The State of Automation Integration
In spite of accelerating globalization, many domestic manufacturers are choosing to keep manufacturing at home by using automation and robotics.
In a 2006 interview with Automation magazine, Trevor Jones, former president of the Robotics Industries Association (RIA), noted: “We believe that automation is a key factor to promote the strength of North American industry. I think there is a general agreement that North American manufacturing is under attack from offshore, lower-cost manufacturing centers….I think that [we need to] promote the technology to people who want to do business in North America, [so they can] take advantage of the technologies available.”
In the past few years, talk about offshore outsourcing undoubtedly grew considerably louder in the United States, as many companies realized how much money could be saved by sending production overseas to reap the benefits of low-cost labor and other cost-saving measures. But then some frightening reports started trickling in from areas such as China—from toys tainted with lead to, most recently, the heparin scandal. For some medical device companies already worried about the risks associated with losing intellectual property protection and maintaining quality from afar, this was the last straw.
“I know there has been some negativity toward China, and I’ve seen some instances of companies not going there. They’d rather spend the money to automate because of the negativity and the weakening [US] dollar,” said Dan Adlon, vice president of Strategic Business Development for Lewisberry, PA-based Integrated BioSciences Inc., a contract manufacturer of class I and II disposable devices.
Photo courtesy of Delta Industrial Services, Inc.
Given the troubles seen in the US economy these days, workers never have felt more worried about their job security, so surely any reversal of the offshoring trend is welcome news—and it’s fueled renewed optimism, particularly for the automation and robotics industry.
Assembling a Solution
Manufacturing is all about getting from Point A to Point B, and automation certainly can make the process smoother. Integrating automation and robotics into a production line often dramatically improves quality and efficiency, offering tighter operational control than might be found overseas.
“Primary factors driving the decision to automate are typically (1) higher quality and (2) lower manufacturing cost. In addition, automation can often lead to reduced manufacturing floor space requirements,” noted Dave Carlberg, co-founder of Kinematic Automation Inc., a solutions provider in Sonora, CA. “Market consolidation in recent years has had a tremendous impact on many of the smaller players. In order to be/stay competitive, a company must maintain a high level of quality while keeping manufacturing costs in line. This is done by automating critical processes.”
The choice of how to utilize this type of equipment is as varied as the systems available: Some companies use single- or multi-station automation, while others want turnkey manufacturing systems. Ultimately, the standard in automation today remains customized solutions to meet each product’s needs.
Wendy Stromberg, marketing coordinator for Delta Industrial Services, Inc., a specialty web converting and packaging equipment provider based in Minneapolis, MN, said her medical device customers are looking for “flexibility and modular” solutions in automation today. “They are looking for machines that manufacture one product today and then can be changed over either the same day, or in a month or a year—whatever the lifecycle of the product. They don’t want to be left with a machine that’s antiquated once a product is out of date. Therefore, our equipment is designed with modules that can be reconfigured—the modules are used as kind of a great big erector set,” she explained.
Photo courtesy of Kahle Automation.
Robotics also play a larger role in manufacturing today. According to the RIA, the medical device market (combined with life sciences, pharmaceutical and biomedical sectors) for robotic equipment grew 20% in the first nine months of 2007, compared with the same period in the prior year. And a March 2008 article in Healthcare Packaging magazine noted that sales growth in medical packaging has grown as robotics come into play, offering benefits such as flexibility and digital changeover—not to mention ergonomic advantages such as elimination of manual lifting and handling of boxes.
IBS, which spun off in 2003 from Synergistech Inc. (an automation development company), is no stranger to designing and using automation equipment in its contract manufacturing operations but has spent the past few years complementing it with robotics. “We like robotics for a couple of reasons: It’s quick to get something up and running, and the motion is already there; and second, the recapitalization of it,” Adlon said. For example, he continued, “This year, we did a work cell that has only one robot but fully assembles a safety syringe in that single work cell. In that cell, we can duplicate all the motions and assembly motions as if it were on a high-speed automation machine.”
