Thailand risks losing momentum due to lack of automation in key technical areas

Economy July 03, 2015 01:00

By The Nation

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Only 36 per cent of businesses in Thailand plan to automate a key operational process over the next 12 months, well below the average in Asia-Pacific, which is facing an increase in labour costs, according to Grant Thornton International.

The figure in Thailand is low even though unemployment is very low. A rapidly ageing population also means it risks falling behind unless its ramps up its attention to automation and productivity.

The figure in emerging Asia-Pacific is two-thirds, slightly ahead of the global average of 56 per cent.

These companies are looking for lower costs and for greater accuracy and increased flexibility to increase or decrease production, while three in five expect this to replace workers.

Grant Thornton surveyed 2,571 executives in 36 economies to mark the 50th anniversary of the mass production of the world’s first personal computer.

The findings suggest that some jobs will go as a result, with the manufacturing, cleantech and food and beverage industries in particular reporting upheaval.

With capital costs low as labour costs rise, the findings pose fundamental questions about the extent to which machines will eventually replace humans.

Tantra Tantraporn, management consulting partner at Grant Thornton in Thailand, said yesterday that automation becomes a viable option when a business suffers from human involvement to a degree that would be more than compensated by having a machine do the same job.

"Not having a clear and detailed understanding of relevant functions is a potential pitfall of automation, but taking the time to study each process and task at the level of detail needed to evaluate the potential application will address such issues," he said.

Globally, by industry, 43 per cent of manufacturing firms said they expect this to eventually replace at least 5 per cent of their workforce. Cleantech was in second place on 39 per cent, followed by the technology and food and beverage industries at 35 per cent.

At the other end of the spectrum, just 9 per cent of hospitality, education and healthcare firms expect 5 per cent or more of workers to be replaced.

"As businesses consider whether to invest in staff or machines, for many, the latter is becoming the more cost-effective option," said Steven Perkins, global leader for technology at Grant Thornton.

Businesses are spending more on research and development, underpinning the growth in automation. In 2011, 23 per cent of businesses globally said they were planning to boost R&D spending. That increased to 26 per cent in 2014 and so far in 2015 stands at a five-year high of 29 per cent.

Opportunities will arise for workers to assume new roles and responsibilities created by the increased use of technology. Globally, 54 per cent of automating firms expect to redeploy workers in other areas, with 28 per cent saying workers will be trained to operate new machinery.

Even in manufacturing, 44 per cent of firms plan to redeploy rather than remove staff.