company by market value, but it is solidly ahead now _ $465 billion to $400 billion.

Worries about the global economy and the state of the U.S. recovery pushed stocks around during the second half of 2011, said Ralph Fogel, a partner and investment strategist for wealth management and advisory firm Fogel Neale Partners in New York. .

“The end of the world was coming,” or so traders thought, he said. “It wasn’t the end of the world. … Then the market stopped listening.”

The euro fell a fraction of a penny against the dollar, to $1.32.

Bond traders appeared skeptical that the cuts passed by the Greek parliament would be enough. Prices moved between small gains and losses. The yield rose to 1.99 percent from 1.98 percent late Friday.

In Europe, the FTSE 100 in Britain rose 0.9 percent to 5,906. Germany’s DAX rose 0.7 percent to 6,738. The CAC-40 in France rose slightly to 3,385. In Athens, stocks rose 4.6 percent.

In Asia, Japan’s Nikkei 225 closed 0.6 percent higher at 8,999, and Hong Kong’s Hang Seng gained 0.5 percent.

Oil rose to $100.49 per barrel in New York. Gold rose slightly to $1,726.60 per ounce.

Among other stocks in the news:

_ Chesapeake Energy Corp. rose 2.4 percent after saying it will try to raise as much as $12 billion by selling assets to pay down debt.

_ Regeneron Pharmaceuticals Inc. rose almost 13 percent after it said sales of its eye drug Eylea should reach $300 million, up from its previous forecast of $160 million.

_ AmerisourceBergen Corp. fell 3.3 percent after the prescription drug distributor said its chief financial officer left to pursue other interests.

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Can’t get enough of those virtual cows and crops from FarmVille? Good news, agrarians: Zynga toys and games are coming this fall.

Hasbro (), the big-time toy company responsible for My Little Pony and Monopoly, announced Thursday that it has bought the rights to license Zynga brands for a "wide range" of products.

Mark Pincus, the CEO of Zynga — which makes popular Facebook games like CityVille and Words With Friends — said in a statement that the partnership is a "leap forward in enabling people to connect their virtual and real worlds."

What toys are in the works? That’s still being decided. Hasbro declined to comment on what kinds of products it will make and which Zynga brands will be included.

The partnership could include "co-branded merchandise" featuring franchises from both Hasbro and Zynga (), the companies said.

At least one digital game brand has transitioned successfully to the physical world. Characters from the Angry Birds mobile game, developed by Rovio, have already been plastered all over the physical world: plush toys, baby clothes and even a feature film.

Hasbro rival Mattel scored a holiday hit with its "Knock on Wood" game, which lets players fling actual plastic avians around, instead of digital birds.  

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