Issue link: https://iconnect007.uberflip.com/i/1357726
APRIL 2021 I SMT007 MAGAZINE 13 I'm a little less optimistic now, just because we're only seeing some smart factory islands and some innovations around the internet of things. All that is wonderful, but it's not very well coordinated. It's meant to benefit individ- ual businesses. I'm sure there are some aca- demic partnerships that are helping to drive automation, but it's piecemeal as opposed to what we see in China. Matties: I wonder what the motivation will ulti- mately be, because if you can still go to China and buy it cheap, why invest in a smart factory here? Rodgers: It's a good point. It's a significant investment, and it's also a significant change in the way these factories are being run. In some cases, the technology itself already exists. We don't have to invent anything new, but actually implementing it is still more expensive than just buying it off the shelf. We're always going to take the path of lowest resistance. Matties: Maybe, as we see, there's an acknowl- edged shortage of engineering labor for imple- menting a smart factory. Rodgers: Yes, there is a lot of emphasis on employment, which I think is important. I understand why people are worried, but these smart factories will require fewer people to run them. If our emphasis is on employment— keeping more people and just growing the size tive effect of transportation costs is even lower. Over the past few years, I've been tracking not just changes in U.S. labor costs, but also labor costs in Mexico vs. China. As Chinese labor costs trend almost exponentially in the way they're increasing, both Mexican and U.S. labor costs are going up but not as much. We're starting to see a real convergence of those two. Johnson: ere's a point where the graphs are going to touch or crossover, so how close are we? Rodgers: It depends on the skill level, of course, but for management we've already crossed over. e cost of qualified, experienced managers in China is probably on par, if you consider total compensation, with a lot of American manag- ers in manufacturing and production. But it's becoming harder to find qualified managers in China. When it comes to entry-level, factory floor workers, it's going to take a few more years, but in terms of experienced manufactur- ing engineers, I think we're already there. is is creating several problems for companies that are trying to expand in China because the com- petition for labor is becoming really tough. Matties: Do you see automation as the big equalizer here in America, though? ere's got to be a push for this as we're seeing smart fac- tories and such. Rodgers: Certainly, the companies that are investing in smart factories, smart technology, and more automation are going to come out ahead. I'm seeing a lot more of this in China than in the U.S. Part of that is because it has become a national imperative; the national government is supporting that push toward smart factories, whereas in the U.S., it tends to be more of an individual company initiative. I'm a little bit worried. I used to believe that we didn't have a lot to fear because American ingenuity and engineering would figure out the next best way to manufacture and those new technologies would derive from the U.S. We don't have to invent anything new, but actually implementing it is still more expensive than just buying it off the shelf.