| Prohibitive costs limit adoption to tier 1 enterprises, but | | | | about 2.5 million pieces need 700 to 800 workers |
| local governments are doling out subsidies to | | | | putting in 12-hour shifts. Procuring 200 advanced |
| encourage more factories to upgrade. | | | | machines can bring down the manpower requirement |
| Raising compensation and benefits to retain or entice | | | | to just 200. This, however, can amount to an |
| workers is not the only approach China suppliers are | | | | investment of up to $14 million. |
| taking to maintain output levels amid a still challenging | | | | As a result, few companies took this route despite the |
| labor situation. Many are also turning to automation. | | | | advantages. Computerized weaving looms, for |
| Swimwear makers that produce their own fabrics, for | | | | instance, cost between 400,000 and 500,000 yuan |
| instance, are replacing manual knitting machines with | | | | ($58,500 to $73,100) each. Computerized flat-knitting |
| computerized units. In addition to boosting efficiency, | | | | machines, on the other hand, can be as low as 35,000 |
| the advanced equipment minimizes the need to retain | | | | yuan ($5,000) or exceed 400,000 yuan. The former |
| a large workforce. | | | | are locally produced units. Although inexpensive, the |
| The same is true for suppliers of fashion jewelry and | | | | quality of output from such machines is often worse |
| watches. Companies are bringing in automatic thermal | | | | than what manual versions can produce. Domestically |
| presses, and copper and phosphorus slug cutters to | | | | made units that can yield good-quality knits are in the |
| boost productivity even with a downsized labor pool. | | | | 120,000 to 160,000 yuan range ($17,600 to $23,400). |
| Bathroom scale manufacturer Zhongshan Camry has | | | | Imported machines, such as those from Germany, are |
| actually been able to raise daily output from 10,000 | | | | the highest priced. They are also faster, can turn out |
| units to 50,000 when it imported surface-mount | | | | more intricate patterns and are 20 percent more |
| equipment from Samsung of South Korea. The size of | | | | efficient. |
| its PCB insertion department was also reduced 70 | | | | Because of the wide disparity in equipment costs, it is |
| percent. | | | | only the large and well-established enterprises that can |
| The company also shifted from manual to automatic | | | | bring in imported units. Small and midsize companies |
| calibration, thereby improving the scales' accuracy and | | | | often purchase locally made computerized flat-knitting |
| reaction times. Developed in-house, equipment for the | | | | machines. |
| latter process was introduced at the start of 2009 and | | | | In addition, employees needed to run such equipment |
| has trimmed the number of workers in the production | | | | often ask for higher pay. Depending on their |
| line from 50 to 45. It has raised efficiency by about 30 | | | | qualifications, these technicians can demand as much |
| percent as well. | | | | as 1,000 yuan ($146) salary increase. |
| Toothbrush and massager specialists are also | | | | Government support |
| investing in computerized and automated machines. | | | | Understanding that substantial investment is the main |
| Doing so has helped speed up production turnaround | | | | barrier to automation, several local governments have |
| and minimize manual processes. | | | | implemented policies that can alleviate this obstacle. |
| Success stories in Tongxiang | | | | The provincial authorities in Zhejiang, for instance, set |
| A second-tier city in Jiaxing, northern Zhejiang, | | | | up a 514 million yuan ($75 million) fund during Q2 2009 |
| Tongxiang is among the many areas in China | | | | for industrial upgrading and automation. Among the |
| experiencing a shortage in labor. Factories have been | | | | supported endeavors are high-tech projects, advanced |
| taking steps to automate since 2007. More plants are | | | | equipment procurement, computerized production |
| now following suit. In fact, the city imported nearly 1,000 | | | | management and technology development. |
| computerized machines after 2010's Chinese New | | | | Even city officials have set similar measures in place. |
| Year. | | | | Zhoushan, a city in northeastern Zhejiang, implemented |
| Jiaxing Mengdi Import & Export Co. Ltd (Sweater | | | | a rebate system in Q1 2010. Enterprises that invest up |
| Branch) purchased 50 computerized flat-knitting | | | | to 10 million yuan ($1.5 million) in purchasing advanced |
| machines recently. Depending on the intricacy of the | | | | equipment can receive a 2 percent refund. Expenditure |
| pattern, each machine can turn out about 800 | | | | exceeding 10 million yuan has an equivalent rebate of 5 |
| sweaters monthly. Using such equipment enabled the | | | | percent. |
| company to cut two-thirds of its workforce. The | | | | Shengzhou, a tie hub in Zhejiang, has been subsidizing |
| remaining machine operators, however, receive roughly | | | | up to 5 percent of factories' production upgrade costs |
| 2,000 yuan ($293) each in wages. Jiaxing Mengdi | | | | since 2007. As a result, the quality of ties from the city |
| estimates the expenditure can be recovered in five | | | | has improved to a level where nothing has been |
| years. | | | | rejected during spot checks carried out in the past two |
| Since it began to upgrade production equipment in | | | | years. |
| 2007, Jiaxing Strong Imp. & Exp. Co. Ltd has managed | | | | Government policies, however, may not be a big |
| to acquire 48 computerized flat-knitting machines and | | | | enough incentive for China's export manufacturers to |
| retired all of its manual units. The company used to | | | | automate. With subsidies and rebates capped to 5 |
| have 300 workers. With each computerized version | | | | percent, companies will still have to shoulder the bulk of |
| capable of fulfilling the output of three or four manual | | | | investment costs. In addition, the financial aid applies |
| ones, manpower has now been downsized to 170. | | | | only to businesses that import advanced machinery. |
| Annual yield, however, increased 10 percent. Efficiency | | | | As such, it is mainly enterprises with adequate capital, |
| has improved as well and, consequently, delivery times | | | | sufficient and stable orders, and a confident export |
| have been shortened. Because the advanced | | | | outlook that will undertake steps to upgrade production |
| machines turn out better-quality knits that can have | | | | equipment. |
| more intricate patterns, Jiaxing Strong can also charge | | | | The shortage in manpower affects mostly |
| higher for its sweaters and pullovers. This, in fact, has | | | | labor-intensive industries such as garments, footwear, |
| made the company confident it can recoup the | | | | textiles, toys, leather goods and furniture. There is |
| investment in equipment over the next three years. | | | | some impact on a few electronic lines, especially those |
| Long-term trend | | | | that continue to carry out manual assembly. The |
| A solution that emerged during 2007's widespread | | | | majority, however, already have automated equipment |
| worker shortage, upgrading equipment helped many | | | | and processes such as plastic injection and SMT. |
| suppliers ease their dependence on labor, while | | | | Even so, a handful of electronic companies are |
| improving quality and stabilizing delivery time. In fact, | | | | exploring other areas in which to automate. Foxconn, |
| several garment plants in the Dongguan town of | | | | one of the largest EMS suppliers in the world, for |
| Humen in Guangdong province have been utilizing | | | | instance, is planning to construct a fully automatic |
| computerized weaving looms since 2007. Each | | | | factory in Taiwan. One fully automatic production line is |
| machine was able to replace 20 workers and required | | | | already in its experimental stage. If proven successful, |
| only two people to operate. As a result, manpower | | | | the maker will build similar facilities in various areas |
| was reduced without affecting efficiency. | | | | worldwide, including mainland China. |
| In general, apparel factories with annual output of | | | | |