February 2021 Volume 3

AUTOMATION

this new task. Given that most operations have been operating as efficiently and lean as they can, it is a lot to assume there is time for people to do considerable in-house training given the level of expertise required. Global Trade Competitiveness A second major economic impact from technology and robotics has concerned trade and global competitiveness. In the last two or three decades, there has been an exodus of manufacturers from the U.S. to other nations, as they have been seeking low-cost platforms for production.The fact is that labor-intensive operations in the U.S. are too expensive and alternatives are sought in places where labor costs are low. As companies are able to substitute technology for labor, the motivation for companies to leave the U.S. declines and companies that had relocated start to consider reshoring. The disadvantages of locating production overseas are considerable – higher transportation costs, challenges of multicultural management, differing rules and regulations, tariffs and quotas and simply being further away from the customer. If the labor issue is solved by the use of technology and robotics, the manufacturer can leave many of these headaches behind. The U.S. becomes competitive in any production area that features increased dependence on advanced technology use. It is not that other nations are not using technology, many are further along in this development than the U.S., rather it is that the advantages of producing in the U.S. are being offset by the cheaper production costs in other nations. It becomes possible for the U.S. producer to lower logistics costs, improve management efficiency, reduce regulatory complexity and be more responsive to the consumer. Consumer Response The third area of influence is consumer response.This has become the era of mass customization. The consumer wants products that meet their precise specifications, and they want the ability to change the product quickly and frequently. It has become a matter of “instant gratification isn’t quick enough”. The issue of customizing and redesigning is made considerably simpler by the use of technology. The reprogramming of a system or robot assembly has allowed rapid adjustment to production requirements, and that becomes a distinct advantage for consumers. Much of what manufacturers produce in the U.S. is not aimed at the ultimate consumer, but at the business that will subsequently offer the product to the end consumer. As that end consumer becomes increasingly picky and demanding the intermediate producer has to become as nimble and this is a capability that has expanded as technology speeds the process. The more that consumers have this desire for flexibility and responsiveness accommodated the more they want, and that further drives technical innovation. Regulatory Reach A fourth economic influence attributed to tech and the advance of robots is regulatory reach. This one is a little obscure, but the general

idea is that expanded use of technology and systems allows for more predictable routines and outcomes.There is also a safety factor. To be frank, the human element in manufacturing is the least predictable. Many of the processes are inherently risky and that creates a need to implement complex safety features, and this invites more regulatory engagement.The automated factory floor presents a less complicated and hazardous environment and reduces the chances of worker mistakes that can lead to injury or delays. The promulgation of automated systems allows for a level of predictability that makes writing regulations simpler and more appropriate. The average manufacturer cites regulatory pressure as equal to taxes and labor supply when it comes to concerns. Regulations and rules that are unexpected or inappropriate to the operation can cost millions and reduce efficiencies drastically. Beyond the regulatory issue is the fact that damaged machines, injured workers and failed systems can significantly impact productivity. The more that these processes can be automated, the less opportunity for human error and subsequent damage. Supply Chain Demands A fifth area affected by the tech revolution is the impact on the global supply chain, and that is related to the issue of global competitiveness and trade. This last year was a watershed in terms of globalization. After decades of discussion regarding the efficiency of the Just-in-Time (JIT) system, the whole concept nearly fell apart. The JIT idea has been predicated on a seamless system of production and transportation. Things could be made anywhere in the world and shipped to where they were required so accurately that a manufacturer no longer had to worry about holding inventory or even having the capacity to hold it. Then came the global shutdown provoked by the pandemic. At one point over 45% of global cargo was delayed or stalled, close to a quarter of a million sailors were stranded to one degree or another by quarantined ports and ships. The predictability that makes the JIT system work was shattered, and suddenly the issue of carrying inventory and having warehouse capacity was front and center again. It is not that technology is able to solve the virus issue, but it plays a major role as far as adjusting to the new realities. If the global supply chain is not as reliable as it once was, there is even more support for having shorter supply chains and that means more support for onshoring and reshoring. It has also opened up new opportunities for other nations. The Vietnamese economy has surged this year because so many companies have been seeking to diversify their supply chains. China has been rapidly adopting robotics and automation as well, but there are some unique challenges for Chinese operations. In the U.S. and Europe there has been lots of support and enthusiasm for moving towards technology, but in China the government deeply opposes plans that result in lost jobs. This is a country that needs to create some 1.3 million jobs a month just to keep pace with population growth. In contrast, the U.S. is considered in good shape if there are 300,000 jobs created in a month. The bias in China remains towards labor intensive industries.

FIA MAGAZINE | FEBRUARY 2021 48