Make in India: Importance of Robotics in the manufacturing segment, and how it can still create jobsIn More Info, Robotics
Editor’s Note: This is part 1 of a two-part series on the role of productivity in making ‘Make In India’ a successful program
The showcase initiative of the Modi Government, #MakeInIndia has entered its third year. The goal for #MakeInIndia was to transform India into a global design and manufacturing hub, improve contribution of Indian manufacturing to 25 percent of GDP by 2025 from near stagnant levels of 16 percent and create 100 million manufacturing jobs. The intense global outreach by the Government, handsome schemes and incentives offered persuaded several global companies including Foxconn, Airbus and Hyundai pledge to set-up manufacturing base in India. But this was pre-Trump era.
Globally, the world is on an accelerated de-globalisation path; a complete U-turn in strategy of the last 20 years when companies trotted globally to setup cost effective supply chain and low-cost manufacturing. In the US, Trump’s focus of getting the jobs back to US with a carrot-stick approach has created widespread ripples so much so that Carrier scuttled the plan to lay-off a thousand American employees and move jobs to Mexico. After all, which CEO would risk waking up in the morning to be trolled on Twitter and thrashed for moving jobs overseas with Trump’s famous 3:30 AM tweets?
Global and regional trade treaties today reek of protectionism, re-shoring or right-shoring are the corporate mantra and ‘make in one’s own country’ efforts are on a rise the world over. The same de-globalisation and nationalistic trends made a case for Brexit and it is likely more European countries will follow suit. In this economic climate, many large corporations are expected to steer for some manufacturing in their home base. This when, China is saddled with supply over-capacity, there is lower demand globally and not enough takers in their home market.
On the other hand, Industry 4.0 is taking automation to a new level with 3D Printing, Internet of Things (IoT), augmented/virtual reality, human-robots collaboration (cobot), adaptive and additive manufacturing and new age robotics with artificial intelligence driving productivity and quality.
Robotics and automation are not new but technologies have visibly progressed. Even in mid-size factories in developed countries, the extent of automation has been tremendous. In US, most of the companies that survived the Chinese onslaught in manufacturing, have super lean manpower and rely heavily on robotics and automation. #MakeInIndia, especially the job creation goals, would hence be operating against an increasingly tough head wind.
Recently, as an advisor to a US-India startup building solutions for predictive analytics of machines, the author, visited several medium-size factories in India, and had the opportunity to chat with plant managers and owners issues and challenges facing the manufacturing sector especially issues relating to productivity, quality, availability of labour and the state of automation at the facilities.
Challenges to Productivity
The first thing that strikes you at a typical midsize Indian factory is the sheer number of people as compared to a similar size unit in the US. Labor is in abundance and under-utilised too, in Indian factories. Individual machines are used for specific tasks like injection moulding and these are not integrated as part of a typical automated production line. There were a couple of employees at each machine involved in operating the machine, inspecting the output, sorting and counting the output and transferring them to the next step. One of the factories visited worked two 12-hour shifts. Productivity leaped when they shifted to three 8-hour shifts. The inference: Beyond 8 hours of repetitive work, per worker productivity drops severely even though machines can operate 24/7. Now this is not a radical find, is it?
China’s official labour cost is widely acknowledged to be 4 times that of India; but the productivity is several folds higher on account of better human capital development through education, training, use of more machinery that automates repetitive tasks and advanced manufacturing processes.
In recent years, Indian enterprises too are pursuing ambitious productivity targets. A case in point is Tata Steel which is working towards doubling productivity over the next 5 years through higher automation levels, no doubt. This move would put further pressure on manufacturing job growth.
The issues with Quality
Across companies, quality of output has been identified as the topmost issue scoring higher than even productivity gains. The quality issues that plague the manufacturing sector are labour related as demonstrated below.
Quality checks a manual effort
Across Indian factories, the tasks of inspection for defective components, sorting and counting continue to be primarily manual and therein prone to errors. Another requirement at the companies has been to create a method to diagnose from the machine PLC11 any operational deviations to reduce the need for manual inspection of machine output to detect production problems. Similar requests were made on vision analytics for inspection which could complete the quality and counting inspection and notify the need for interventions.
Automation may well lead to downsizing staff with many seeing it as essential to enhancing quality, productivity and growth in domestic and export revenues. Automation and implementing some elements of Industry 4.0 were deemed necessary to demonstrate modernisation to global clients to increase exports.
Transitory contract labour is currently the norm in the manufacturing sector. The average factory worker wage is Rs 8,000 – Rs 12,000 a month. Archaic labor laws and high proportion of unregulated contract force are characteristic of Indian manufacturing enterprise. The booming service economy, employment alternatives, spread of service sector jobs to manufacturing hotspots and Tier-II cities has created job alternatives and pay competition.
Drivers of Uber and Ola, the delivery work force of Swiggy and Big Basket enjoy higher average pay packages, making these jobs more attractive for the factory work force too.
While we discourse on Skill India, setup training institutions and accelerating efforts to augment skillsets in manufacturing, the same industry is looking to be more machine-driven and error-free that even a novice can achieve ie effectively de-skilling.
Diploma holders start work at a small base salary in manufacturing. The repetitive work and poor pay drives them to seek more lucrative alternatives. At one of the plants visited by the author, near two-thirds of the labor force was on contract and deployed on the production floor with a very basic training to report at best that something is not working. They are ill equipped to take fix issues.
Maintenance staff was at least 10 times more in these Indian factories compared to US. Sadly, there is limited knowledge of the machines and machine abuse is rampant. The machine OEM’s maintenance contractors generate standard reports and only the red flagged ones are ever addressed. Maintenance teams seek quick fixes that can have production resume and seldom analyse failures. Review of factory operations would mitigate inefficiencies and enable root-cause analysis to avoid repeated breakdowns and downtimes leading to productivity losses, which are unfortunately commonplace.
