Robots Replacing Humans at Automated Factories
The authors are analysts of NH Investment & Securities. They can be reached at mj27@nhqv.com, jack.baek@nhqv.com and kyeongkeun.kang@nhqv.com, respectively. – Ed.
Present: Introduction of process automation
Amidst ongoing social structural changes, including shrinking working-age population numbers and rising labor costs, domestic F&B companies have introduced process automation to their plants, and agricultural and livestock companies have pushed for mechanization of farming in order to secure production competitiveness and improve efficiency. Factory automation entails putting in place unmanned production systems that use computers and robots. In other words, robots are replacing humans at automated factories. This move towards process automation has brought about the benefits of smooth interconnection of all manufacturing processes (encompassing production, quality control/inspection, and logistics) as well as enabling companies to establish company-wide return systems.
We note that compared to other industries, the portion of manual works remains still high at the F&B sector, especially for quality control and packaging processes. But, as process automation has been pre-emptively introduced to large-scale F&B facilities, significant progress has been made, especially with regard to food safety inspection, product quality control, and product history tracking. And, sensor-using automation systems have first been appearing in the packaging, food safety, and quality control areas.
Present: Mechanization of farming
Korea has long been pursuing mechanization/automation of farming, aiming to counter growing challenges at domestic farms such as a declining rural population size, rural population aging, a shrinking grain self-sufficiency rate, stagnated income growth for farmers, and global climate changes. The mechanization movement first started in early-1960s in line with penetration of power tillers across Korea’s rural areas, and the initiative took off in earnest upon the announcement of a 5-yr agriculture mechanization plan under the directive of the President in the 1970s.
Thanks to well-coordinated efforts of the public agencies and farmers, Korea has achieved almost 100% mechanization for rice farming. By end-1970, Korea completed localization of power tillers, and by end-1990s, most of rice farming processes were carried out with machines. The annual number of man-hours required for a 1ha rice paddy stood at 1,700 hours in 1971, but the figure gradually declined to 928 in 1981, to 162 in 2008, and to 10.8 in 2015. Over this period, the mechanization of farm works has helped to overcome the sharp decline of Korea’s farmer population—as early ago as only 1970, Korea’s farm population represented 44.7% (14.42mn) of the overall domestic population, but the portion has since plunged, standing at merely 5.1% (2.57mn) as of end-2015. With the penetration of agricultural machinery rising, the total number of major agricultural machines (cultivator, tractor, rice-planting machine, and harvester) rose to 1,337,000 units nationwide (1.1 per farm).