Automation is sexy, fun to talk about, and cool to have in a facility. The great thing is that the country is sold on having automation and thinks that there are these huge benefits to having it.
The fact that you can have a robot replace people is great. No more drama of having to deal with people. No need to worry about the lack of skills, people calling in sick, and no ideologies to deal with.
The greatest benefit of all is the cost. Think about it: replace 20 headcount by automating the back end of your facility, which will save you $1 million a year in labor. The cost of automating the back end of your facility is $10 million, and that’s a 10-year return on investment—a great project by any stretch of the imagination.
Then, you can raise the cost of your product because you overspent to look cool, leading to less volumes, and ultimately either shutting your doors or shipping the jobs overseas to produce it at a lower cost. What is not to like about that?
According to an article on the website KentuckianaWorks.org: “Perhaps the strongest evidence that automation has not fully replaced manufacturing jobs is the percent of the world population employed as manufacturing workers has remained relatively steady over the past 25 years. If automation were completely replacing workers, there would be worldwide decline in manufacturing employment as factories around the globe invest in technology to fully substitute for human labor. Instead declines in manufacturing employment have been primarily concentrated in wealthier countries, where labor is more expensive, while less-developed countries have seen their share of manufacturing employment grow.”
Instead of reducing headcount, we are replacing headcount with high paying, higher skilled jobs. So eliminate 20 lower skilled jobs and hire seven people paying them twice or sometimes three times as much. Not to mention the fact that you have carry more spares at a higher cost, tying up cashflow. Couple this with the added complexity to a line, and it seems to be a winning formula for success!
Other than the disadvantages of the high capital expenditure required to invest in automation (an automated system can cost millions of dollars to design, fabricate, and install), a higher level of maintenance needed than with a manually operated machine, and a generally lower degree of flexibility in terms of the possible products as compared with a manual system (even flexible automation is less flexible than humans, the most versatile machines of all), remember just how cool and sexy it is to be able to tell everyone that you are automated.
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Adding complexity to a line looks really awesome. Never mind the fact that this requires additional training and development of different skill sets, and when the machine goes down it typically takes longer to get it back up and running, resulting in lower throughputs than expected. Not only are you adding to the cost of your product, it will also make it harder to compete in the marketplace.
This inability to compete generally leads to lower volumes because people will not pick up your product from store shelves and can ultimately lead you right out of the market altogether, leading you to close your business or sell it to the competition. But hey, at least you will look really good doing it, am I right?