The WelderDestiny Compass

The Equalizers - Issue #017

Wednesday, April 26, 2017 / Perth Australia / By Niekie Jooste

In this edition of "The WelderDestiny Compass":

• A Changing Economic Model
• Robots - The Great Equalizers
• Decentralized Manufacturing
• Decentralized Manufacturing and the Welder
  

A Changing Economic Model

When we think of robots coming to take away our jobs, we imagine that the manufacturing environment will remain the same, only the people will disappear, being replaced by robots. 

If history has any lesson to teach us, it is that some technologies will not only give us new "stuff", but that they can change entire economic models. With the widespread introduction of cheap and flexible robots, I believe that another such change in economic model is imminent. 

In today's The WelderDestiny Compass, we consider how robots could change the manufacturing landscape, and how this could effect us as Welders. 

If you would like to add your ideas to this week’s discussion, then please send me an e-mail with your ideas, (Send your e-mails to: compass@welderdestiny.com) or complete the comment form on the page below.

Now let's get stuck into this week’s topics...

Robots - The Great Equalizers

The old saying goes: 

"God made men, but Sam Colt made them equal. Col. Samuel Colt’s revolver continues to serve as an equalizer. Being bigger, tougher and meaner than the next guy may not mean jack spit if the next guy carries a .357 in his waistband." 

Don't worry, in today's The WelderDestiny Compass we are not going to enter the messy world of the gun debate. We are merely drawing a parallel. 

Just as a gun in the hand of a weak person equalizes a physical fight with a strong person, so robots remove the labour cost advantage that economies with low wages have over those with high wages. 

As capital expenses for the robots start shifting cost of production from labour to capital, robots remove the incentive for companies to establish manufacturing operations in low wage economies. The cry that it is unfair that all the manufacturing is moving to China or Vietnam, or wherever, will come to an end. 

At the same time, even in the low wage economies, wage rates will rise more rapidly, because "the edge" of that economy will no longer be low labour costs. It will be productivity through the use of machines. The same as everywhere else. 

The focus of the future manufacturing organisation will no longer be labour costs. It will be the most efficient tax and capital structures, along with access to "support services" and markets. Access to markets (customers) being the biggest driver.

Decentralized Manufacturing

In the last few decades, manufacturing has become very centralized. From the days of Henry Ford, the production line concept has driven manufacturing processes. In a production line, the drive is to reduce costs by maximizing the output of the production line. Economies of scale rule. 

Setting up a production line is very expensive, so you want to get as much out of a "production run" as possible, before you spend a lot of money and lost production time on changing the production line for the next production run of a slightly different product. 

Let's stay with our Henry Ford (motor car production) example. To set up a production line to produce a new line of automobile may be in the order of $1 Billion. In the "good old days" before production lines, the early motor car manufacturers would make each car as an individual "production run". 

As long as they had the design of the car, and the necessary materials, it made no difference if every car they made was different from the last. All the people on the factory floor worked together to produce the car and then get it out the door before working on the next. (OK, it was not quite that simple, but almost!) 

In the early days, there were hundreds of automobile manufacturers and brands around. Every second guy that had a knack for working with his hands opened an automobile factory and built cars. Opening a motor car factory was not expensive, but the labour costs of building the cars certainly were. In the early years, cars were very much luxury items. 

This all changed with the production line invented by Henry Ford. Labour costs were drastically reduced, at the expense of production flexibility. You could get any colour model T Ford, as long as it was black! Manufacturing started becoming much more efficient, as long as the "production runs" were big enough. 

For many manufactured articles, the costs associated with transporting, marketing, warehousing and retailing are significantly higher than the original production costs. 

The production dynamics associated with robotic manufacturing will greatly change the economics once again. Instead of huge factories with machines that have dedicated production functions, robots have the potential to revert back to the earlier model. In the robot model, a "robotic cell" manufacturing platform can be installed in a relatively small space and almost everything that is needed to build the car can be done by a few robots, at the same time.

As long as the designs and raw materials are available, the robotic cell can really make any model car required. (Again a simplification, but you get the idea.) Each production run again becomes a production run of 1. 

Imagine the automobile industry of the future: You walk into the "dealership" and select a model from a virtual reality catalogue. (or you could order it from Amazon on-line if you prefer) This could be a Ford, Honda, Toyota, or whatever "brand and technology provider" that dealership has a contract with. You are told that in two days the car will be delivered to your door. 

As you leave the dealership, you glance through the glass wall at the back of the dealership and you see the robotic cell starting to make your car. You stand for a couple of minutes, transfixed by the rapid movements of many robotic arms manipulating materials, welding panels together, moulding plastic components, 3D printing other components, machining little "widgets" needed who knows where.

You get a warm feeling... 

Decentralized Manufacturing and the Welder

Within such decentralised manufacturing facilities, most welding will be done by the robots in any case, so that does not change much from the current manufacturing model. What does change is that such fabrication facilities will invariably need support services. Part of those support services will be welding related. 

As the advantages of being close to your customer base starts to override the cost advantages of having global scale manufacturing facilities, such decentralized manufacturing facilities should mushroom all over the world where the necessary infrastructure and customer base exist. 

While we have used the automobile industry as an example, it will probably be one of the last industries to decentralize. Earlier adopters would probably be industries associated with appliance manufacturing, plumbing supplies, recreational items, toys etc. 

On a local basis, the amount of support services for such manufacturing cells will greatly expand. The services we are looking at would be services that would be too costly to incorporate into the manufacturing cell itself, or for maintenance of the manufacturing cells. 

Trades associated with "hardware" and maintenance would in all probability experience an increase in workload rather than a reduction in workload under such an economic model. 

In short, introducing robots into manufacturing has the potential to not only decentralize manufacturing, but also decentralize the support functions. This may lead to increased demand for artisan services with the right knowledge and skills. Most probably on a "contracted-in" basis. 

Be one of the Welders with the right knowledge and skills before the trend becomes obvious! 

Yours in welding

Niekie Jooste

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