Motor industry shows how humans can use AI productively
There’s no disputing that Covid-19 has upended the world and our national economy. The discussion now is about the extent of that disruption, and how to adapt to and recover from it. The nation’s best economic minds are debating how to do so.
But as much as Covid-19 has changed the world and the world of business, some fundamentals remain. One is the need for economies to earn foreign exchange. Nobody has a silver bullet or a panacea, but harnessing the power of exports is one solution.
National Association of Automobile Manufacturers of SA (Naamsa) figures show the value of automotive exports to the economy: despite a falling domestic new-vehicle market that in 2018 reached its lowest sales level since 2010, vehicle exports again showed exceptional growth in 2019 to support the export-orientated industry’s overall performance.
A record 387,125 vehicles were exported in 2019, up from the 351,139 vehicles of 2018, with a record export revenue figure of R148bn. Nearly 64% of vehicles made in SA in 2019 were exported.
Then came Covid-19, striking exports as it hit all aspects of the economy: the first half of 2020 saw 73,419 fewer vehicles exported year on year. The 43% fall translated into a R21.3bn drop in revenue, from R67.2bn in 2019 to R45.9bn in 2020.
But despite that admittedly massive impact, a recovery is under way: Ford Motor Company of Southern Africa (FMCSA) was the top SA vehicle exporter for September, with 6,995 units shipped to its more than 100 global markets. This was an increase of 11.3% compared to August, and our highest export volume for the year.
On the domestic front, FMCSA notched up 3,679 sales, a substantial 23.6% improvement compared to the preceding month, and the best volume since February 2020. It is heartening to see markets finally recovering to the volumes that were typical pre-Covid.
The second strength to which we’re playing is the fourth industrial revolution (4IR), which will continue to improve our productivity and innovation. It’s become a bit trendy for some pundits to sniff at 4IR or Industry 4.0 as a buzzword, and yes, some of our society’s most intractable challenges can’t be fixed directly by robots. But that cynicism ignores the extent to which Industry 4.0. is changing the way we all live, work and play.
Over the past 10 years, we’ve already seen huge benefits for productivity and job creation thanks to the technologies that are ushering in Industry 4.0. We’ve used big data, robotics, and artificial intelligence (AI) for a long time already. It’s part of what we do, and it’s had a sizeable effect on our ability to compete globally, contradicting the view that SA stands no chance as Industry 4.0 arrives.
Within Ford, we compete with other plants for manufacturing business. SA went head-to-head with Ford plants in Thailand and South America to manufacture vehicles for the Mexican market. Only if our cost per unit is better will we get that piece of business, and Industry 4.0 enables us to compete with our peers.
Anyone who needs convincing of the efficacy of Industry 4.0 should consider the statistics: in 2009 FMCSA was building about 45,000 vehicles a year. Today, thanks to maximising the efficiency of both robots and humans, we have an annual capacity of 168,000 and rising. A decade ago we only used to work a single shift, of about 1,200 people. We did small volumes of several vehicles, only for the SA market.
Today we employ about 4,300 people, working two — and at times three — shifts, and we export roughly 80% of what we build to more than 100 global markets. What’s more, we’ve brought down the cost per unit in the process, which makes us even more competitive.
Our operation is living proof that when humans and AI work together, a business can flourish and robots can aid rather than replace human capacity. Robots allow engineers to focus on more complex tasks, making us more productive.
By replacing labour activities with faster, more accurate intelligent automation, augmenting workers as they perform higher-value tasks and making capital stock more productive, AI creates an opportunity to bring new growth to the industry while creating a new relationship between man and machine.
Since all our plants have the same technologies at their disposal, the competitive difference lies in the human touch. And I can tell you from working in several Ford business units around the world that our SA workforce is absolute gold.
There’s no chance of robots taking over manufacturing — or any other industry — completely. On a typical day at FMCSA’s Silverton plant you will solve about 45 issues, some of which can have 20 to 30 root causes that a human being can identify. No machine today can do that for you.
About 65% of our automated process will have non-standard work required. There will always be subtle differences for which you can never replace a human applying just their mind to make decisions.
But back to the world, society and doing business: we’re in the midst of a transportation revolution, a mobility renaissance. Could Industry 4.0 help industry navigate and meet the needs of a society undergoing changes in how and where people live and work, and how they travel? We firmly believe that to be so.
After the hammer blow of Covid-19 automotive exports remain a crucial aspect of SA’s economic recovery and the sector’s efficiency — through Industry 4.0 and other components — will be vital to that.
Despite the 40% decline in vehicle exports to the continent for the first half of 2020, Africa’s potential remains a priority focus for the domestic automotive industry. SA-built bakkies, in particular, continue be popular with new vehicle buyers on the continent. About 85% of the 6,934 vehicles exported into Africa during the first half of 2020 were bakkies, with Kenya, Zimbabwe, Ghana and Nigeria topping the list of the 30 export destinations in the continent.
Large infrastructure projects linking African countries and increasing intra-African trade could be the platforms to launch the continent into a new era of prosperity. Investment in infrastructure tends to increase business confidence, and simultaneously lowers transaction costs by making it easier for businesses to move people, goods, and services.
In this regard, the implementation of the African Continental Free Trade Area (AfCFTA) could mark the beginning of a promising decade for Africa. Unfortunately, due to Covid-19 the implementation of the AfCFTA, which aims to create the world’s largest free trade bloc, has been postponed from July 1 2020 to 2021.
So recovery will take time. We live in a world in many ways unrecognisable from a year ago. We’re living through the greatest “disruption” of our time, to repeat another buzzword. Businesses that innovate and know which strategies are fundamental to success and which must be amended or abandoned, will weather these times and thrive.
• Berry is vice-president of operations at FMCSA.
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