Throughout China, factories are replacing humans by robots in a new industrial revolution driven by automation. And their effects will be felt throughout the world. Just this week, Foxconn, the world’s largest mobile phone manufacturer, announced that it has managed to halve the number of workers due to the introduction of machines in its assembly line
The casting washer loi Ying Ao in Guangdong province in southern China, has the appearance of a factory of the future. The sign over the entrance door is faded; inside, the floor is greasy and mud stains and the air is filled with a thick metallic dust, the byproduct of stainless steel polishing process. While workers waiters at the factory floor, the cavernous and like building with a shed reverberates with a metallic sound.
Guangdong is the growth engine of China’s industrial production, generating 615 billion in exports last year – more than a quarter of the national total. In this part of the province, the normal wage of workers is 4000 renmimbis per month (600 dollars or 536 euros). The Ying Ao, which manufactures sinks for the kitchens of Europe and the US, have to pay double that for the conditions at the plant are so unpleasant, says Chen Conghan, the vice – director. So, four years ago, the company began buying machines to replace hand-to -. Human work increasingly expensive
Nine robots now do the work of 140 full-time workers. robotic arms take up sink a pile, jump us until the shine and then deposited in a cart with autopilot that takes them to a camera connected to a computer to a final quality check.
The company, which exports 1,500 sinks a day, spent over three million dollars in robots. “These machines are cheaper, more accurate and more reliable than people,” said Chen. I never had a whole lot spoiled by robots. I look forward to replace more people in the future, “he adds, with a wry smile.
Throughout the industrial belt of the southern coast of China, thousands of factories like Chen are turning to the automation, an industrial revolution focused on robotics, supported by the government and of a size never seen. Since 2013 China has, every year, to buy more robots than any other country, including the giants of high-tech manufacturing as Germany, Japan and South Korea. at the end of this year, China will overtake Japan and become the largest the world’s industrial robots operator, according to the International Federation of Robotics (IFR, acronym in English), an robotics industry group. the pace of change in China is “unique in the history of robots,” says Gudrun Litzenberger, general secretary of the IFR, which is headquartered in Germany, where are some of the largest industrial robot manufacturers in the world.
technological transformation of China has still a long way to go – the country has only 36 robots for ten thousand factory workers, while Germany has 292, Japan 314 and Korea 478. But it is already changing the face of the overall manufacturing industry. This process is raising broader questions: can still emerging economies hope to follow the traditional path to prosperity in which the developed world has supported since the British industrial revolution of the eighteenth century? Or will the robots take over many of the jobs that once took hundreds of millions out of poverty?
Competitive Advantage falling
The huge investment of China in robots industrial has its roots in a pressing economic problem. From 1980, when the Communist rulers in Beijing opened to global trade, huge and cheap hand labor of the country helped this to become the world’s largest exporter of industrial products. The breakneck economic growth has lifted hundreds of millions of Chinese out of poverty and transformed whole areas of the country with the workers to migrate from the countryside to the city. But a middle class growing and aging population have led to rising wages, wearing the competitive edge of China. Partly because of the one-child policy, formally abolished in 2015, it is estimated that China’s working age population will fall billion people last year to 960 million in 2030 and 800 million in 2050.
in recent years, the Chinese government has been promoting automation as a way to fill the gap workers. Promised generous subsidies – to be shared by local governments – to smooth the way for Chinese companies to use and also build robots. In 2014, President Xi Jinping called for a “robotic revolution” who first turn to China and then the world. “Our country will be the largest market for robots,” he said in a speech at the Chinese Academy of Sciences, “but get our technology and our production capacity to deal with competition? Not only do we need to update our robots, but also we need to win markets in many places. “
the march of the machines, not only in China but around the world, was accelerated by the sharp fall in the price of industrial robots and a steady increase in their capabilities. The Boston Consulting Group, a management consultant, predicts that the price of industrial robots and their software will fall about 20% over the next decade, while its performance will improve by 5% every year that passes.
Liu Hui, a businessman 40s, is making the most of explosion of robotics in China. In 2001, when it opened its first factory in Foshan, an industrial city of seven million people in Guangdong, he began to make copies of electric fans. With the growth of the business passed to the legal manufacture, producing components for brands of Chinese household appliances. Then in 2012, finding an opportunity in a growing market, jumped into the emerging world of robotics. Liu matter now robotic arms suppliers like the Swedish-Swiss conglomerate ABB, and sell them to Chinese manufacturers, helping them to integrate the machines in their production lines. It is a highly specialized business. Most of its customers are manufacturers of components that provide engines and other parts to major brands of Chinese household appliances, such as Midea and Galanz, which produces air conditioners, refrigerators and other machinery.
