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Pharmaceutical Manufacturing and Packing Sourcer
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The global industrial automation market is set to reach $200 billion by
2015. Automation success stories can be identified around the globe,
from Japan’s record-breaking robotics industry to the German-led
Industry 4.0 concept that has taken the world by storm.
Global Market
IMS
reports show that in 2012, the automation market grew by 3.7% – and the
figure was approximated at more than 6% for the following year. Based
on indicators such as machinery orders and manufacturing activity,
estimates show that almost half of global investment in automation is
from the Asia-Pacific region, with 46% of global investments in 2012
originating from this location – equivalent to $76.6 billion.
North
America accounts for 13% of overall shipments, followed by BRIC giants
India, Brazil and Russia. China is head and shoulders above its sister
BRIC economies when it comes to manufacturing volumes and industrial
automation purchases. Despite a recent reduction in momentum, BRIC
economies are continuing to grow at above average rates, according to
the ARC Advisory Group. The BRIC states are predicted to go on improving
manufacturing technologies and increasing their uptake of automation in
years to come.
Automated China
Over the last few
years, China has been the leading destination for automation purchases.
In 2012, the country manufactured machines and systems worth €678
billion. The Chinese market has matured, becoming more competitive and
price-oriented, and has successfully designed, manufactured and sold a
huge quantity of sophisticated products, including high-speed trains,
computers, machinery and automobiles.
Furthermore, as Credit
Suisse figures show, China has seven times more workers in the
manufacturing sector than the US. Even so, the output of these two
manufacturing giants is roughly similar, with the US producing $1,732
billion, and China $1,612 billion. This means that the US efficiency per
worker is seven times greater than that of China.
China
overtook Japan to become the world's largest and fastest growing robot
market in 2013, with more than 35,000 units of industrial robots sold in
the former last year, according to the International Federation of
Robotics. However, automation encompasses a much wider range of
technologies than just robotics.
In the last decade, China began
the transition from low-cost labour in the manufacturing sector to
efficient automated processes and extensive technical expertise. There
are many examples of Chinese companies making impressive headway in
product development and production. Automation solutions are becoming
increasingly important in complex industry applications, and the
country’s labour resources no longer seem limitless.
UK Automation
In
the UK, the signs are encouraging: according to the sales statistics
collected by GAMBICA from its member companies, uptake of automation is
on the rise across sectors – both factory and process automation sales
have been on a positive trend for the last five years. Although the UK
automation market is not quite at the world average rate, it is growing
faster than the European average.
The Manufacturer’s 2014
Annual Manufacturing Report reflected growing confidence levels
regarding the role of automation in manufacturing. Eight out of ten
respondents identified automation as a means of driving business
forward, and seven out of ten have already implemented a major
automation project – worth more than £100,000 – within their companies
over the last two years. Even taking into account economic cutbacks,
smart investment in technology and equipment is considered to be one the
best ways to gain a competitive advantage and drive company growth.
According
to the Boston Consulting Group, the UK is the most cost-effective place
to manufacture in Western Europe, with average costs significantly
below those in Germany and France (1). The same study revealed that many
countries traditionally classed as low-cost manufacturing havens have
seen sharp wage rises that have, in turn, decreased their manufacturing
competitiveness.
A recent Engineering Employers’ Federation
(EEF) survey has also found that one in six companies has re-shored
production back to the UK in the last three years. This slow but steady
trend is an exceptional opportunity for the manufacturing sector. To
exploit it, however, further investment and government support is needed
to create a favourable environment for manufacturers.
Skills Gap
Despite the profound differences between them, China and the UK are currently facing similar challenges when
it comes to fast and smooth large-scale automation implementation. One
of the common barriers is the engineering skills gap and lack of
appropriate training. Simply investing in the latest manufacturing
hardware and software does not guarantee success – it needs to be
supported by competent and skilled personnel.
To make the most
of complex industrial automation solutions, companies need a new range
of skilled workers able to purchase, implement, operate and service
them. However, nearly half of the UK manufacturers surveyed in the 2014
Annual Manufacturing Report confessed they lack the in-house skills
required to implement automation projects.
Reliance on external
suppliers can severely limit the speed and efficiency of production
levels. Only the ability to source a wide range of engineering skills
in-house can help companies minimise their dependency on suppliers.
These skills should include, but are not limited to, an in-depth
knowledge and understanding of control systems, variable speed drives,
servo motors and robotics, as well as programmable logic controller
awareness and programming capabilities.
As the industrial
automation market continues to evolve, identifying the right talent with
the appropriate skills will be an ongoing challenge. Governments,
education providers and manufacturers alike will have to adopt creative
strategies that attract and retain talented people. Training programmes
will also have to be constantly adapted according to the fast-paced
advances in cuttingedge technologies.
