Canon to automate production instead of offshoring

[bmattock]

New story:

http://www.reuters.com/newsArticle.jhtml?type=technologyNews&storyID=6884582

Canon to Automate 25 Percent of Japan Production
Mon Nov 22, 2004 07:58 AM ET

By Nathan Layne
TOKYO (Reuters) - Japanese office equipment and camera maker Canon Inc. said on Monday it planned to fully automate 25 percent of its domestic production by the end of 2007, aiming to cut about $270 million in annual costs.

[snip]

The company's strategy contrasts with copier and printer maker Fuji Xerox, which is in the process of moving 90 percent of its production to China to tap cheaper labor costs. Fuji Xerox is a venture between Xerox and Fuji Photo Film

I thought Canon's position is interesting - concentrating on obtaining efficiency at home (Japan) versus just offshoring labor, as the US is currently doing so much.

Will it work? Who knows? But I find the decisions Canon has made to be fascinating - possibly pivotal for the company's future.

So many little decisions are so important these days - in ways we may not comprehend in the beginning...

Best Regards,

Bill Mattocks

 

[Nikon Bob]

It is quite possible that automating production at home rather than moving production off shore where labour is cheaper may have the same end result. That is large numbers of unemployed worker at home. Job loss is job loss no matter how it occurs. There is no way around it in the eternal quest for better bottom lines on corperate profits. Sorry, but I find little to be optomistic about these days.

Bob

 

[bmattock]

Bob,

In terms of labor-related jobs, you're probably right. However, there are side-effects of developing technology to use at home.

1) During the time it takes to retool and develop the technology, the current jobs remain.

2) Possibility exists to retrain some workers to maintain the new automated facilities - which are never 100% automated.

3) All other jobs which might otherwise be sent off when the manufacturing jobs ended could remain - shipping/receiving, management, and other administrative positions.

4) Automated manufacturing employs IT/IS people, remains capital expenditure at home (local economy vs exporting all capital costs).

I can think of a lot of other positives here. Bottom line - if I lived in a small town that offered choice - shut down and send everyone packing while all jobs go to China *OR* shut down 70-80 % of manufacturing line to upgrade to top-end automated technology and keep factory, some workers, all management and attract new scientists / technicians / IT people with some limited retraining possible of former laborers, I know which one I'd choose.

But maybe I'm just an optimist!

Best Regards,

Bill Mattocks

 

[dll927]

One of these days we will read that Bangledesh or Zamibia is "off-shoring" jobs. Which might be a nice trick if they don't have a shore.

I have never been much of a labor union advocate. They were once known for "making middle class citizens of less-educated ones", and therefore they have certainly had their purposes. But when they started getting greedy and demanding everything but the kitchen sink in their contracts, they went beyond the call of duty. I can recall unions 'demanding' 30-per cent raises in three-year contracts. Then who pays for the increase in prices - those same union members.

The number one expense of nearly any business is - LABOR. Maybe if we could stop running society on an 'adversary' basis at every turn, those with differing interests could learn to live together.

 

[Nikon Bob]

I have been watching for at least 15 years the offshoring process and have seen the automating of my workplace. It is not really a recent event. I do not want to comment further as this issue is too politically charged and could lead to some nasty things being said. Not much of an optomist.

Bob

 

[hoppinghippos]

bob: I am not sure about the rest but I would love to hear your views, I think it would be interesting and enlightening to hear the views of various members from different countries.

Personally I think outsourcing is simply an easy way for companies to lower their production costs and is essentially the same old debate on employers vs employees. that what benefits the employer usu doesn't benefit the employee and vice versa. while I think it is inevitable and a natural evolution of business structures in light of globalisation and the better linkages we enjoy, I also think it isn't all doom and gloom. there's always a balance, work lost here means work gained somewhere else, it all means that one has to adjust to the new economy and find ways of securing those newly created jobs. as have been mentioned earlier, it may not be that great to insist on the company adhering to local investment as escalating costs (which the company may have been trying to avoid by out sourcing) may trickle back to the consumers (aka the workers too) or result in other cost cutting measures like retrenchment.

however, over here in s'pore we have a strange phenomenon of a few companies which claim cost cutting is neccessary and carry out retrenchment exercises only to record healthy profits shortly after.

 

[Pherdinand]

My girlfriend lives in Hungary. She's just hired by IBM for its HR department. IBM moves most of its human resource dept. from Portsmouth, UK to Budapest, HU. The salaries will be less than 1/3 of the ones they had to pay to the British employees, not to speak about taxes and insurances, and they are still well above the hungarian average wage.

The irony in the action is, the new hungarian employees were sent to the UK for a 3-month training... the "trainers" being the former UK HR folks. The last group finished the training a week ago. From December the UK team has no job anymore. They do get a christmas/new year allowance.

You can imagine, they were not very friendly to their "students". Noone likes to dig his own grave.