Flexible Automation in Developing Countries: The Impact on Scale and Scope and the Implications for Location of Production (Unu Intech Studies in New Technology and Development, 6)

This book examines the extent of, and motives for, the diffusion of flexible automation (FA) at global level and then turns to the local and firm level, bringing together in-depth studies of sixty-two firms in Brazil, India, Mexico, Thailand, Turkey and Venezuela. Research focuses on the impact of computer-numerically-controlled machine tools on scale and scope by exploring changes in lot sizes and product variety (product scale and scope), total plant output (plant scale) and total firm output (firm scale). Barriers to setting up FA-based operations are discussed, as are factors which may affect a decision to locate in a developing country. The contributed studies reveal a relatively slow diffusion of FA in developing countries and it is demonstrated that while FA possibly increases scope, it also requires that plant output be increased in order to maintain efficiency. Alcorta concludes that the location in developing countries will probably only be viable for large domestic firms, multinationals seeking to relocate simple but labour intensive assembly processes and firms in countries with significant domestic markets. This work is unique in addressing the scale and scope issues in developing countries and in the wealth of information regarding machine tools which it provides. The data provided in the appendix includes official United Nations data, previously unpublished. This will be of use for all research into trends in the use of machine tools. BOOK COVER......Page 1 HALF-TITLE......Page 2 TITLE......Page 4 COPYRIGHT......Page 5 CONTENTS......Page 6 FIGURES......Page 11 TABLES......Page 12 CONTRIBUTORS......Page 17 ACKNOWLEDGEMENTS......Page 19 LIST OF ABBREVIATIONS......Page 21 Background......Page 23 Research questions......Page 26 Organization of this book......Page 28 Part I CONCEPTS, METHOD AND SYNTHESIS......Page 30 1 Introduction......Page 31 2 Origins of economies of scale theory: from ‘division of labour’ to cost curves......Page 32 3 Scale, economies of scale and optimal scale: definitions, sources and dimensions......Page 34 4 Scope and economies of scope: origins, definitions and sources......Page 37 5 Flexible automation and economies of scale and scope: the ‘modern technology’ literature view and its critics......Page 43 6 Technical change, costs, scale and scope: a graphical representation of the issues......Page 52 Notes......Page 55 1 Introduction......Page 58 2 Approach, method and unit of analysis......Page 59 3 Sampling: technology, industries and countries......Page 61 4 Data requirements......Page 67 5.1 The firm......Page 71 The production process......Page 72 Flexible automation (FA)......Page 73 Reasons for adoption of flexible automation......Page 74 Process of selecting and adopting FA......Page 75 Setting-up times......Page 76 Batch sizes......Page 77 Product variety......Page 78 Changes in plant scale......Page 79 Factors affecting changes in scale......Page 80 Changes in unit cost......Page 81 Factors affecting changes in unit costs......Page 82 6 Implementation of the study......Page 85 Notes......Page 88 1 Introduction......Page 90 2.1 Diffusion of metal-cutting machine tools......Page 91 2.2 Diffusion of numerically and computer-numerically-controlled machine tools......Page 97 3 Surveyed countries’ CNC machine-tool diffusion in an international perspective......Page 102 4.1 The point of departure......Page 105 4.2 Diffusion of flexible automation in studied firms......Page 107 5 Flexible automation and new organizational techniques......Page 113 6 Factors underlying the diffusion of CNC machine tools in surveyed firms......Page 119 7 The process of intra-firm diffusion of CNC machine tools......Page 124 8 Conclusions......Page 128 Notes......Page 129 1 Introduction......Page 131 2 Changes in product scale......Page 132 3 Changes in product variety or scope......Page 135 4 Changes in plant and firm scale......Page 141 5.1 Technical factors......Page 144 5.2 Economic factors......Page 152 6 Other price and efficiency effects......Page 156 7 Conclusions......Page 158 Notes......Page 160 1 Introduction......Page 163 2 Flexible automation and production and cost conditions in engineering......Page 164 3 Scale and scope and firm entry......Page 169 4 Transport costs, just-in-time and infrastructure......Page 175 5 Factor prices and biases......Page 178 6 Is large local demand still necessary?......Page 180 7 Location of production in developing countries: an assessment......Page 181 Notes......Page 183 6 CONCLUSIONS AND POLICY RECOMMENDATIONS......Page 186 Extent and motives for the diffusion of flexible automation......Page 187 Implications for location of production in developing countries......Page 188 Areas for further research......Page 189 Policy areas......Page 191 Note......Page 193 Part II THE COUNTRY STUDIES......Page 194 1.1 Manufacturing......Page 195 1.2 The engineering industry......Page 196 Capital goods......Page 197 Autoparts......Page 198 1.3 The diffusion of FA in Brazilian manufacturing......Page 200 Production processes in sampled firms......Page 202 Capital goods firms......Page 