A simple solution of getting PLC data scrubbed and parsed would give insights on not just machine utilization, idle time and downtime but also on production and quality as management explores alternative information sources to make decisions without relying solely on factory personnel.
Editor’s Note: This is part 2 of a two-part series on the role of productivity in making ‘Make In India’ a successful program.
Case for Robotics in Industry 4.0
Automation and robotics technologies are in their infancy in Indian medium-size factories since technical feasibility and return on investment (RoI) are preconditions for deployment. Factories review RoI basis a 2-3 year horizon, which becomes a difficult RoI with the cheap cost of labor.
RoI needs to be examined basis higher output levels, better quality, reliability to compete globally and beyond labor substitution. High capex costs are however a deterrent.
In this context, the Industrial Robot Sales report by International Federation of Robotics (IFR) throws up a few interesting facts: Global industrial robot sales increased 15 percent to 253,748 units in 2015 with 75 percent of the total sales volume from 5 countries – China, Korea, Japan, US and Germany. Sale of robots in India was a mere 2,600 robots compared to 70,000 in China and 50,000 in Europe. Robotics is nascent in India with startups like Shastra Robotics, Gridbots and Systemantics solving niche automation tasks with home-grown affordable robots.
India is an OPEX driven economy and any business model innovation from CAPEX to OPEX and financing could sway automation in the right direction. The new greenfield projects by large manufacturers will hopefully lay emphasis on automation while the existing factories adding new lines and expanding are likely to look at immediate RoI and may miss the opportunity.
Silver Linings to manufacture Job Growth
Despite manufacturing sector not creating jobs, the wider ecosystem is rife with opportunity. Some opportunities will evolve more organically as manufacturing activity and global product demand increase. Simply put, more production to meet demand will create more jobs (albeit more skilled ones) in the core and ancillary industries. Any large manufacturing setup will create several peripheral ancillary industries in the cluster. As more factories are setup, demand for more peripheral or support jobs in supply chain to support the plants or the workers in these plants (in terms of services) will arise.
Even though such industries are moving towards bigger use of machinery (not necessarily automation), the Indian Council for Research on International Economic Relations (ICRIER) study did not find a significant decrease in Labor/Machine ratios where such shifts happened. This makes these industries a bright spot for job creation.
As manufacture and sale of products rises, opportunity for more pre-sales, implementation, logistics, installation, and support jobs throughout the entire supply chain will no doubt be seen. This makes traditional labor intensive manufacturing industries like leather, apparel, food a bright spot for job creation as issues with respect to skilling, SME support, export promotion get addressed.
In traditional labor intensive manufacturing industries like leather, apparel, food etc., an ICRIER study points out that the employment generation in these industries is hampered by non-availability of skilled workers, bad labour laws, lack of more female workers, lack of credit, lack of infrastructure etc. Even though such industries are moving towards bigger use of machinery (not necessarily automation), the ICRIER study did not find a significant decrease in Labor/Machine ratios where such shifts happened. This makes these industries a bright spot for job creation, especially as #MakeInIndia government initiatives in skilling, SME support, availability of credit, export promotion, etc, address some of the underlying issues that hamper job creation in these industries.
Pressures to increase plant utilisation which is currently at 70 percent average and more shifts of shorter duration will also increase job creation possibilities. Low plant utilisation is also a result of issues such as non-availability of raw material, components, maintenance, labor laws, labor skills etc. As these issues get addressed, plant utilisation will improve and more people will be needed to run factories for longer periods.
Future of jobs in manufacturing
If we do some crystal gazing and imagine how manufacturing itself may fundamentally change in the near to midterm future, more job opportunities emerge.
- For example, distributed manufacturing with 3-D and 4-D based techniques, can open up new avenues to augment bulk manufacturing as we know it today. One bold vision is that while a lot of component building blocks become standardised, commoditised and made using bulk, automated manufacturing and the final products will allow for higher customisation using these components. Such customisation will necessitate specialised manufacturing AND expert assembly jobs.
- The trend of searching for optimal solutions as regards price, performance, aesthetics and differentiation is on the rise across the social spectrum. Such shifts in the nature of manufacturing will positively affect job and entrepreneurial growth in manufacturing in different ways than how we view monolithic manufacturing today.
- Manufacturing today starts at raw material procurement and culminates with production and packaging. In the long term, as environmental regulations strengthen, manufacturers will be required to offer greater product stewardship and cradle-to-cradle manufacturing. This will give rise to a whole class of new jobs in manufacturing that don’t exist today or at best are seen in unclassified sectors. For example, servicing the products, determining failures and fixing problems in the field, selective dismantling of broken products, classification for re-use, repurposing, recycling bins, refurbishing products and components etc are entirely new job avenues that are largely yet non-existent.
The world-over, the definition of employment is changing from lifelong to job-hopping to cyclical to temporary. Concerted efforts are required to condition the labor to accept more temporary and cyclical job opportunities.
While the net results of these countervailing forces, simultaneously reducing and increasing job growth, are somewhat speculative, one thing is clear. Employment models need to evolve so that a large army of cyclical and temporary workers will need to be managed during periods of high and low employment demands. This needs new comprehensive thinking, program design and concerted execution by the Government and the industry working in unison.
#MakeInIndia and the growing consumption economy is great news for India, but the quantum increase in manufacturing jobs, a goal of #MakeInIndia will remain a challenge despite several fold increase in factories. In the interest of ensuring India has a competitive edge in the long run, while raising the bar on productivity and quality of output, India would do well to derive a metric focused on productivity and quality to make-good India’s potential and achieve the dream of India’s manufacturing sector touching $1tn by 2025.