Automation Imperative - Core Business Function

  • February 18, 2013
  • Feature

February 2013

By Bill Lydon, Editor

The success factors in manufacturing are changing - making it imperative that all size companies use automation as a strategic tool to compete. Manufacturing is important.  For example, according to the World Bank, the United States is the world's largest manufacturing economy, producing 18.2 percent of global manufactured products. China is second with 17.6 percent. U.S. manufacturing produces $1.8 trillion of value each year, or 12.2 percent of United States GDP. For every $1.00 spent in manufacturing, another $1.48 is added to the economy. U.S. manufacturers are responsible for 47% of the total U.S. exports.

Labor Costs & Availability

Labor costs are increasing in traditionally lower cost regions of the world and changing demographics will continue to be a factor driving the need for more automation. The 2012 Manpower Talent Shortage Survey notes that about one in three employers (34%) continue to experience difficulties filling vacancies due to lack of available talent. The proportion is unchanged when compared with 2011, and is four percentage points above the level reported in 2009, which was the height of the global financial crisis. Despite a growing global population, the availability of skilled workers is actually shrinking in advanced aging countries. Emerging markets, such as China and Russia are also feeling a demographic pinch. Despite projected growth in the global population from 6.9 billion in 2010 to 7.6 billion in 2020, the working-age population is expected to decline in many countries.


Automation is a key success factor, for companies large and small, in achieving lower costs, increased productivity and quality. A company can successfully compete only if it outperforms rivals by delivering greater value to customers or creating comparable value at a lower cost, or both. Automation is the best way to achieve this goal over the long term by improving sustainable operational effectiveness. Operational effectiveness means performing similar activities better than competing manufacturers. By waiting until competitors apply available automation, manufacturers make themselves vulnerable, keeping them in catch up mode.

Small Manufacturers

Smaller manufacturing companies are an important part of industry that can now take advantage of automation. In the United States alone, companies with fewer than 100 employees make up over 94% of all U.S. manufacturers. Automation technology has become lower in cost and more flexible, enabling smaller companies to deploy it and gain competitive advantage. For example, robots have come down in price and are becoming simpler to program, including the ability for users to teach robots to perform tasks. Another example of using technology to be more competitive is the retrofit of manual 3 axis machine tools by adding a controller and motors in place of the hand controls to automate the machine tool.

The integration of business information systems and manufacturing automation has also become significantly easier and lower cost to deploy, allowing companies to become more responsive and efficient. Small companies can leverage the same technologies large companies use to gain advantage. For example, at the Aberdeen Manufacturing Industry Summit held on December 4-5, 2012, Howard Hauser, VP Operations of Hiawatha Rubber, described how their small private company has orchestrated the use of modern manufacturing technology as part of their competitive strategy to improve the operations and pursue new markets. Technologies used include a robot and using a cloud based enterprise system to provide the advantages only large companies could afford in the past. The cloud based system provides a range of functions including product lifecycle management (PLM), enterprise resource planning (ERP), order entry and tracking, manufacturing execution systems (MES), and supply chain management (SCM). The cloud based system from Plex Systems ( was implemented in just five months.

Bottom Line

Automation is a core business function and key factor for success and competitiveness in the world economy.

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