205 Autopart firms......Page 209 Machining service firms......Page 213 2.3 Selecting and adopting flexible automation: procedures and problems......Page 215 Changes in setting up times and machining cycles......Page 216 Reductions in batch size......Page 218 Increased product variety......Page 220 3.2 Increases in plant scales......Page 221 3.3 Factors determining changes in plant scales......Page 223 4.1 Changes in total unit costs......Page 225 Impact on capital unit costs......Page 228 Impact on labour unit costs......Page 229 Impact on input unit costs......Page 230 Impact on overheads and firm scales......Page 231 5 Conclusion: industrial restructuring, flexible automation, scale of production, and the prospects for the location of produ......Page 232 Notes......Page 234 1.1 Macroeconomic trends and poticy issues......Page 235 1.2 The engineering sector......Page 236 1.3 The diffusion of FA in the manufacturing industry......Page 237 Patterns of diffusion......Page 238 2.1 Sampled firms......Page 239 2.2 Flexible automation and the production process......Page 241 2.3 Reasons for flexible automation adoption......Page 243 2.4 Process of adoption......Page 245 Lay-out and JIT systems......Page 246 Labour and organizational changes......Page 248 Changes in setting-up time......Page 251 Batch sizes......Page 252 3.2 Changes in product diversity......Page 254 4.1 Production volumes and capacity utilization......Page 256 Cost factors......Page 257 Technical advantages of flexible automation......Page 258 4.3 Other competitive advantages......Page 259 5 Costs and prices......Page 262 5.1 Unit cost and prices......Page 263 Capital and labour costs......Page 265 Indirect costs......Page 267 5.3 Profit margins......Page 269 6 Main findings and conclusions......Page 271 Notes......Page 274 1.1 Macroeconomic performance and development strategy in Venezuela......Page 276 1.2 The Venezuelan manufacturing context......Page 278 1.3 The engineering industry in Venezuela......Page 279 1.4 The diffusion of flexible automation within the engineering industry......Page 280 2.1 The firms studied......Page 284 2.2 The production process......Page 286 2.3 Modernization......Page 288 2.4 Selecting and adopting flexible automation: reasons and procedures......Page 292 3.1 Changes in setting-up time and batch size......Page 294 3.2 Scope and economies of scope......Page 297 3.3 Changes in plant and firm scale......Page 298 3.4 Factors affecting scale......Page 300 Capital unit costs......Page 301 Labour unit cost......Page 303 Maintenance and energy costs......Page 306 R&D, marketing and administrative costs......Page 308 4.2 Changes in profits and delivery times......Page 310 5 Conclusion: flexible automation, scale and location of production in Venezuela......Page 312 Notes......Page 315 1.1 India’s industrial policies and development......Page 317 1.3 Technology diffusion......Page 320 Tractors-India......Page 322 Pumps-India......Page 323 CNC machine tools......Page 324 CAD and computers......Page 325 2.3 Reasons for the introduction of CNC machine tools......Page 326 2.4 Production process employed by sampled firms......Page 329 2.5 Selection of CNC machine tools......Page 330 2.7 Flexible automation and organizational changes......Page 331 Setting-up times......Page 333 Batch size......Page 334 Product diversity......Page 335 3.2 FA and scale......Page 337 4 Production costs......Page 338 5 Conclusions......Page 344 Notes......Page 346 1.1 Historical developments......Page 348 1.2 Developments in Turkish manufacturing......Page 350 1.3 The Turkish engineering industry......Page 351 1.4 Diffusion of flexible automation in the Turkish engineering industry......Page 354 2.1 The case-study firms......Page 355 Autoparts firms......Page 356 Capital equipment firms......Page 361 Customized product firms......Page 362 2.3 Other factors related to the diffusion of flexible automation......Page 363 3 The impact of flexible automation on scale......Page 364 Machine adjustment times......Page 365 Batch sizes......Page 366 Product diversity and product scale......Page 367 Machining times......Page 370 Plant output......Page 371 Other factors related to plant scale......Page 372 4.1 Changes in the level of unit costs......Page 374 4.2 Changes in the structure of unit costs......Page 377 5 Conclusions......Page 380 Note......Page 382 1.1 The industrialization process......Page 383 1.2 The machine-tool industry......Page 384 1.3 The policy climate and institutional support for flexible automation3......Page 385 1.4 Applications and diffusion of flexible automation in manufacturing......Page 386 1.5 Factors affecting diffusion......Page 388 2.1 The firms studied11......Page 389 Motivation......Page 391 Selecting flexible automation......Page 392 Integration in the production process......Page 396 Level of automation......Page 397 2.3 Problems encountered with flexible automation......Page 398 2.4 Flexible automation and organizational change......Page 399 Setting-up time......Page 401 3.2 Product diversity (scope)......Page 403 4.1 Plant scale21......Page 405 4.2 Costs of production......Page 407 5 Summary and conclusions......Page 408 Notes......Page 412 APPENDICES: GLOBAL DATA......Page 415 BIBLIOGRAPHY......Page 448 INDEX......Page 471