Economic Uncertainty
A
second challenge for widespread automation solutions is the investment
cost associated with its implementation and the rate of return on such
an investment. The cost of purchasing and implementing an advanced
automation solution can be a barrier for companies, even when payback
periods are short. Economic uncertainty has increased the aversion to
risk and many are still wary of investing.
For China, rising
wages, energy and raw materials costs have meant that the country needs
to find an alternative route to manufacturing success. To remain
competitive, it must invest in industrial automation and robotics. Once
implemented, the new technology will allow Chinese manufacturers to
increase product quality standards and create more flexible, intelligent
production lines. However, the initial investment is a significant one.
What is more worrying is that the total cost of ownership (TCO)
for industrial automation goes well beyond the initial investment. The
TCO includes added capital costs like acquisition, design and
implementation, plus operating costs such as maintenance, improvement,
adaptation and operation – not to mention the costs associated with
system security.
As a general rule, acquisition and installation
costs should represent 50% of the TCO. A number of factors can also
impact upon the lifecycles of control systems – usually between 5 and 25
years, depending on the industry.
Ironically, if you compare
the TCO of a variable speed motor-driven application that uses a
variable speed drive (VSD) with one that does not, energy (and therefore
cost) savings involved in powering the motor dwarf purchase and upkeep
expenses. So, without question, VSDs are a great example of a technology
that pays for itself.
Strategic Integration
The
consensus in industry and the trade media is that automated systems
reduce energy usage, increase manufacturing flexibility and volume,
while ensuring better control and quality standards. However, the
purchasing decision and implementation needs to be made knowingly and
integrated into the strategic vision of the company, because automation
brings a fundamental change in the way a business operates.
Lack
of information, specifically allocated budget and management involvement
are some of the biggest causes for uncertainty when it comes to
industrial automation purchases. In order to overcome these challenges,
companies need to be well-informed, and work with authorised partners
and trade bodies to understand what automation success could look like
for them.
Energy Costs
The rising cost of energy
is not a new issue for the manufacturing industry. However, the pressure
has increased exponentially during the last decade. According to an EEF
report published in 2013, energy prices for UK businesses are rising
faster than in any other country (2). This slippery slope is squeezing
manufacturers' margins and threatening to choke off investment.
In
China, the situation is more complex. For the last decade, the
government has effectively subsidised the industrial sector to ensure
low electricity prices – but this situation is now changing. The
three-tiered electricity system launched by the Chinese National
Development and Reform Commission in 2012 was expanded to industrial
applications the following year, meaning slightly higher energy costs
for certain industries – for example, the aluminium sector.
Although
relatively modest so far, reforms to electricity pricing are likely to
lead to higher costs for industry in the near future. This will
represent additional challenges for a manufacturing sector already
struggling with rising labour, capital and exchange rate costs.
Under
the pressure of spiralling prices, the most efficient way of cutting
costs is by using less energy in the first place. Through the use of
intelligent automation and control systems, VSDs, switches and
controllers, manufacturing processes or industrial plants, companies can
slash their energy bills, while also improving efficiency.
Going Forward
The range of complexity of industrial automation technology varies from
simple pick-and-place mechanisms to multi-axis robots with vision
systems and real-time adaption. Despite its challenges, industrial
automation remains one of the best solutions to become or remain a key
player on the global manufacturing scene. It is no longer an option, it
is a necessity. Research, long-term strategies and collaboration between
governments, trade bodies and manufacturers are essential for taking
full advantage of the benefits new technologies can offer.
There
is still low-hanging fruit to be exploited in terms of industrial
applications – such as installing VSDs – and simple solutions that can
be implemented to cut costs and raise manufacturing efficiency and
product quality. In the race for smarter, more sustainable
manufacturing, industrial automation is a tool you should not be
without.
References
1. Visit:
www.telegraph.co.uk/finance/ economics/11042217/britain-is-nowthe-
lowest-cost-manufacturingeconomy- of-western-europe.html
2. Visit: www.eef.org.uk/releases/uk/2014/ gradual-re-shoring-of-manufacturingcontinuing-% E2%80%93-eefsquiresanders- survey.htm
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Steve Brambley is a Deputy Director at GAMBICA, the trade association for instrumentation, control, automation and laboratory technology in the UK. He is responsible for representing the industrial automation sector to a diverse range of stakeholders, including UK and European governments, national and international standards bodies, the media, other industry associations and institutions, and end-users. Steve brings experience from the automotive industry, having worked in roles across manufacturing, quality, logistics and engineering. He has a degree in Mechanical Engineering from Loughborough University.
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