Business expanded so quickly last year that Liu does not have enough space in your factory for all machines in the assembly phase. He has to store parts for an ABB robot in a makeshift outdoor porch. “Things are changing fast,” he says. “The cost of labor is increasing every year and young people do not want to work on the production line as their fathers did, so we need machines to replace them.”
The stereotypical image of Chinese factories can still be found in many places: tens of thousands of lines long hunched over sewing or introduce components on a printed circuit board. But this form of production is beginning to be replaced by a more mixed picture:. Production lines partially automated, with human workers interspersed some key points
Meanwhile, China is expanding their own robot manufacturers. In September last year, Ningbo Techmation, a Shanghai producer of machines for the plastics industry, has launched a subsidiary, E-Deodar, which makes robots 20% to 30% cheaper than those produced by international companies such as ABB, Kuka German or Japanese Kawasaki. The factory in Foshan E-Deodar, with your coffee, the rest area and the production line in open space, it seems – more with the facilities of a technology startup Silicon Valley than with a Chinese plant. “Our global rivals are very good at making robots, but their costs are higher and they are not as good in regard to understanding the needs of local customers,” says technical director of the company, Zhang Honglei, 35 and spiky hair
this year, Zhang plans to produce 350 robots green, a distinctive color, designed for use in plastic factories, and sell them at a price between 14,000 and $ 18,000 each.; within three years, he expects to produce three thousand a year. “We have to act quickly because automation is a scale business,” he says. “The bigger the better.”
The Chinese manufacturers, who bought 66,000 of the 240,000 robots industrial sold globally last year, still prefer mostly buy international brands, according to the IFR Litzenberger. But she expects that to change, especially as a result of full support to the government in Beijing has given the robotics industry in the country in recent years. “They are developing very quickly,” she says
In imposing government building with columns on the facade. – Locally known as the White House – in Shunde District of Foshan, the authorities are trying implement the President Xi appeal for a robotics revolution. Guangdong province promised to invest eight billion dollars between 2015 and 2017 in automation. Zhang Peng, deputy director of the economics department and Shunde technology, recently saw the size of his office in the building to be reduced in line with the call of the Communist Party to the bureaucratic austerity. But the budget for industrial automation was not affected. Zhang says the robots are vital to overcome the shortage of workers and help Chinese enterprises to make products of better quality and more competitive. Exceptionally straight to a Chinese official, he warns: “. If the production companies do not improve, will not be able to survive”
A march at different speeds
the government’s support for the integration of industrial robots increasingly cheap and efficient is good news for owners of factories in China, which are facing a weak global economy and the slowdown in domestic demand. But the benefits of robotic revolution are not equally distributed throughout the world. Developing countries, from India to Indonesia and Egypt to Ethiopia, have long been waiting to follow the example of China as well as Japan, South Korea and Taiwan before them: to stimulate job creation and growth economic, carrying farm workers for low-cost factories to produce goods for export. However, increased automation means that it is likely that industrialization will generate significantly fewer jobs for the emerging next generation. “Low-income countries today do not have the same opportunity to achieve rapid growth by moving workers from farms to the higher-paying jobs in factories,” according to the findings of researchers from the American investment bank Citi and the University Oxford in a recent report, the Future is not what it Used to Be [the Future is not what it Used to Be], on the impact of technological change.
they argue that the increase in labor costs in China is a “window of hope” for the country, because it is driving the technological advancement in the same way that an increase in wages in the eighteenth century in the United Kingdom gave the impetus for the first industrial revolution in the world. At the same time, according to Johanna Chua, Citi economist in Hong Kong, the industrial lingers in parts of Asia and Africa face a “race against the machines” for fighting to create jobs in sufficient numbers in the industry before they are annihilated by the robot army meeting in China and the rest of the world.
Tom Lembong, 45, Minister of Indonesian Trade, and an important voice within the government for liberalization and reform of the largest economy southeast Asia, is aware of the risks. “Many people do not realize that we are seeing a quantum leap in robotics,” he says. “It’s a huge concern and we need to recognize the threat of this new industrial revolution. But as political and business elite, we are still stuck in debates on industrialization that were closed in the twentieth century and even in the nineteenth century.”
