In the coming years, factory automation will become increasingly more prevalent as businesses strive to maintain a competitive edge. One of the main reasons for this is the rising cost of labor. As wages continue to increase, businesses are looking for ways to reduce their overhead costs, and factory automation is seen as an attractive option.
Why Labor is Getting More Expensive
There are a number of factors that have contributed to the rising cost of labor. First, up until recent years, the global economy has been in a period of sustained growth, and this has led to increased competition for workers. In addition, many countries have implemented policies that have resulted in higher wages for workers. Higher minimum wages, and more advanced skills are driving wages higher (as they should). This is not a bad thing: as economies grow, the skills that the workforce has also advance, and those workers have more value in the marketplace, especially when there are more opportunities for work than ever.
However, the largest driver of wages in the past 2 years has been the Pandemic and subsequent inflation. The reduction in workforce during the lockdowns of 2020 led to increased competition. This impact, combined with the recent inflation over the past 18 months, has created a snowball effect, driving wages for labor positions even higher.
Technology Costs Have Flattened
Comparatively, the price of technology, specifically in the manufacturing industry, has not risen as quickly. These technologies were once much more expensive relative to the cost of their labor intensive counterparts. Operators would look to 2-4 years of operations when rationalizing automation investments, as the cost relative to labor was so high.
Yet, we’re now seeing ROI projections for automation technologies as low as 6-9 months. The only difference? Labor has become more expensive, while technology costs have remained the same.
For businesses, the solution to this problem is factory automation. By automating processes and tasks that are currently being done by human workers, businesses can save money on labor costs while still maintaining (or even increasing) production levels. In addition, factory automation can help improve quality and consistency of products, as well as increase safety in the workplace.
Automation can take many forms, from simple machines that automate a single task to complex systems that can manage an entire production line. No matter the size or scope of the project, factory automation is becoming an increasingly popular option for businesses as labor costs continue to rise.
What does this mean for the future?
The trend of rising labor costs and increasing factory automation is likely to continue in the coming years. As businesses strive to remain competitive, we will see more and more factory automation projects being implemented. This is not necessarily a bad thing: factory automation can lead to increased efficiency, safety, and quality in the workplace. It also will allow opportunity for workers to up-skill to operator positions of such equipment. However, it is important to be aware of the trends so that businesses can make informed decisions about their future.
Contact us today to get more information on whether automation is suitable for your operation.