Robots to the rescue where workers can't be found

In a prosperous economy, there are few takers for new jobs

When Zbynek Frolik needed new employees to handle surging orders at his cavernous factories in central Bohemia, he fanned advertisements across the Czech Republic. But in a prosperous economy where nearly everyone had work, there were few takers.

Raising wages didn’t help. Nor did offers to subsidize housing.

So he turned to the robots.

“We can’t find enough humans,” said Mr. Frolik, whose company, Linet, makes state-of-the art hospital beds sold in over 100 countries. “We’re trying to replace people with machines wherever we can.” Such talk usually conjures visions of a future where employees are no longer needed. In many major economies, companies are experimenting with replacing factory workers, truck drivers and even lawyers with artificial intelligence, raising the specter of a mass displacement of jobs.

But in Eastern Europe, robots are being enlisted as the solution for a shortage of workers. Often they are helping to create new types of jobs as businesses in the Czech Republic, Hungary, Slovakia and Poland try to stay agile and competitive. Growth in these countries, which became low-cost manufacturing hubs for Europe after the fall of Communism, has averaged 5 percent in recent years, buoyed by the global recovery.

Few are riding higher than the Czech Republic, where plants roll out cars for the likes of Toyota and consumer electronics for Dell, while smaller companies produce specialty goods to sell around the world. A roaring economy has slashed the jobless rate to just 2.4 per ccent, the lowest in the European Union.
 

The dearth of manpower, however, has limited the ability of Czech companies to expand. Nearly a third of them have started to turn away orders, according to the Czech Confederation of Industry, a trade group.

“It’s becoming a brake on growth,” said Jaroslav Hanak, the organization’s president. “If businesses don’t increase robotization and artificial intelligence, they’ll disappear.”

Eastern Europe’s factories are already well automated. New robot installations in the Czech Republic rose 40 percent between 2010 and 2015, according to the International Federation of Robotics. Today there are around 101 robots for every 10,000 workers. And more machines are coming as companies try to improve productivity, tilting them toward levels in countries like Germany, which averages 309 robots per 10,000 workers, the most in Europe.

At Elko EP, which makes industrial timers for companies like General Electric, 70 percent of production is automated, and the company is aiming to be almost fully robotized in a few years. In a sleek white corner of the factory, robots have taken over routine manufacturing tasks. Jiri Konecny, the company's chief executive, moved factory floor workers to more complex roles, and focused hundreds of other employees on research and development.

“If we didn’t invest early in automation, we’d be dead by now,” he said.

For the Czech Republic and its neighbors, the calculus is one of survival. A new generation of robots is needed not just to confront the labor squeeze, but also to increase flexibility and output as consumers demand a wider range of products. On a recent afternoon in Brno, the nation’s second-largest city, hundreds of suppliers showed off articulated robots, robotic sensors and other wares in a hall as big as an airport at Amper, an automation convention. Buyers crowded around “smart” machines that tested car headlights or interacted with humans in shared work spaces.

Many are doing brisk business as companies around Eastern Europe accelerate an automation drive. At Rittal, a maker of switch gears and control cabinets for industrial robots, orders rose 15 percent last year and have jumped 25 per cent since January. “Companies aren’t able to produce more, so their competitiveness is falling,” said Jaromir Zeleny, Rittal’s MD. “They don’t want to be so dependent on people.”

Cost is another factor. Eastern Europe became a manufacturing powerhouse by luring multinationals with low wages. That advantage is ebbing, though. Average monthly pay in the Czech Republic rose 8 percent last year to about 1,160 euros, or about $1,400. Although one-third the average in Germany, it is expected to keep climbing.

Businesses say letting in more foreign workers would help. But the conservative government has pledged to limit immigration, and recently set strict caps on foreign work visas.

There are longer-term trends at play, as well. Families aren’t having children fast enough to replace people heading into retirement. Automation, one argument goes, could compensate. Skoda, the nation’s biggest automaker, said last month that it would “significantly accelerate” automation to face demographic changes and wage pressures.

© 2018 The New York Times