Future Factories

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Image via MIT Technology Review

 

China is heavily investing in a robot workforce. In the coming years, countless of manufacturers in China, and around the world for that matter, are planning to transform their production processes by using robotics and automation on an unprecedented scale.

Why?  Because it is necessary to their future survival.

Factory wages in Shanghai have doubled in the past seven years and this, combined with increasing competitive pressures from lower wage countries in Southeast Asia, such as Vietnam, has resulted in many Chinese factories struggling to keep their contracts. Moreover, the costs of other inputs to Chinese production also continue to rise.

These developments are to be viewed against a certain backdrop: high-tech operations in the Western world increasingly have threatened the security of China’s title as “factory to the world.” Thus, if China wants to retain its position as the world’s go-to factory and remain attractive to foreign firms, in terms of relative profitability, it needs to adapt to the reality of robotics, and fast.

Nowadays companies are turning towards a new paradigm of manufacturing: the dark factory.

The dark factory, theoretically, is entirely automated; it consists wholly of robots and machinery. Implicit in the term “dark factory” is the idea that with so few people around, if you were to turn off the lights the business would still hum along easily and profitably.

There are serious employment consequences to these developments. For instance, Foxconn, known for supplying Apple and Samsung with parts for their phone hardware, has already reduced the number of employees from 110,000 to 50,000 at one Kushan factory in Jiangsu province. Throughout the south of China, which is a region known for its manufacturing strength, factories are heavily investing in automation technology to remove the rising cost of labor and increase efficiency. More than 500 factories across Dongguan, in Guangdong province, have invested a whopping 4.2 billion yuan in robotics since 2014.

There may be serious social consequences to follow.

The CEO of Shenzhen based Cambridge Industries Group, Gerald Wong, put it succinctly, “It is very clear in China: people will either go into automation or they will go out of the manufacturing business.”  

Of course there are still many practical details to iron out. Much of the factory work in China involves a tremendous amount of dexterity and skill. For human hands, wrapping a wire around an item that came down the factory belt at an awkward angle is easily accomplished. For a robot, that task still presents considerable difficulties. The reality of the dark factory, therefore, is still very much a work in progress.

While all the repercussions of factory automation, via robotics, remain unknown, what is certain is that there will be significant employment consequences across major sectors of the current job landscape.

Consultants from Deloitte, collaborating with researchers from Oxford University, anticipate that 35% of all jobs are at risk over the next 20 years. Of course, blue collar jobs may be the first to be automated; however, white collar jobs are not immune and increasingly these may be  automated too as the competitive impact of artificial intelligence and machine learning continues to manifest.

Though the industrial revolution that spawned in the Pearl River Delta boosted Guangdong’s economy to $1.2 trillion and is largely responsible for China’s meteoric GDP rise, today, much of the future prosperity of the Middle Kingdom hinges on China’s resolve to adapt and evolve into the world of robotics.

Will all the factories of the future be dark?  Increasingly, It seems so.

What do you think? Let me know your thoughts in the comments section below.

祝好,

Julien

 

Sources:

BBC: Foxconn replaces ‘60,000 Factory Workers With Robots”

Bloomberg: China’s Factory To The World Is In A Race To Survive

Financial Times: China’s Robot Revolution

MIT Technology Review: China Is Building A Robot Army Of Model Workers

South China Morning Post: Rise Of The Robots

 

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