Automation and robotics advancements are resulting in the total transformation of assembly factories. In the Chinese city of Dongguan, around 1,500 Robot Replace Human programs were completed by the end of 2016. Since the first unmanned factory was set up in 2015, more than 500 factories have joined the initiative which was part of the implementation of the Made in China 2025 strategy.
Following the schedule, the Changying Precision Technology Company, one of the 50 pilot projects that began in 2015, has now completed the replacement of 590 workers with robots. What was a gradual transformation is the equivalent to 90% of its workforce. Only 60 humans still work in the factory at this point.
However, people are not involved in the manufacturing process. They simply supervise, making sure the robots are functioning properly. The number of humans is expected to decrease to a third or less in the near future leaving all the processes to be controlled remotely.
The fully automated production lines, which uses KUKA Robotics robotic arms, produce mobile phones modules at each station. The number of robots has been increased to 1000 since first the factory began its automation project in 2015. The factory also uses fully autonomous transport trucks, and automated warehouse equipment. Production and product quality have considerable increased.
Since the shift to robots, production has risen from 8,000 to 21,000 pieces per individual accounting to a 250% increase whereas product defects has decreased from 25% to less than 5%.
Technological advancement applied to manufacturing is at the core of Made in China 2025 goal. As ongoing government investment of 943 billion RMB in the area from 2015 to 2017 is helping close to 2,000 industrial businesses adopt robots for their manufacturing processes.
Made in China 2025
The national Made in China 2025 initiative was launched in May 2015 with the aim to improve the manufacturing industry. After reaching the goals proposed for 2025, the next steps continue to 2035, and 2049. By then, China is expected to have become a leading manufacturing power across the globe.
2025. Coincidence? Not quite
Before jumping to conclusions on China's decision to fully automate all its factories let's have a look at some demographic facts.
China's aging population is expected to result in a demographic crisis just a few years from now. Fewer workforce could bring an economic crisis to China. Totally automated manufacturing processes might be the answer to the future of the Chinese economy, and to the world’s aging population.
A paper titled Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation, issued in January 2017 by the National Bureau of Economic Research, addresses this. The economists Daron Acemoglu and Pascual Restrepo hypothesize that as populations age businesses are more likely to adopt technology that helps boost productivity.
To support this, they offer preliminary results that show a close relationship between aging and the adoption of robots.
Several recent theories emphasize the negative effects of an aging population on economic growth, either because of the lower labor force participation and productivity of older workers or because aging will create an excess of savings over desired investment, leading to secular stagnation. We show that there is no such negative relationship in the data. If anything, countries experiencing more rapid aging have grown more in recent decades. We suggest that this counterintuitive finding might reflect the more rapid adoption of automation technologies in countries undergoing more pronounced demographic changes, and provide evidence and theoretical underpinnings for this argument.
Keeping this in mind, the argument for or against automation and robotization might shift. Where would you stand?