Enter the robots
Manufacturers and other producers are increasingly automating in an effort to contain costs and reduce risk.
Speaking at the release of the Manufacturing Circle’s second quarter bulletin, Dr Iraj Abedian, chief executive of Pan-African Investment and Research Services (Pairs), said he has been concerned about the fact that tense labour and industrial relations, not only in manufacturing, but other sectors of the economy, will result in business using machines to replace labour.
The trend seems to take root in the local manufacturing sector.
Although Statistics SA reported that the sector shed 18 000 jobs in the second quarter, output has not followed suit.
Abedian said respondents in the survey also indicated that they are experiencing a lack of skills with regards to robotic, technical and production engineers.
“So you must watch this space. From a political economy point of view this is where so-called chickens come home to roost. When you destabilise the labour environment and production becomes vulnerable to that type of industrial relation volatility, the response of the manufacturer, the response of management is to mitigate that risk by automation and that gets then further accelerated when the cost bottom line implications is in favour of automation – (the) interest rate is low, capital is in excess globally so you have a double whammy on the job creation front,” he said.
Robotic welding is one of the areas where huge technological advances and the cheaper prices that go with it, have accelerated automation.
However, the automation drive and the threat it poses to labour substitution is not unique to manufacturing or South Africa.
Abedian said his fear is that it is in fact more applicable to mining given the technological changes in the sector and the fact that mining itself is getting deeper underground which makes machines more suited to perform under ground.
“There is a technological change, digitalisation and precision that comes with it, there is a cost factor and there is a volatility factor. When I combine those things, mining is… and I am on record to say it, not here, but elsewhere, that something between 130 000 to 150 000 of mining jobs which is roughly about a third of jobs in that sector are vulnerable to automation,” he said.
The survey
The second quarter manufacturing bulletin, which included responses from 68 local manufacturers, indicated that the majority of manufacturers experienced a fragile business environment and expected it to continue during the next six months.
The bulk of respondents expected employment levels to remain unchanged during the next year (33%), while 30% expected it to decline by between 1% and 5%.
Although a weaker rand has supported exporters, the depreciation was not beneficial to those who have a high percentage of imported input costs.
The rand depreciated by 5.87% between the first and the second quarter, based on the average daily close to the dollar.
Almost 80% of respondents said they did not benefit from government’s local procurement program.
Abedian warned that any green shoots in the manufacturing industry will have to be nursed very carefully – any unfavourable development could tip the balance in the sector.
Source: Moneyweb
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