Countries like Indonesia are already suffering with something that Harvard economist Dani Rodrik has dubbed “premature deindustrialization”. The term describes a trend in emerging economies see their production sector begin to shrink long before countries reach income levels comparable with the developed world. Despite the rapid economic growth over the past 15 years, Indonesia saw the economic peak of its manufacturing industry in 2002. Analysts believe that this is due in part to an investment failure in infrastructure and trade policy and little investment competitive of the country and partly to globalization.
Rodrik believes that the country will never be able to grow in the kind of rapid pace experienced by China or in South Korea. “Traditionally, the production needed much low-skilled and employed many people, “he says. “Because of automation, the required qualifications have increased significantly and are much less people employed in factories What do you do with these extra workers They will not turn into IT entrepreneurs or artists;.? And if they become employees of restaurants, receive a salary much lower than they would receive in a factory. “
the robot spread makes it much more difficult for developing countries to enter the” escalator “of economic growth, he argues. This is bad news for the two million young people are estimated to enter the labor market every year in Indonesia, a nation of 255 million, where 40% of people live on three dollars a day or less. Mahami Jaya Lumbanraja 22, a job seeker on the Indonesian island of Batam Industrial, is feeling the effects of premature deindustrialization phenomenon. Seven months is looking for a job in a factory in Batam, which is just 30 kilometers from the thriving Singapore, but has not had luck. With pants of faded jeans, a gray hooded sweatshirt and a captivating smile, Lumbanraja says that although a year of work experience in Shimano, the Japanese manufacturer of bicycle changes and fishing equipment, do not have sufficient experience to ensure more than one position on the lower level, and there are many more people looking for work than available places. “I can survive with the little money I get from performances on the street and to help friends in construction work, but I have to get a real job in a factory to save enough money to set up my own small business later” he says. Salaries in Batam – about $ 230 a month – are double what Lumbanraja could win in his home city of Medan on the island of Sumatra. So he thinks he has to stay there until you find work.
Lumbanraja is one of about 700 Indonesians in their late teens and early twenties who visit every day the community center in the park industrial Batamindo looking for work. In February, three thousand people signed up personally to only 80 seats in a factory of electrical cable Japanese property, a meeting so big that executives initially feared that it was a protest demonstration.
Batamindo is a joint venture between Singapore and the Indonesian investors was supported by the presidents Lee Kuan Yew and Suharto – the respective leaders of the two countries – when it opened in 1990. what was intended to be a model of Indonesia’s industrialization strategy, has become a symbol of all that’s wrong in it. In recent times, an average of five plants per year changed the industrial park by other countries and the number of people employed there fell to only 46,000, from a peak of 80,000 in 2000. This, despite the fact that wages are today between a third and half of which are paid in Guangdong province of China.
Lembong, a graduate of Harvard who ran his own private equity firm based in Singapore before being appointed Minister of Commerce in August, says the government is determined to solve the twin problem at the heart of Indonesia’s economic malaise:. weak infrastructure and excessive regulation
But some argue that the reform afternoon will too. During the period of rapid industrialization, China has invested in highways, railways and modern ports needed to support the productive sector. In contrast, the physical infrastructure in Batam and in much of Indonesia “have not changed much since the 1970s,” says Mook Sooi Wah, director general of Batamindo.
In fact, Indonesia had one to “robotics density” slightly larger than China, where were collected the latest data by the International Federation of robotics in 2014, although it is likely that the situation has changed dramatically since then, given the pace of Beijing automation push. This anomaly was largely the result of the industrial labor force in China is much higher than that of Indonesia, which still has no plan or government support for industrial automation.
The regulatory process in Indonesia is so old-fashioned as its infrastructure. Recently, the legitimate shipments from a paper mill were held by customs at the port of Batam because of a rule intended to prevent the export of illegally harvested timber. These problems leave exasperated by supporters of Batam.
Stefan Roll, a German veteran producer who has worked in China for its industrial take-off in the 1990s, like living and working in Indonesia. But he fears that the country is losing its “golden opportunity” to become efficient enough to compete on a global scale. “When you are dealing with multinational companies, time is money,” says Roll, while showing its new plant in Batam, riding coffee machines for Nestlé. “But only if you get a just in time production if there are good roads and infrastructure.”
Although few who doubt the importance of the challenges facing developing countries, not everyone sees the problem terms so dark. With wages in countries such as Indonesia and India much lower than in China, and having those countries populations still relatively young, some analysts believe they can attract more labor-intensive industries such as clothing, where widespread automation is not appropriate.
