Overcoming Labor Constraints with Factory Automation

The pandemic has fundamentally changed the manufacturing industry. Supply chains around the world have become long, complex, fragmented and unreliable. Manufacturing has been impacted by steep increases in costs and delays in delivery of materials and parts. As a result, we’re observing a global shortage in labor. In Deloitte's 2022 Manufacturing Industry Outlook, of the top five trends in the US, workforce shortage is number one.

Knock-on effects of the labor shortage include reduced productivity, risks to brand reputation, and pressure on margins. In response, manufacturing companies in most sectors are looking to factory automation and robotics to build resilience and gain a competitive advantage.

Advanced manufacturing solutions are now more affordable and accessible than ever before. We’re seeing a spike in interest and demand for factory automation  – both from manufacturers who are new to automation, and from those who need to update old technology. (Advanced factories are upgrading their lines as new solutions come to market.)

The State of Smart Manufacturing (2022 ), a global study by Plex Systems and Hanover Research, surveyed more than 300 manufacturers. It found that ‘smart manufacturing adoption grew by 50% year over year; environmental, social, and governance (ESG) efforts are being more highly prioritized; and barriers to entry are lower, leading to a higher level of adoption and a more attractive ROI.

Benefits of factory automation include:

  • Addressing short- and longer-term labor shortages.
  • Significant improvement in productivity.
  • Greater operational resilience in the face of fragile supply chains.
  • Enhanced agility and scalability for volume fluctuations.
  • Removal of manual, repetitive and/or dangerous tasks.
  • Higher value roles – employees thrive from more meaningful work.
  • Improved workplace health and safety for individuals; reduced liability for the company.
  • Improved yields, with a lower cost-to-manufacture.
  • Improved product quality.

Cost of machines vs. cost of labor

Over the years, human labor costs have only increased, while ongoing innovation in technology is bringing the cost of automation and robotics down. Factory automation can offer some of the greatest ROI in solving the most challenging labor shortage issues. We frequently hear that even when a customer can secure workers for those low-skilled repetitive tasks, employers cannot guarantee that those workers will continue showing up for work.

Costs and compliance requirements for human labor are extensive and complex to manage. On top of fixed costs to the employer, including wages, benefits, insurance and payroll taxes, there are intangible costs, such as absenteeism, and the slower (and more error-prone) pace of human labor compared with automation.

When analyzing the ROI from automation and robotics solutions, businesses need to factor in up-front costs for hardware, software, installation, operator wages, power, water and ongoing maintenance due to planned or unplanned shutdowns. When developing a business case for a project, CAPEX and monthly expenses require a full analysis, so customers can make informed decisions and present accurate ROI and payback periods to their board of directors. It’s not uncommon to have a payback period of three to five years for a typical automated line.

Advantages of automation for factory workers

Factory automation can also support a business’s corporate responsibility policy. While some people fear that automation will lead to loss of jobs, it is typically only the more hazardous roles (such as heavy lifting or welding) or repetitive tasks (such as packing and assembly) that are replaced by machines. And these are the hardest roles to fill due to the global labor shortage.

What's more, automation can lead to new jobs that are higher skilled and more rewarding. Existing employees can be retrained and moved into higher-value tasks. For example, in a new line for a medical device company, the team previously sorting rejected products can now be utilized in production, boosting overall output.

When factory automation is used to take over the dirty, dull and dangerous tasks, both employees and businesses benefit. According to a 2019 Deloitte and MAPI Smart Factory Study, companies running smart factory initiatives have, on an average, seen a 10% average increase in production output, 11% average increase in factory capacity utilization, and 12% average increase in labor productivity.

Places to invest for the most impact

When looking at a new or extended factory automation solution, there’s an opportunity to redesign workflow and factory workspace, as well as facilitate human–machine collaboration. The first place to start is those parts in the process where automation will deliver the biggest ROI.

The most common manual repetitive tasks that suit automation solutions include:

  • Packaging – common in FMCG, appliances and building materials factories.
  • Cleaning – for pre-assembly, for reuse. For example, cleaning crates and lids in the food or diary industries.
  • Assembly ­­– for example, assembling medical devices or testing laboratory samples.
  • Inspection ­­– vision systems used to inspect quality. For example, pinhole detection in film, product defect detection, label confirmation.
  • Part handling – moving around parts, sorting parts. For example, lifting large or fragile sheets out of presses, transferring large drums from one conveyor to another.

Common dangerous tasks include:

Address labor shortages and gain a competitive advantage

Offering higher productivity, worker safety, rewarding roles, and superior quality control, factory automation benefits the business, the team, and the end user.

To find your optimal automation solution, Facteon assesses where you are in the automation maturity cycle and therefore where we can add the most value to your business. We offer a low-risk starting point for manufacturing modernization, and then partner with you at every step to help your business reap the rewards of automation.

Find out more:

Speak with one of our team to find out whether your business will benefit from factory automation. Contact Facteon via our contact page.

Jonathan Choy

Jonathan Choy

Design Engineer

Jonathan joined Facteon in early 2014 as an Engineering Cadet following the completion of a Bachelors of Engineering at University of Auckland. The role of Engineer Cadet involved a rotation around various business units from design through to automation and control systems. Since completing his Cadetship in 2016, Jonathan moved into the role of Design Engineer. He’s since contributed to the development of a range of flexible manufacturing systems.