At various times since the Second World War the manufacturing industries of North America and Europe have undergone periods of decline at the same time as those in parts of Asia have significantly grown. It is a story of many complex forces. But accounts of the shift usually centre on the issues of low-wage labour and intensive government investment in countries such as China.
Those involved in the automation industry might wonder how their work might affect this state of affairs. For example, if more and more manufacturing processes end up being carried out by robots, will the traditional reliance of electronics companies on cheap Asian labour come to an end?
The amount of factory work that lends itself to automation is naturally very high. A McKinsey study of manufacturing in 46 countries suggested that, as of 2015, 64% of activity could be automated; of specifically production-related activity it was 87%.
And such percentages increase as technology takes on the challenge of ever-more sophisticated tasks. 3-D printing, for instance, notably in the aerospace industry, is now being used not just for prototyping but in the production of end-use parts. Vision technology, to take another example, is dramatically multiplying the potential applications of production-line robots.
Such routes to higher productivity are complemented by an increasing use of sensor-based data streams that provide manufacturers with detailed work overviews, thanks to which systems can be continually tweaked for greater efficiency.
The most recent Global Manufacturing Competitiveness Index report (2016) is clear that advanced technologies are now the key to high performance levels in manufacturing industries and their associated economies.
But to what extent are European and American companies investing in them?
There is evidence that many are with an 80% growth in fund ownership not unusual. The returns are good too: Roboglobal, who run the ROBO Global Robotics & Automation Index, report the sector returned 48.62 percent to investors in the last 12 months and 75.82 percent since inception in fall 2013.
Tesla, who manufactured its 300,000th electric car this year, recently bought the German company Grohmann Engineering, specialists in automation technology. Elon Musk is candid about his plans for an ‘alien dreadnought’ factory in which ultimately ‘there will be no people in the production process itself.’
Among industry specialists in the UK, the Annual Manufacturing Report for 2018 found widespread agreement that future productivity lies with advanced technologies. Alongside this consensus, however, the Report also discovered a mood of uncertainty about the future and some reluctance to invest in it.
What are the conditions favorable for investment? Confidence in the business climate is one factor mentioned in the Report. Faith in an education system that can deliver our future engineers and analysts is another. At the moment these are unresolved issues, it seems, for a number of UK manufacturers.
To these conditions could be added a clear understanding of the issues on the part of policymakers. The Brussels-based economic think tank Breugel last year suggested that western politicians who call for the revival of national brands or for ‘hands-off’ legislation are in danger of referencing (and reinforcing) the manufacturing models of yesteryear. Innovation-friendly regulation, education and infrastructure, on the other hand, will all underpin the success of future manufacturing.
Even thus rejuvenated, though, how realistically might the manufacturing industries of Europe and North America think in terms of a competitive advantage over rivals in Asia?
Change, after all, is happening over there too – and not least in terms of robotics and automation. The Made in China 2025 strategy is an ‘initiative to comprehensively upgrade Chinese industry’ directly inspired by the German Industry 4.0. More automation on the factory floor is just one aspect of this attempt to move the country’s manufacturing up the value chain.
As such it is also held to be a way of offsetting the (short-term) financial penalties incurred by the movement towards a higher-wage economy.
Foxconn, the electronics contract manufacturing company behind Apple’s iPhone and much besides, aims to achieve 30% automation in its Chinese factories by 2020. In addition to productivity considerations, for this manufacturer the adoption of in-house robotics is expected to relieve the worst problems that flow directly from the poor treatment of workers, such as suicide and employee litigation.
In fact there is a global decline in the number of people willing to endure a life of ill-paid factory work, especially among millennials. SoftWear Automation Inc., an American developer of autonomous sewing machines, tells the story of how, when it launched its LOWRY robot in 2015, many of the calls it received were not from the United States but from Bangladesh and China.
Of course, there continue to be large, low-paid populations in parts of Asia still associated with cultures of unskilled work. And increasingly countries such as Cambodia, Laos and Vietnam are finding a role within cross-border manufacturing operations whereby, as neighbours like China move up the value chain, they take on the downstream segments of the production process.
The phenomenon, ‘Factory Asia’ as they call it, has the potential to support, if not favour, the development of higher tech manufacturing in the region; not least because of the strong appeal of such global value chains to international investors.
Ultimately, though, and in the very long term, the wide spread of such patterns in manufacturing, particularly coupled with the homogenisation of consumer markets across the globe, forecasts a world in which talk of traditionally localised industries, let alone the old opposition between east and west, makes less and less sense.
By the same token, such forces imply that for European and North American manufacturers willing to invest in the research and the technology, and able to exploit the new connectedness, the days of disadvantage are already over.