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To automate or not: That is the manufacturing question

When it comes to manufacturing in today's economy, increased automation in manufacturing plants may seem like a given. Factories first opened their doors to modern industrial robots in 1961 when Unimate—a 4,000-pound (1,814-kilogram) arm attached to a giant steel drum—joined the General Motors workforce, and they have since become a mainstay of mass production. When a job is just right for a robot, productivity tends to increase dramatically.

However, not all companies are going the way of automation on the assembly line, especially when trading humans for machines goes against their brand.

Man vs. Machine in the Automotive Industry

Tesla is one of the newest automotive car companies, and it is also one of the most progressive in its approach to automation and the use of robotics in its manufacturing facility. The “Car of the Year” is a result of some remarkable automation that the company views as the future of manufacturing. To take a peek inside the new, truly modern Tesla plant in Freemont, CA, view a recent video from National Geographic or this video, produced by Wired.

On the extreme opposite is Lamborghini. Lamborghini proudly keeps a staff of highly-skilled laborers in its one and only (original) plant in Sant'Agata Bolognese, Italy—and the company uses no robots in the production of its cars. Women primarily do the assembly of the cars' interior, including the hand-sewn leather seats. On the other side of the plant, men work on assembling the exterior of the vehicles. View this 60 Minutes segment that demonstrates how they build their vehicles.

Both car companies sell high-end, luxury cars, and both could afford to automate. So why has Lamborghini not automated its production line? For them, it comes down to their philosophy and their brand. Lamborghini wants to create a hand-built sports car for their customers; it's the way they've done it for decades, and they do not have any desire to change that approach. Furthermore, in true Italian fashion, there is a romance and aesthetic to their cars that they feel can only be achieved through human assembly.

Redesigning a Production System The Harley Way

Harley Davidson’s factory in York, PA, represents an alternative to the common strategy of moving manufacturing overseas and adopting automation—a strategy that has been repeated so many times that even as overall manufacturing output has grown by nearly 25%, manufacturing jobs in the US have fallen by 30% since 2000 (see our previous post on this topic). In the January New York Times article, “Building a Harley Faster,” the York plant manager, Ed Magee, is quoted as saying, “Even during the company’s worst days, management never considered busting its union. Frankly, it couldn’t. The company has an American blue-collar, working man brand.” To get rid of its union or to make its motorcycles in Mexico—while tempting during the worst of the 2009 recession—would have been catastrophic to the brand.

Instead, the company could only compete by redesigning the production system so that each worker created more value than they cost. They built a new factory—one that continues to be entirely absent of robots on the assembly line. Hundreds of experienced, skilled workers, operating in teams, manually build each motorcycle and, unlike robots, can constantly adjust to new information and solve small problems that lead to major inefficiencies. Harley’s very existence was in question in 2009. Today it is a manufacturing role model, with a stock price that is near the peak it reached at the top of the bubble in 2006. And that has a lot to do with its workers.

Automation does not come cheap, but for many manufacturing organizations, the long-term savings in human labor appears to be worth the investment. However, automation in a manufacturing environment is not always a matter of dollars and cents. It may just come down to a company's brand philosophy, no matter what the cost.

MIT Sloan Executive Education offers a new two-day course, the Future of Manufacturing.


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