“As China moves up the industrial chain, it is actually releasing a lot of opportunities to Southeast Asia and India,” says Anderson Chow, analyst robotics at HSBC investment bank in Hong Kong.
Sirkin Hal, a specialist in the manufacture of the Boston Consulting Group, says that the prospect of an economy like India, it makes sense to automate now because it would raise the price of goods – “when they have a billion people who can do things more cheaply.” It is among the technological optimists who believe that in the medium term, automation will also create new business niches for emerging economies, mitigating the damage of jobs that will be eradicated.
“We think we will see increasingly location instead of more scale, “says Sirkin. “I can set up a factory, change the software and manufacturing all kinds of things, not in the hundreds of millions but in five or ten million units.”
But Carl Frey, an expert in employment and technology at the University of Oxford, warns that without better education and more skills, developing countries will find it difficult to take advantage of advances in the industry.
“the technology is increasingly based on qualification, “he says. “Many of these countries do not have a skilled workforce, so they are not very good in the adoption of these technologies.”
Bet across borders
China itself is not immune to the negative consequences of automation. More than 40% of its population of 1.4 billion still live in the countryside, many in poverty, and benefited only marginally from the urban economic miracle.
But the government is betting that the benefits of promotion tip manufacturing outweigh the potential damage of lost jobs. The industrial strategy announced by Beijing last year – known as Made in China 2025 – is designed not only to improve the technological capacity of its plants, but also to support the development of Chinese brands internationally
. Chow, the HSBC analyst, says it is likely that Chinese companies, to try to increase their exports to alleviate the impact of domestic slowdown, focus more on the quality of their products: “often a part of that development is better production process involving robotic “
Each year, the amount of time required for the investment company a robot is compensated – known as the”. payback period “- decreases dramatically, making more attractive for small businesses and Chinese workshops invest in automation. The return period for a welding robot in the Chinese automotive industry, for example, fell from 5.3 years to 1.7 years between 2010 and 2015, according to calculations by analysts at Citi. In 2017, it is expected that the payback period decreases to only 1.3 years.
Automation is not only the placement of cheaper and more efficient robot arms in the production line. Li Gan, the Director-General of Shangpin Home Collection, which produces and sells furniture for the custom house, says that the greatest opportunity is to integrate robots in factories with customer data in real time and automated logistics systems.
Thanks to the use of robots, the factory that Shangpin opened in Foshan in 2014 was 40% more productive than their previous works, although 20% employ less people. Later this year, will start operating its newest and largest production center, where hopes to improve four times with productivity just double the number of employees, using more robots to move the parts within the factory and help pack containers output of goods transport.
the drilling wooden slats for the wide range of the company’s beds, cabinets and other bespoke furniture used to be a laborious process and sometimes dangerous. Now, the worker simply takes each piece of wood, scans a barcode and place the timber on a conveyor belt that leads to the robot arm. The finished product back into another pad. The process however is surprisingly complicated: the Shangpin had to design a device to make sure that each slat would be properly aligned to be gripped by the robot arm and drilling specifications for the slats have to be pre-programmed and recorded on a code bar, because the robot does not have any capability of artificial intelligence. Li Gan stresses that human supervision and decision-making is still crucial. “Automation is only a technical process, but what is more important is our thinking about the best way to do this,” he says. “Whenever we change something, we ask: is more efficient to do this using people or robots”
The Boston Consulting Group predicts that the percentage of robot tasks advanced increase from 8% today to 26 % by the end of the decade, driven by China, Germany, Japan, South Korea and the US, which together account for 80% of robotics purchases. Sirkin of BCG, says that the rapid expansion of automation could be compared to the difference between the “human learning curve” and Moore’s Law, which postulated that computing power would double every 18 months to two years. “Even if it is very good, humans can only double your productivity, at best, every ten years,” he says. On the contrary, researchers can bring robots to double your productivity every four years, he estimates. “Over time, this makes a big difference.”
With China and other industry leaders to build more and better robots, the functions they can perform will be expanded. The tasks of a butcher, for example, have long been regarded as the kind of skills that machines have difficulty developing because of the need for careful coordination between hand and eye and handling of non-uniform pieces of meat . But Sirkin noted robots to cut the fat much more efficiently meat than humans, through the use of cheaper and more responsive sensors. “The use of machines to do this is to become economically viable because it can be saved three or four percent of the flesh. – And this is worth a lot in a production line, where you can fast forward” There are things that beings humans can do better than robots, “he adds.” But they are less and less. “
Exclusive DN / Financial Times
