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May 14, 2015

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Factories turn to robots amid labor woes

IN Dongguan, a precision mold-processing plant is using 1,000 robotic arms to phase out positions once filled by 2,000 human workers.

As a vital hub in the sprawling factory complex that has long underpinned the economy of south China’s Guangdong Province, Dongguan is at the forefront of the country’s robotics revolution as rising wages and labor shortages push factory owners to replace flesh-and-blood staff with machines that will never tire or complain.

One of Dongguan’s first automated factories, owned by Evenwin Precision Technology Company, recently shuttered a staff dormitory as managers prepared for the arrival of a shipment of imported industrial robots.

About 100 robotic arms have already been put into service at the company’s factory, while another 900 are being installed and debugged.

“Assembly-line workers used to run computer numerical control machines, which created potential safety hazards and disturbed quality stability,” says Ren Xiangsheng, an executive manager at the company.

Ren says the company now needs less than 200 workers to operate and maintain robotic arms which can produce the same output that once required more than 2,000 workers.

Labor drain

In the decades which followed the start of China’s opening up and reform era, labor-intensive export manufacturing carried out by low-paid migrant workers from the interior formed the backbone of Guangdong’s — and China’s — economic development.

Over recent years though, the story has changed. For one thing, the country’s working-age population — that is, those between 15 to 59 years old — is declining steadily. Meanwhile, migrants are increasingly turning their backs on toilsome jobs in coastal factories in favor of opportunities closer to home. Those who remain on the jobs are demanding much higher wages than in years gone by.

According to the National Bureau of Statistics, the population of working-age individuals dwindled by 3.45 million people over the course of 2012, marking the first such contraction in modern Chinese history. The slump continued into 2013, with the loss of another 2.27 million working-age individuals.

Ma Jiantang, former head of the bureau, believes the trend would continue until at least 2030.

At the same time, labor costs have been growing by roughly 20 percent per year amid a dwindling influx of migrant workers, says Qu Suoling, chairman of an association of Taiwan-funded enterprises in Dongguan.

“The number of migrant workers looking for jobs this year is down by at least 20 percent,” says an human resources manager at a factory in Dongguan’s Houjie Township.

Strikes calling for better pay and benefits also break out occasionally.

Tens of thousands of employees from a factory making shoes for Nike and Adidas went on strike in April last year, demanding their social insurance and housing fund be fully paid.

With cheap migrant labor no longer in abundant supply, companies are turning to robots to keep costs low.

“Though the initial investment in automation is huge, we are confident it will pay off in the coming years,” Qu says.

Government support

Central and local governments are chipping in to help manufacturing companies in their automation drive.

The provincial government of Guangdong has opted to invest 943 billion yuan (US$152 billion) to replace human laborers with robots in three years.

According to an action plan published in March, the province is expected to see robots used in 1,950 companies across industries like automobile, home appliance, textile, electronics and construction materials manufacturing by 2017.

Official data show the number of robots installed in the Pearl River Delta has increased by annual rates of 30 to 50 percent over recent years.

The city government of Dongguan has also set up a 600-million-yuan fund to encourage local companies to install robots over the next three years, with replacement subsidies up to 15 percent.

In Dongguan, a 4.2-billion-yuan robot replacement program will help local factories eliminate more than 30,000 jobs. The cost of such replacements could be recovered in two years, according to local authorities.

Despite huge demand, China’s robot manufacturing industry remains heavily reliant on imported equipment and technology.

According to the International Federation of Robotics (IFR), foreign companies like Swiss robot maker ABB, Germany’s Kuka and Japan’s Fanuc account for more than 70 percent of China’s robotics market.

China is expected to buy another 1.55 to 3.44 million industrial robot units over the next few years, meaning the country will eventually become the largest robotics market in the world, according to a 2014 report released by the IFR.

Su Bo, vice minister of industry and information technology, said in 2014 that China would strive to make breakthroughs in key robotics technologies.

Last year, Guangzhou set goals of fostering a 100-billion-yuan local robot-making industry and having 80 percent of the city’s manufacturing done by robots by 2020.

Guangdong Province also plans to build two advanced industrial bases for robot production by the end of 2017.

“Rising demand for robots will definitely draw more investment to the industry and encourage domestic innovation,” says Li Yuewei, marketing director of a robotics technology company based in Shenzhen.



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