Is manufacturing automation really a bad thing for the economy? Media loves to create a technophobia frenzy for automation and robots. Would REALLY automation in manufacturing cause the economy to collapse? 

Taking an extreme case that is impossible to happen even in the far future due to technical challenges, but consider that EVERY job is replaced by robots. Manufacturing of a product from start to finish would be done by robots and no work from humans necessary. This product would essentially be for FREE. Shouldn't this the ultimate goal of an economy? 

Ignoring this dystopia society, even if automation replaces some of the more redundant jobs, like taxi drivers, truck drivers etc. Wouldn't that allow for reassignment of human resources to more important tasks and help the economy grow? 

I think the situation is similar to the introduction of steam machines and the fear people had about them replacing men. While in reality they didn't replace them, they re-assigned them to positions that required more skill and knowledge (Such as machine mechanic etc)

I don't see any way that automation in manufacturing is a bad thing. Our society is more data and knowledge focused and I think the ones that are afraid are the ones incapable of expanding their knowledge, learning a new skill or adopting to the changes. But should we stunt the growth of our society due to few lazy, unskilled people and literally wait until they die to introduce progress?

I believe that any human in order to survive will adopt and the people mentioned above are no exception.
As an answer let me offer a paradox that goes in your direction and is related to automation and the future of jobs: 


  Despite a century of creating machines to do our work for us, the
  proportion of adults in the US with a job has consistently gone up for
  the past 125 years. Why hasn't human labor become redundant and our
  skills obsolete? In this talk about the future of work, economist
  David Autor addresses the question of why there are still so many jobs
  and comes up with a surprising, hopeful answer.


Here is David Autor's TEDx Why are there still so many jobs? and I will have added [despite automation]

Autor's answer is that technology magnifies the importance of our expertise and creativity and since we never get enough the wealth and the time saved by automation boost our endless inventiveness. So, automation will NOT replace EVERY job by robots. There's always new work to do.

The challenge that this automation phenomenon creates, what economists call job polarization, is that it knocks out rungs in the economic ladder, and shrinks the size of the middle class. The share of employment in occupations in the middle of the skill distribution has declined rapidly in the US and Europe. At the same time the share of employment at the upper and lower ends of the occupational skill distribution has increased substantially. A compelling explanation of this job polarization is that middle-skilled manufacturing and clerical occupations are characterized by a high intensity of procedural, rule-based activities which they call "routine tasks", which can relatively easily be coded into computer programs (see Autor, Levy, and Murnane, QJE, 2003).



Update

Daron Acemoglu and Pascual Restrepo have new working papers tackling this important question.


Robots and Jobs: Evidence from US Labor Markets
Automation and New Tasks: The Implications of the Task Content of
Technology for Labor Demand
Demographics and Automation


Abstract of Automation and New Tasks: The Implications of the Task Content of
   Technology for Labor Demand  [emphasis mine]


  We present a framework for understanding the effects of automation and
  other types of technological changes on labor demand, and use it for
  interpreting changes in US employment over the recent past. Automation
  enables capital to replace labor in tasks it was previously engaged
  in. Because of the displacement effect it generates, automation is
  qualitatively different from factor-augmenting  technological changes;
  it always reduces the labor share in value added (of an industry or
  economy) and may also reduce employment and wages even as it raises
  productivity. The effects of automation are counterbalanced by the
  creation of new tasks in which labor has a comparative advantage,
  which generates a reinstatement effect raising the labor share and
  labor demand by expanding the set of tasks allocated to labor. We show
  how the role of changes in the task content of production—due to
  automation and new tasks—can be inferred from industry- level data.
  Our empirical exercise suggests that the slower growth of employment
  over the last three decades is accounted for by an acceleration in the
  displacement effect, especially in manufacturing, a weaker
  reinstatement effect, and slower growth of productivity than in
  previous decades.