May, 2016
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Page 21 Robots and Re-Shoring: Can Robots Save Jobs? By Philip Stoten (@philipstoten) M
ore than one person at APEX in Las Vegas said that robots could be part of the drive to
save manufacturing jobs in places like the U.S. where labor rates are higher. Initially this is counter-intu-
itive, right? If robots do simple oper- ations more economically than a hu- man worker, humans will lose their jobs. Well, maybe in some cases, but consider the scenario where a factory with high and growing wage costs looks likely to fail, resulting in 100 percent of the jobs being lost, includ- ing those in HR, sales, accounting, planning, etc., with the work done by the factory moving to a lower-cost lo- cation. If that factory can use automa-
tion or robotics to become competi- tive, it can stay open, which would result in the loss of fewer jobs. If it becomes world-class in its automa- tion, there is every chance that it can compete and grow, and perhaps even surpass the original number of em- ployees. Some employees will need to be trained in maintaining the robotic systems, and this will create a new job category for the company, possi- bly offsetting the number of workers lost to automation. This is certainly something that
the German government took into ac- count when they developed the term and strategy that they, and the rest of the world, now call Industry 4.0. They have envisioned a manufactur- ing industry that is lean on the shop floor and can use automation to even out the costs between themselves and regions where cheap labor has been a competitive advantage thus far.
gion, is one expected trend. The one fly in the ointment is the cost of the bill of materials (BOM) and the loca- tions in which most of those compo- nents are made. BOM costs are the largest, and most would agree that while low labor costs brought Asia — particularly China — into the manu- facturing landscape, it is BOM costs and logistics that have kept them there.
A number of U.S. contract man-
ufacturers who had firsthand experi- ence in bringing projects back from
Asia spoke out during APEX, and the consensus was that some of them should probably not have gone there in the first place. They all talked about the education process required to allow the customer to understand the real hard and soft costs of manu- facturing far away from both devel- opers and end users. Many said that once the calculations were made ac- curately, the lower cost geography was only marginally cheaper, and that would have been offset by the flexibility, agility and local support
provided elsewhere. So, if the new competitive edge
is automation, what are the skills re- quired to win the cost-to-make con- test? First, a willingness to change is essential. Then there is the access to capital. There are plenty of moder- ately-priced ways to start this process, but substantial change to the manufacturing operation will re- quire investment in hardware, soft- ware and people. Next comes the question of the skills mix, a topic I've
Continued on page 28
Philip Stoten is an internation- ally recognized EMS industry expert. Known for his skills as an inter viewer, reporter and
panel moderator, Philip is a fea- tured multi-media contributor to U.S. Tech on a regular basis.
There are then two expecta-
tions. First, that those who automate right away will have a competitive advantage; and second, that automa- tion will make the cost of direct labor so low that it becomes less significant or insignificant in pricing. Once that happens, the other
factors in the "cost of landed goods" equation become more significant. It also becomes likely that manufactur- ing once again clusters around con- sumers for supply chain simplicity, or around design and development for more agile product introduction. Made in a certain region, for that re-
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