The industrial history is full of events that trigger debates on robust de-risking mechanisms and lessons not learnt. And now, the COVID-19 pandemic is triggering clueless debates on alternative manufacturing systems and practices.
Recent arguments for manufacturing automation to emerge from the pandemic are a politically correct manifestation of the silent desire of our business leaders to reduce the large number of low productivity labour force. The Indian discrete manufacturing industry, long guilty of complacency in the areas of productivity improvement, while reaping the short-term benefits of labour arbitrage, is feeling the heat on competitiveness from even the ‘high cost’ countries. The added costs of poor infrastructure and unreliable power have industry leaders frequently looking out for government reliefs at each budget, failing which, pins their hopes on the Almighty for a good monsoon. And for the past two decades, more often than not, good monsoons have always come to their help, which means all ‘costs’ for productivity improvement are moved to the next year.
In a populous country like India, where the demographic dividend will continue to reap for the next 30 years and where manufacturing still relies on low value additions, automation is generally not the right strategy for productivity improvement. And a pandemic is no reason to alter this thinking. Pandemics are temporary disruptions. Economic development and creation of jobs is a permanent necessity. There cannot be a universal manufacturing strategy for a country or even an industry. Discrete manufacturing can choose to opt between a highly automated manufacturing, a highly skilled labour force or a combination of the two. This depends on factors, such as scale & complexity of manufacturing, cost of poor quality in the end-product and the nature of competing markets. Companies have to evaluate themselves on these factors before deciding on only automation as a fix.
The current COVID-19 pandemic can be seen as an opportunity to course correct and fix historic ills in our manufacturing industry. In the short-term, the temporary low demand gives ample time to conduct serious training of our labour force in productivity tools. The resultant improvement in labour productivity and product quality will pay for itself. In the medium term, one should train or hire engineers to create in-house capability of manufacturing systems improvement taking advantage of digitalisation tools. These newly acquired skills should be used to devise custom solutions in-house for further productivity improvement using digitalisation technologies, thus doing away with the need to hire workers as growth picks up. It will also drive the growth of domestic automation and the data analytics industry, therefore creating high value jobs. In the long-term, this allows for correction of wages upwards to compensate the higher skills, hence putting more disposable income in the hands of employees that will spur demand for high value products. The ones who implement these simple steps will emerge as the winners.