It's a well-known fact that automation has helped the manufacturing sector immensely in terms of higher productivity and consistent quality among many other factors. However, there's another school of thought, which considers automation to be a killer of jobs as it reduces the need for human intervention. In order to find out if this is true, we got in touch with Sameer Gandhi, Managing Director, OMRON Automation India. He also gave us an insight into the way automation is gearing up for the future and how it can help the growth of various sectors including automotive.
Arpit: Since demonetisation of Rs 500 and Rs 1,000 currency notes what has been the impact on your business?
Sameer : We would say that we are still trying to figure out what could be the impact of demonetisation to OMRON as most of our business is B2B (Business to Business) and some tail-end of the business being B2C (Business to Customer), primarily retail markets like electrical market which is a very small component of our business. As of now, it can be recovered and is not a big impact, but we have to wait an watch what the mid-term impact is and it is uncertain.
There is a common notion that automation has been taking away jobs. In fact, it has been a valid discussion point even when automation was at a nascent stage in India. So, does it really take away the manpower from a system?
Based on our experience and based on the evidence available with us, we think it has a mixed impact of taking away a job and providing another one in the same system This is for sure that there will be a 'skill shift'. The low skilled job profiles will be replaced by higher skilled requirements. For example, a person who is packing an object in boxes at the end of a production line. Something like that would finish, but all these automated machines would require regular maintenance and engineering as well as backup manpower to run the automated system effectively. It may not be a one-to-one replacement, but there would a lesser number of people required for that same job. There could be job loss in terms of a pure headcount number, but if we look deeper, automation improves the overall productivity of that particular manufacturing operation. In perhaps may improve the profitability which means there is more money for investment into another manufacturing unit or improving or automating another system in the same facility.
This means an overall growth of a company. If you say that in the India context where we are still witnessing a demand – supply graph going up in some commodities where demand is actually increasing. If we can make production facilities more efficient, they can then invest in other new production facilities, meaning they can actually end up employing more people.
Understandably, there would be some job displacement, however, programmes such as Skill India would be able to make a person better skilled. Your take on it?
Programmes like Skill India have a major role to play, but other than that industries themselves are imparting skill programmes. In fact, we have our own training arrangements for our employees in various verticals, channel partners and automation industry also being a part of it. There is a lot of investment being done by organisations like OEMs from another company into skill programmes and it's not just Skill India.
This needs to pick up momentum and might as more automation comes into play.
There is a lot of focus on demonetisation and digitisation where people are being encouraged for cashless transactions. So, how much would the automation industry gain out of it and specifically the areas of largest opportunity for a company like Omron?
The main thing that is being discussed today in terms of digitisation is the payment aspects and in some cases, tracking. This is one end of the spectrum. The automation aspect with respect to the industries is more on the shop floor. So, there is a connection, but not an immediate link. But digitisation is coming to the shop floor in terms of IOT (Internet of Things). Data from the shop floor will become more and more available and accessible at the ERP layer (Enterprise Resource Planning) and once that happens, some of it will start to get connected to the consumer itself. To that extent, there would be a link, but at this point of time it is still in a nascent stage and may happen in future.
If we talk about the automotive industry in India, would you have an approximate number as to where the percentage of automation stands today in the OEM supplier's unit and where do you see automation in future?
The automotive industry has been an early adoptor or automation because of the way production is setup and the quality check requirements are extremely high. Having said that, there is still some scope. Unfortunately, it is difficult for us to put a number in terms of what percentage, but we see that when a new plant is setup, there is a significant amount of automation that happens at the planning or the execution stage itself. And for some of the older lines, investments happen in terms of retrofitting. What we can discern are the kind of trends that are overall happening in this industry. Today the industry in moving more towards traceability, quality inspection and IOT which are the major trends that are coming, especially in the automotive industry. And we will witness more and more investment on these trends going forward
If we talk about the key opportunities of automation for India, just not from the automotive sector. Where do you see lies the growth for automation in India and what key technologies do you think would be used?
From India's point-of-view, every manufacturing industry has automation. Automotive is perhaps the most heavily invested in terms of automation but other than that FMCG, Machine and tool industries etc., there is a lot of scope of adding automation in general. And as the Indian manufacturing industry is getting a push in terms of new schemes and plans by the Government like Make in India, this could be a leap for the Indian manufacturing industry. If they start to use automation during their initial planning itself, then the unit will be highly productive, efficient and with the highest quality requirement. Basically, one ends up producing goods which adhere to world-class quality and cost effective. This puts the Indian industry on a stronger footing as imports reduce if a product can be manufactured locally. So, this is an opportunity for the Indian manufacturing industry to produce world-class products in the country and Omron from that point-of-view is a major player in this effort. So, to make it effective any industry needs to plan and invest in automation right at the design stage.
The trend of automation that have been seen is traceability, serialisation, quality inspection and robotics. These are the major trends witnessed in industries other than automotive.
How much of a difference does it make between adopting automation at a design stage or later in terms of overall quality and proactivity?
It varies quite a lot from one industry to another, but we feel that if automation is adopted while planning, it saves time in terms of the higher productivity from day one. One can save up to 75 percent of the time on just one aspect of quality check that too in a retrofit manufacturing line.
What are the key differences that you have witnessed in terms of automation adoption globally vis-a-vis in terms of Indian manufacturing units. And what are the main drivers of growth for Omron in India
The key difference lies in the maturity of a market. Customers and manufacturers have gone through a learning curve and have developed in markets like Europe, Japan etc. The Indian industry is still developing and will have a learning curve which is expected to be faster. The difference that we see is the acceptability of the benefits of automation. There is still some skepticism in India about how automation can be beneficial. We believe that can be related to a maturity level. The other difference is the availability of manpower. Because of the time period involved, there is a resource pool that has become available in terms of skilled resources in mature markets. This resource pool or manpower is still in the development stage in India. So, this has become a constraint on adoption of the benefits of automation.
The third difference is in terms of the cost and investment capability. In India, the real interest rate is anywhere between eight and 10 percent but the interest rate for the same product is around two percent or less in a country like Europe. There is a considerable cost difference involved in terms of the initial cost here and these are the three major differences I see at this point of time.
What kind of growth percentage are you looking at in India?
We are definitely looking at double digit growth somewhere around 20 percent in terms of growth percentage. Unfortunately, there is no concrete projection as of now.
Any closing statement on the perception of people that automation will take away jobs?
One aspect for us to understand is that why automation will probably take away jobs. From an Indian context whereas a manufacturer, the manufacturing components are small, we need to ramp up our manufacturing at a rapid pace. Automation will lead to a skill-up, manufacturers investing in more manufacturing units. Jobs would be replaced but in terms of the skill set. In a nutshell, automation would have a positive impact on our society.