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Archive for the ‘Automation’ Category

Why invest in automation? The answer to that question is often to cut cost — a straight up move to replace labour with capital. That has the obvious implication that firms in high-wage locales like the US should be willing to invest heavily in fancy machinery while those in lower-wage countries like India should be more cautious in doing so. That may not always hold, however. As the Wall Street Journal tells it, there is one Indian industry that is investing heavily in automation and it’s not really about shaving costs. The industry in question is generic pharmaceuticals and the driving force behind the capital investments is maintaining high quality standards (India’s Drug Makers Move Toward Automation, Jun 5).

Despite an abundance of low-cost laborers in India, all of [Dr. Reddy's Laboratories'] plants are moving toward fully automating their production process “to avoid good manufacturing practice pitfalls from regulators,” said Samiran Das, head of Dr. Reddy’s generic drugs manufacturing.

In the past decade, India’s pharmaceutical companies have blossomed into multibillion-dollar companies that now account for 40% of the generic drugs sold in the U.S. Those companies, however, have come under increased scrutiny in recent years from the U.S. FDA, for manufacturing, testing and other safety issues that are often the result of human error.

To ensure that their products don’t get banned from the U.S.—the world’s biggest drug market—many companies that can afford it are spending hundreds of millions of dollars to automate. …

Mr. Venkatanaryan, the head of the Dr. Reddy’s Bachupally plant, says the drive toward automation is meant to make the manufacturing process “mistake-proof.”

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There has been a lot written recently about the state and future of making stuff in the US. Just in the past month, Strategy & Business has touted new technology and software as a way forward for American manufacturing (America’s Real Manufacturing Advantage, Jan 20) while Steven Rattner, the administration’s former Car Czar, took the New York Times pooh-poohing talk of a revitalized manufacturing base (The Myth of Industrial Rebound, Jan 25). As Rattner sees it, whatever boost there has been in manufacturing has been inconsequential and not beneficial for workers.

But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies. Most important, in order to compete with China and other low-wage countries, these new jobs offer less in health care, pension and benefits than industrial workers historically received. …

This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga, Tenn., in 2011, the company was hailed for bringing around 2,000 fresh auto jobs to America. Little attention was paid to the fact that the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.

With benefits added in, those workers cost Volkswagen $27 per hour. Consider, though, that in Germany, the average autoworker earns $67 per hour. In effect, even factoring in future pay increases for the Chattanooga employees, Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).

This all gets us to a different New York Times on Harley Davidson that describes changes the firm made to save itself (Building a Harley Faster, Jan 28). What is interesting is that Harley’s approach differs fundamentally from either of the approaches above. They are relying on humans over widespread automation and working with their existing, unionized workforce as opposed to hightailing it to a location with cheaper labor. (more…)

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This blog entry is a direct continuation of Marty’s post on Textiles in America and part of our ongoing posts on reshoring of work.  The New York Times Replica Edition is an exact electronic version of the in-print newspaper where I first saw these two nice pieces of data.  (I LOVE data.  Recall: “In God we trust, all others bring data”–according to quality guru Edward Demming.)

jobs evolution since 1990. (Source: Bureau of Labor Statistics, as reported in New York Times of Sep 20, 2013)

Jobs evolution since 1990.
(Source: Bureau of Labor Statistics, as reported in New York Times of Sep 20, 2013)

This chart provides hard data of the stories often told about job losses.  The huge transformation of textiles and apparel is striking–mind you, the data spans the relative recent 18 years!  I can only imagine the devastating impact to families working in that sector…  From an economic perspective, two key explanatory changes are: 1) offshoring to low cost countries after deregulation and 2) innovation leading to increased automation, and the substitution of capital for labor.  (I purposely use the “big” innovation word; later I shall also write about recent data linking innovation to offshoring.)

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Back in April of last year, we had a post discussing how Tesla managed to set up its Fremont factory on the cheap. Now Wired has a video showing just what happens in the factory (Peek Inside Tesla’s Robotic Factory, Jul 16).

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Last Monday I posted about Rethink Robotics’ Baxter robot which can be easily programmed to perform a variety of manufacturing tasks. And that very day, the Wall Street Journal had a story about a firm that uses Baxter robot (A Toy Maker Comes Home to the U.S.A., Mar 11)! K’Nex Brands makes a variety of plastic building sets that snap together to make any number of things. Over the last several years, they have moved much of their production from China back to Pennsylvania. There are a number of strategic reasons for the move.

By moving production closer to U.S. retailers, K’Nex said it can react faster to the fickle shifts in toy demand and deliver hot-selling items to stores faster. It also has greater control over quality and materials, often a crucial safety issue for toys. And as wages and transport costs rise in China, the advantages of producing there for the U.S. market are waning.

Robotics play a roll in this. They use the Baxter for “simple packaging tasks,” which sounds like the kind of thing that it would be impossible to have a human do more cost effectively in the US than in Asia.

But to my mind, the most interesting part of the article discusses the design trade offs that K’Nex has made to facilitate the move. (more…)

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Check out this video:

The robot being demoed is Baxter, which is a new industrial robot and the brainchild of Rodney Brooks, the guy who brought you the Roomba. Here is how NPR describes the technology (Could This Robot Save Your Job?, Mar 9).

Rethink Robotics, describes Baxter as a collaborative manufacturing robot. Brooks showed how Baxter, which costs $22,000 per model, can work alongside humans — not replace them — to do simple, repetitive tasks. …

Baxter has eyes for feedback. Though its eyes don’t see you as a person, they serve as a signal as to what it’ll do next.

Normally robots need to be programmed, but this one learns by physical training. Move Baxter’s arm and it learns that’s how it should move its arm. In just a few minutes, the robot can be taught, for example, to take something out of a box and place it on a conveyor belt, then, after it’s assembled, put it back in a box.

