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Big manufacturing companies may seek more automation to solve staffing issues

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Commentary:

Dark manufacturing. No, this is not clandestine manufacturing or a Darth Vader request to go over to the Dark Side. Rather, dark manufacturing, sometimes referred to as lights-out manufacturing, is a concept in which advanced automation can be implemented in a production plant to not only manufacture the final product, but to acquire materials and components, conduct quality controls, and deliver the finished goods to their final destinations. The only human labor in this concept are people needed to maintain and calibrate the machinery, and perform any other maintenance tasks necessary to allow the machinery to keep running. In other words, once the automation is set up, the machines can run with the lights off in a virtually dark environment.

I operate out of the Santa Teresa industrial base on New Mexico’s border with Mexico. A pressing problem we have had in previous years, and particularly during the pandemic years, is the difficulty of recruiting employees to fill positions in companies that are locating here or expanding. In a Catch-22 irony, I know several production companies that are experiencing a surge in demand for their products, but they are unable to meet this demand due to lack of labor. Managers running these plants are doing everything from increasing salaries, offering signing bonuses, and fast-track advancement. They are still having problems hiring sufficient numbers of workers to increase production. This is the case in many other major manufacturing regions. It appears that fewer young people seem interested in going into a manufacturing career, unlike their fathers or grandfathers.

At first glance, dark manufacturing can be a scary concept in the sense that fewer humans are needed to manufacture products. This means fewer available jobs when a plant is established, but most likely an increase in productivity because automated machines can work longer than humans, don’t take lunch breaks, and don’t have drug or other problems at home. They also don’t need soft skills in terms of showing up on time and/or getting along with fellow workers. Furthermore, machines will most likely generate less production waste than humans, further increasing savings.

And if a company can literally turn off its lights because most machines, unlike humans, don’t need light to work, it can realize tremendous energy savings. I had a conversation the other day with the manager of a manufacturing firm here on the border that is spending approximately $200,000 a month on electricity costs. These costs could be tremendously decreased if less energy is needed.

It can be argued that full automation can cut down on mistakes during the manufacturing process and increase quality. Granted, machines can go haywire from time to time, but most human error and accidents could be eliminated during longer production lines. If maintained and calibrated correctly, a lot of machinery could run 24/7.

Dark manufacturing might not yet be a good fit for countries such as Mexico where much of the manufacturing done there is still labor-intensive. Governments in developing countries want to employ as many people as possible in order to increase output, and this has been the backbone of Mexico’s maquiladora (twin plant) industry. However, this is a growing strategy in developed countries such as the U.S., where worker shortages are becoming more and more acute. To an extent, the move toward more automation in the production process we see in countries such as the U.S. is essentially a move toward dark manufacturing.

And production sharing, in which countries such as the U.S., Mexico, and Canada all work together to manufacture different components, or provide labor to manufacture a product such as an automobile, could be applied to the production process. Using dark manufacturing, the U.S. and Canada could churn out components and materials that are then sent to Mexico to be assembled into parts or a final product that can be exported out of North America.

Other than fewer jobs being created in production plants, the major downside to dark manufacturing is cost. Imagine the millions of dollars of capital needed to fully automate a production plant. For many major manufacturing corporations this might not be such a barrier when comparing savings to costs, and removing the element of constantly struggling to find good workers. For smaller, less-capitalized companies, the cost of full automation can be prohibitive until the cost of automating a plant comes down. Dark manufacturing will require more trained technicians to maintain the machinery. Ironically, this could pose another worker shortage unto itself.

Jerry Pacheco is President of the Border Industrial Association and Executive Director of the International Business Accelerator.