Think of a factory. One might imagine blue-collar workers with serious faces, surrounded by machines of all kinds, busy putting together components in an assembly line. Another mental picture may be of a fully-automated manufacturing plant, where raw materials blossom into consumer products without any human help. In many ways, these contrasting images are complementary.
While nobody can deny that robotics and the universe of connected devices, better known as Internet of Things (IoT) are here to stay, people in manufacturing are not going away any time soon. People make companies, not robots. Contrary to naysayers, a greater number of highly skilled, versatile and creative people will be needed in new avenues of manufacturing than ever before.
Yes, with the labour cost arbitrage exploitation by IT companies quickly becoming history, there is an opportunity for manufacturers to tap into a larger talent pool. Absorbing such talent, however, would depend on how rapidly they reskill. Employability in the manufacturing sector has always been a challenge, with the focus being not only on numbers but on the relevant skill-sets.
Critical growth driver
In any economy, manufacturing is one of the critical drivers for growth. In India, the manufacturing sector is poised to reach $1 trillion by 2025, and we are expected to rank among the top three growing economies and manufacturing destinations in the world by 2020. With the implementation of GST, India is now a common market with a GDP of $2 trillion and an impetus on manufacturing, drawing both domestic and foreign investments.
The government is striving to drive employment growth in manufacturing, with its ‘Make In India’ and ‘Skill India’ programmes, which aim to contribute as much as 25 per cent of GDP (from the present 15 per cent). Skill India plans to train over 400 million people by 2025. A partnership between academia and industry is crucial to achieve this.
The World Economic Forum says that by 2020, one of the top skills that will be in demand is creativity. This is a consequence of automating many monotonous jobs and freeing the mind to think beyond the obvious.
Having the right people is the formula for success and is the reason why a company grows, stalls or perishes. Hiring the right people defines a company’s culture, and will have a butterfly effect on all other aspects of the business. With the rise of digital and social media, some of yesterday’s best practices have become obsolete. Some top CEOs have recruited through social media channels. Identifying the sparks in candidates could, therefore, happen through any channel, and social media is the new frontier.
Manufacturing on the upswing
India has now begun to show promise of being on par with China as a manufacturing base to reckon with. Though there is a long way to go, the omens are good. The World Bank’s Doing Business Report 2018 ranked India 100th among 190 countries in the ease of doing business category, advancing by 30 ranks from last year’s rankings. During December 2017 India’s factory activity also expanded the fastest in the last five years.
About 12-15 per cent of India’s GDP comes from the manufacturing sector, which employs 12 per cent of all labour. A recent McKinsey analysis shows the manufacturing industry in the pink of health — it is expected to touch $1 trillion by 2025 (30 per cent of India’s GDP) and create 90 million jobs.
Boston Consulting Group says that it costs only $8 an hour to use robots for welding in the auto industry, whereas it costs $25 for a human welder. In 1980, it took 25 jobs to generate $1 million in manufacturing output in the US. Today, it only takes five jobs. India is also moving in this direction.
But what about job losses? The fear of mass layoffs because of automation and artificial intelligence is largely unfounded. Even after high levels of automation, the search for real talent continues to be tough for recruiters worldwide. That leads us to the idea that automation is not the actual reason for job losses; it is in fact the opposite.
Automation will eventually free humans from monotonous, stressful and dangerous jobs and make them available for more creative work. “The digital economy must be built on decent work, which gives humans dignity,” says Guy Ryder, Director General, International Labour Organisation .
The challenges
The immediate challenges the manufacturing sector faces are finding the right talent, training and retraining the existing workforce to bridge the skills gap, and to consistently put forth manufacturing as an aspirational sector to work in. It is equally important to initiate reforms at the grassroots level by strengthening education, forming great partnerships with academic and research institutions, and hiring through digital platforms, as well as working on ways to retain the millennial workforce.
Companies should become more agile by embracing new forms of labour flexibility. Workers need to up their skills, adapt to the situation and actively take charge of their careers. Employees will have to wait for help from companies and policy makers to acquire new skills that automation cannot replace. Labour-complementing productivity enhancements, increase in manufacturing demand and a young demographic profile point towards a great future for the manufacturing industry.
Employees and trade unions must also work together to learn more. Human resources and organisational development specialists will have their hands full with reskilling projects.
Academia should also rise to the occasion. India now has over 700 universities and over 35,000 colleges churning out more than 1 crore graduates annually. Count the technical training institutes and this number easily crosses 2 crore. Sadly, the employability of this gargantuan work force is abysmal. Only about 5 lakh graduates, who are equally good with technical and soft skills, are considered employable by the industry.