So this is seriously a pretty gee whiz bit of technology but does it live up to the hype of working with humans and saving jobs? (more…)

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We would be remiss if we did not note that this weeks Economist has a special series of articles on outsourcing and offshoring. The general theme is that after rush to send a variety work to cheaper locations, many firms are reconsidering and bringing some work back home. The rationales range from underestimating the impact of long lead times and the difficulty of coordination across continents to a belief that doing work in-house allows for greater flexibility. On the whole, the report is well worth reading. One article, however, stood out for me. It looks at the increasing use of automation in service centers (Rise of the software machines, Jan 19).

IPsoft is a young company started by Chetan Dube, a former mathematics professor at New York University. He reckons that artificial intelligence can take over most of the routine information-technology and business-process tasks currently performed by workers in offshore locations. “The last decade was about replacing labour with cheaper labour,” says Mr Dube. “The coming decade will be about replacing cheaper labour with autonomics.”

IPsoft’s Eliza, a “virtual service-desk employee” that learns on the job and can reply to e-mail, answer phone calls and hold conversations, is being tested by several multinationals. At one American media giant she is answering 62,000 calls a month from the firm’s information-technology staff. She is able to solve two out of three of the problems without human help. At IPsoft’s media-industry customer Eliza has replaced India’s Tata Consulting Services. …

A small British start-up, Blue Prism, has developed a software-development toolkit that allows people within a company to create their own software “robots” to automate business processes. …  An onshore information-technology worker may cost $80,000 a year and an offshore one perhaps $30,000, wrote James Slaby, HfS’s research director, in a recent report. But Blue Prism’s robots cost at most $15,000 a year. They can perform only routine, rules-driven tasks, but there are plenty of those about.

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Several months ago Amazon bought Kiva, a firm that develops robotic fulfillment systems.  Several photos and tours of Amazon’s newest warehouses were released this week, and people were shocked to see that the warehouses are still built for human pickers, with no robots in sights. Bloomberg’s BusinessWeek ran an article trying to explain this observation. (Amazon’s Robotic Future: A Work in Progress)

After all, aren’t robots supposed to be the future of such places as distribution centers and warehouses? Didn’t Amazon buy a robot manufacturer, Kiva, in March? The online retailer announced in October that it was taking on 50,000 additional part-time workers for the holiday season. Shouldn’t some of those spots be taken up by mechanical arms and wheels?

The article provides several explanations:

Bruce Welty is chief executive officer of Quiet Logistics, an order-fulfillment company that manages the online inventory and distribution for retailers like Gilt, Zara, and Bonobos. He uses robots made by Kiva, the company Amazon purchased, but his warehouse in Massachusetts is not bereft of humans. “Robots aren’t very good at picking up things,” he says. “They aren’t very good at looking at a bin of different things and distinguishing one item from another.

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How could I pass on blogging about the Wall Street Journal reporting on May 21 that 100 U.S. engineers and managers were flown across the Atlantic and told: “Do as the Belgians do!”?

The article, titled “Indiana Steel Mill Revived With Lessons From Abroad ,“ is part of their series on how globalization can improve local organizations and may be one reason why American manufacturing is growing again.  “Some steel mills are destroyed by globalization, others reborn.

Left for dead a decade ago, this 50-year-old facility on the shores of Lake Michigan has been rejuvenated thanks to an unusual experiment by its owner, Luxembourg-based ArcelorMittal.

In 2008, Burns Harbor was “twinned” with a hypermodern mill in Gent, Belgium. Over 100 U.S. engineers and managers, who were flown across the Atlantic, were told: Do as the Belgians do.

Burns Harbor now enjoys record output. Its furnaces, where steel is made out of iron ore, coal and limestone, are run with software developed in Belgium. Robots are in. Pencils are out. Workers are learning to make the same amount of steel with nearly half the people it employed three decades ago. Productivity is nearing Belgian levels.

Burns Harbor, according to the WSJ, is a case in point of the “upsides of globalization: … it puts pressure on U.S. factories to become more efficient to keep up with global competition, making it possible for them to survive.”  There are a few observations to be made: (more…)

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Each year we design new ‘kits’ (uniforms) for my cycling team and have them manufactured.  During that quest, I’ve started to put premiums not only on quality but also on minimum order size and response time.  The typical leadtime for custom pro-level cycling wear is about 8 weeks and several manufacturers have minimum order sizes of 10 units (which is not helpful to get replacement kits after the inevitable crash).

Like many other industries, the textile industry has been digitizing to allow smaller batch sizes and faster turn-around-times.  Digital inkjet printing became the norm for small batch sizes.  Sublimation still the higher quality but for larger batches.  Apparently, the technology has now sufficiently advanced to bring the same flexibility to higher volumes (and hence lower cost per unit).

According to industry expert Debra Cobb, high speed developments now have led to new printing capabilities:

At ITMA in September 2011, the array of inkjet printing developments generated strong interest amongst attendees. While high-volume printing is generally considered to be better than 200 m2/hr, new printers have moved way beyond this benchmark.

Stork Prints highlighted their new Sphene 24 digital printer, which is said to realize speeds up to 555 m2/hr on virtually any fabric; including tricky substrates such as polyamide/elastane swimwear knits. Durst Phototechnik AG launched its Kappa 180 inkjet printer, said to reach speeds of over 600 m2/hr with a resolution of 1056 dpi x 600 dpi.

Xennia Technology’s Osiris high speed digital printing system, also introduced at ITMA, is said to be one of the fastest inkjet printing systems in the world. It is capable of printing up to 2880 m2/hr, with up to 8 colours; its speed gives mass market fashion printers a competitive edge by allowing them to react quickly to new fashion trends.

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