What works for one company, though, may not work for another. Clear Automation, a solutions provider based in Southington, CT, has found that many of its customers are starting to shy away from sophisticated (ie, complex) automation and are heading more toward Lean manufacturing environments that use more simplified, linked machines that may include both manually operated and automated equipment. “We’re seeing more attention to Lean manufacturing work cells with more manual transfer—companies aren’t investing in huge $5 million production lines anymore,” said Paul Kuchay, sales manager for Clear Automation. In his experience, while a company once may have spent $250,000 on a work cell that would take 24 weeks to get into a working operation, now that company may be looking to Clear Automation to develop a simpler solution costing between $25,000 and $100,000 and offering fewer validation hurdles to get to market in, perhaps, only 12-14 weeks.
Investing in Automation: Costly or Justified?
The cost-benefit and time-to-market equation is one that must be explored carefully before a company chooses to integrate automation and robotics into its production lines. But, as is the case with many other users of the technology, Advanced Scientifics, a contract manufacturer based in Millersburg, PA, has found that the investment absolutely warrants the expense when product volumes justify it.
“Because most of our products are custom to the customer and the order size [is] not of high quantities, most of our production is of manual or semi-automated state that acquires well to the custom requirements of the product. The investment that would be required for automation generally has to do with the required volumes for the product line and the efficiency of the automation,” said Jay Martin, tooling manager for Advanced Scientifics. “[But] as the product lines for disposables get larger in the future, I’m sure there will be more automation required for the growth in our market.”
Adapted with permission from International Financial Services Corp.
“The sophisticated automation systems required to manufacture today’s medical and diagnostic products are not a commodity like computers and electronics. Indeed, they typically contain large quantities of steel and aluminum, and numerous commercial components—the cost of which are all increasing dramatically. Costs for automation, therefore, are not coming down—if anything, they’re going up,” he said.
Once an investment is made, though, many companies won’t ever need to think about replacing their equipment once it’s installed, according to Julie Logothetis, president of Kahle Automation, a solutions provider based in Summit, NJ, with an overseas office in Italy.
“Most medical devices don’t fade out that rapidly,” she explained. “We have [automation] machines running in the field that are 30 years old. It’s not like if you come out with a new safety syringe, [for example], the new one is going to necessarily obsolete your standard syringe. By the time you come out with something new, you’re most likely still going to offer that other product.”
And should capacity increase for a product line, she said a company wouldn’t necessarily need to replace the automation technology already in place. Instead, she explained, “If you said to me, ‘We have a machine that has a capacity to manufacture 10 million parts a year, running three shifts seven days a week, and our volume is increasing to 30 million parts a year,’we might make a new machine to handle the additional 20 million parts.”
For many companies, Logothetis added, return on investment for new equipment purchases can be as quick as a within a year (with more sophisticated equipment taking longer). Many providers seek to ensure that return on investment occurs within two years. (For more information about investing in capital equipment, see “Think You Can’t Afford New Equipment? Think Again,” to the left.)
Changing the Scope of the Workforce
Of course, one of the main reasons companies convert to an automated and/or robotic work line is to ensure quality and reduce reliance on human operators.
“Automation has become so turnkey—I know that’s an overused word—that we’re able to maintain quality verification and validation with each aspect of the process. Our customers don’t have to rely on trial and error with their employees—rather, you’re taking it into a robust process,” Stromberg said.
While fewer humans will be needed to work on the floor when this type of equipment is used, the actual number of reductions varies, as does the level of knowledge that will be needed to operate and maintain the equipment, according to the experts.
For example, Clear Automation builds certain safety features into every piece of its more standard equipment and designs human interfaces to enable anyone with basic reading skills to understand the controls. “When I am in the process of closing an order, we want to make sure the HMIs [human interfaces] are in line with the customer’s expectations,” Kuchay explained. This can be important for companies that typically rotate workers to avoid repetitive injuries such as carpal tunnel syndrome—that is, if multiple users will operate the equipment, the controls have be easy to use for varying levels of skill.
