More Robots, less Workers: this is the Factory 4.0

June 2017

Italian companies replacing employees with machines say: “But we are still investing in human capital”

ADRO (Brescia) – “Of course, if I looked at things in a different way and did not change this machine, I would have perhaps been able to still keep two or three workers.
But then I would have gone out of business and would have had to lay off ten of them.” This is how Paolo Streparava tries to sum up the Industry 4.0, while contemplating a robot drilling the rocker arm shafts produced for Volvo’s lorries.
All around there is very little noise, floors as clean as those of a clinic and a worker stealthily wandering around the machines. Paolo Streparava, the 40-year-old managing director of the company bearing his name and that of his father, the chairman, and of his grandfather, the founder – gives us a list of figures to better explain this: “We currently have 360 employees in Italy, the same number we had 10 years ago, but there has been a change: we previously had 300 factory workers and 60 employees, but we now have just over 200 factory workers and the rest are employees, mostly technicians monitoring production processes.
And from here we also monitor our production lines in Brazil and India. Not only did we not lose any jobs, but the quality of work has also improved.”

In the adjacent warehouse, a new production line is under construction, automated of course, which, every year, will churn out 900,000 injection pumps for Volkswagen. Meanwhile, another machine pivoted to 650 tonnes of concrete and anti-seismic springs simulates the stresses of every type of soil to test the strength of lorry components: “It is worth 2.5 million euros, we are the only ones who have it and our customers are aware of this…” says Streparava with ill-concealed pride.
Also here, there are just a few workers running between control boards, monitors and metal cages.

If we look at it from the point of view of this factory, located halfway between Brescia and Bergamo, similar to thousands of other companies that are the production heart of our country, the Industry 4.0 actually seems to be a positive revolution.
Yet, it is another technological acceleration triggering a virtuous circle of productivity, business growth, employment, wage increases and increased consumption. After all, this is what happened worldwide in the previous industrial revolutions (starting with the English one in the late 18th century) and this will happen this time too, as many economists argue, thanks to developments in automation and cybernetics.
However, we also have to deal with other numbers and forecasts, which anticipate a much less virtuous story.
The International Monetary Fund holds robots and computer science accountable for the sharp downscaling (4 percentage points from the 1970s to today) of the workers’ share of national income in developed countries.
The researchers of Bruegel, an authoritative think tank based in Brussels, believe that, in the next few decades, between 45 and 60% of the European workforce will likely be replaced by robots. According to a McKinsey report, 1.2 billion jobs worldwide could be replaced with technology.
Moreover, a research conducted by the Massachusetts Institute of Technology and Boston University shows that, on average, a robot installed every thousand workers destroys 6.2 jobs and reduces salaries by 0.7%.
“Machines, which were once tools to increase employee productivity – writes Martin Ford in the best seller “Rise of the Robots: Technology and the Threat of a Jobless Future” – are becoming actual workers, and the dividing line between job opportunities and capital ones is becoming more nuanced than ever.”

After hearing such considerations, Paolo Streparava stares at us as if we were Martians who just landed in the Brescia plain.
But, after all, these global figures and reasoning also concern him and his company: “Look, we are talking about making true innovation here: in the last 15 years at least, there have been factories with production facilities controlled from thousands of miles away.
Nothing like ATMs and online accounts causing cuts for bank staff: when we go to a bar, we brag about how many employees we have.
We continue to invest in human resources because people do quality control, not robots.”

Ucimu, the Italian machine tool manufacturers’ association, says that the Industry 4.0 is the result of the investment slump due to recession: “The machinery fleet of the Italian industry has the highest average age of the last 40 years,” and this also explains the 22% increase in machine tool orders in Italy in the first quarter of 2017.
As if to say that it is a forced revolution. “Industry 4.0 me seems to me more like a title to be given to the new round of incentives – says Streparava -.
I would not want my colleagues to end up buying just a few computers to get the funds without actually making innovation.”

Well, perhaps. Meanwhile, Fausto Angeli, of the FIOM trade union in Brescia, warns: “Automation may result in staff cuts or, if things go well, to an increase in workloads.”
In fact, the debate is now open among trade unions, with the leader of CISL metalworkers, Marco Bentivogli, going against the flow: “Robots have been around for over 30 years now, but I do not think we regret welding exhalations in factories.
In Italy, sectors such as that of home appliances have almost disappeared due to poor investment in technology.
Stopping progress is unrealistic, since there is room for work and more jobs available if we completely redevelop the idea of a business and its goals, schedules and smart sustainability.”

But this is just one of the many possible answers. Such as those coming from the warehouses of Centro Sviluppo Materiali, a company that was once in the public steel industry and then joined the private Rina group. 3D printers to study imperfections in helicopter turbines; machines that test the metal sealing of gas pipelines or tracks; a 2 million euro microscope that scans metal powders with a resolution reaching atomic rows.
Not far from Rome, overlooking the presidential estate of Castelporziano, an unpredictable world where, every day, we try to move the frontier of innovation even further.
An incubator of the Industry 4.0 working for Italian and foreign groups, such as Arcelor Mittal, Arvedi, Fincantieri, Eni, Nippon Steel and Ansaldo.
“Several years ago, the iron and steel industry already paid the price of technological unemployment,” explains Stefano Luperi, head of the business line – but new robots will not replace the worker teams.
Today, the challenge involves materials and production processes: we have sold a control system derived from that of the production lines of a wire rod to a food company, since a steel bar is not so different from a spaghetti.”
Csm’s machinery brings back to mind another prophecy that Martin Ford wrote about in his book where he illustrated a printer designed by the University of Southern California that can build the cement walls of a house in just 24 hours: “Today, 110 million people work in the construction sector worldwide.
3D printers could one day create better and cheaper homes, but this technology could also make redundant millions of employees.”

A true catastrophe, one might say.
Perhaps we should reflect on what Nobel prize winner Milton Friedman said during a visit to a public construction site in an Asian country, where there were many workers with a shovel and just a few bulldozers. When officials began explaining that it was an “employment project”, he ironically asked them why the workers had not been given a spoon instead of a shovel.
But that was in the 1960s, practically a glacial era ago and, in the meantime, the solid infallibility of economists is beginning to show a few cracks.