Issue link: https://iconnect007.uberflip.com/i/1197000
JANUARY 2020 I SMT007 MAGAZINE 39 well. It's a big change. The government has said, "You will do this." I was in Beijing at the largest state enterprise company on Monday last week, and they have a whole new depart- ment on environmental protection, green man- ufacturing, recycling, etc. They're asking us, "We understand 1401, which is good for us to export to Europe. That's great, but what else do you have?" If you think of it from a com- pany standpoint, it's one of their KPIs that they have to show the government on what they're doing to support the environment, and that's a positive thing. I don't see that strong of a government input in some other parts of the world. It certainly will serve China well. Matties: I think they recognize that not only is it good for the environment, but it's good for business. There's a lot of global pressure to clean up, and they took it seriously because they have a long vision. Carmichael: I think the Chinese government does take a much longer view of things than most countries. They still do a five-year plan that has money behind it, which is unique in the world today. They say, "We want to focus on these five areas over the next five years. We're going to put money aside for R&D, and people that are working in those areas." That's what makes it happen. If you put investment against it, it's going to happen. Matties: The other thing that I hear a lot about is factories moving to expand, and they're only allowed to do that if they're doing it without operators. It has to be an automated/AI situ- ation. Carmichael: If you're expanding a factory, in addition to your local government approvals, you need approvals of your neighbors on all sides, regardless. Even if it's a restaurant or a hotel, they have to approve your expansion. Increasingly, neighbors are very concerned about how you dispose of certain waste prod- ucts. Are you recycling? What about the waste- water from cleaning operations? You need to convince not only the government but also your neighbors that you're a good citizen, and that's how it operates. Again, I see that as a real positive. Matties: My understanding is if you're looking to expand, they don't want to hire or create operator jobs; they want to create automated factories. Carmichael: They're more interested in knowl- edge-based workers. That's a natural evolu- tion in China. Because I travel the region, I see that touch labor assembly work moving to lower-cost countries, but it's not decimat- ing the industry. The industry is migrating into knowledge-based or automation/CFX-type products where you can run a factory and have machines talk to each other by themselves. But you still need somebody to do programming and oversee that. It's a different type of per- son than somebody who's populating a board by hand. Matties: The interesting thing for me is that the cost of labor has to go down to compete in the world because, as AI is coming, that 30% or so advantage that they enjoyed for many years is starting going away. Thus, they have to look to be competitive on different levels. Carmichael: Yes, and part of the good year we had was based on the fact that we grew very strongly in Southeast Asia. As we support their growth in touch labor production that's mov- ing from China to Vietnam, Thailand, Indone- The industry is migrating into knowledge-based or automation/CFX-type products where you can run a factory and have machines talk to each other by themselves.