Then again, those who bring automated solutions into their production have to keep in mind that more sophisticated systems can require a higher skill level to operate them. “A lot of times you have an operator with a mechanical background or engineer on a machine. You need to take into account that you can’t just take someone off the street and run this equipment—it takes education, depending on the level of the system you’re running,” Adlon said.
Regardless of the system chosen, the bottom line is that automation and robotics will help save on labor expenditures, but they won’t replace humans entirely. As Stromberg pointed out, a human operator still usually is needed to keep an eye on tolerance and other aspects of the process.
Getting From Point A to Point B
One of the greatest determinations of a company’s success in building a manufacturing platform based on automation and robotics has nothing to do with technology and everything to do with human interaction. Designers and suppliers of this equipment say that it may be a cliché, but the importance of fruitful communication between themselves and a customer cannot be underscored enough for a purchaser to obtain the most useful solution.
“It’s good to have open dialogue about what the customer wants, what the customer needs and what is ultimately possible,” Stromberg said. “What’s critical to your process—is it the speed, the tolerance, … [etc.]?”
Time and again, the experts supplying these solutions to the device industry said design for manufacture is another important consideration. “If it’s a new product, the company should be talking with someone with automation experience all the way through the development cycle. It’s never too early to come to a provider. A good automation company will stand by you during your product development process to help the product be the best it can for automation. It’s never too early to just have a conversation,” Logothetis said.
Adlon agreed, noting that as much as 90% of a company’s cost to assemble a product is established in the product’s design. Thus, if an automation expert is involved from the onset of the development process, the solutions provider will be able to suggest improvements to the design that may help lower manufacturing costs.
Kuchay summarized: “As an engineer, when I sit down and look at [the customer’s] manufacturing process, I have to figure out how to get components in the cell, through the cell and out the cell. I try to interview the customer to understand what they’re trying to get and match the sophistication of the solution with their expectations, but that’s not always easy to do.
“You have to make sure you aren’t losing anyone in the process,” he continued. “Philosophically speaking, when you look at the relationship, there has to be caring, sharing and mutual respect. We have to care about the customers enough to ask the right questions, and to do that, we have to share open data—with discretion.”
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Looking ahead, Kuchay said “I can’t see anything but a strong outlook in the future.”
Logothetis agreed, concluding that “as integration becomes more and more sophisticated, it’s opening new roads. If you’re creative, you can always think of new solutions.”
Think You Can’t Afford New Equipment? Think Again
The US government’s rebate checks, as a measure of economic stimulus, were sweet relief to many households this year, but this program offered businesses opportunities as well.
According to International Financial Services Corp. (IFS), a Libertyville, IL-based provider of financing and leasing for a broad range of high-tech and industrial equipment, H.R. 5140 – Recovery Rebates and Economic Stimulus for the American People Act of 2008 presents huge incentives for companies to acquire new equipment this year.
Adapted with permission from International Financial Services Corp.
“It’s been a tremendous tool in assisting companies in acquiring equipment—and all-around good for the economy,” said Laura Gustafson, an IFS account executive who works in the corporation’s St. Paul, MN office. “Some market analysts are talking about a recession, and we've seen just the opposite. Business owners are taking full advantage of these tax incentives and expanding their company's capabilities.”
If huge capital outlays aren’t feasible for an organization, regardless of these incentives, another option is securing an operating lease. Benefits of this structure are that debt and assets aren’t shown on the balance sheet, borrowing capacity is increased, Debt Covenants and capital budgeting requirements are circumvented and financial ratios can be enhanced. Tax write-offs also are advantageous. The leasing company passes along lower monthly payments to the user of the equipment in exchange for the user not building equity in the equipment. This allows the user to treat the monthly payments as an operating expense for tax and accounting purposes.
“Our clients are finding that, the combination of low interest rates, tax incentives and flexible operating lease options, now is a great time to acquire equipment,” Gustafson said. “Manufacturers are not allowing the traditional lenders’ credit crisis put their company's plans for increasing efficiencies or expansion on hold. Third-party financing is a viable option.”