The future of 'Made in China': Industrial robots replacing dwindling workforce

The factory looks like many others in China's heavily industrializedGuangdong province crates and scrap metal outside, vats of steamingchemicals and rows of stainless steel parts inside.

Workers are dwarfed by the mammoth metal presses they run, loud andgrimy like something out of the industrial revolution.

Indeed, these plants have been the foundation of China's manufacturingrevolution, churning out more than $2billion worth of exports every single day inthis region alone.

This factory belongs to Ying Ao Kitchen Utensils, which makesdesigner stainlesssteel sinks for North American consumers, including about 150,000destined for Canadian kitchens every year.

But look past the row of men and women folding, welding and sorting theshiny sinks, and you'll see another revolution firmly taking hold here:China's robot revolution.

In two back rooms, giant, orange robotic arms have replaced human workers. Theypick up the half-finished fixtures, twirl them in the air and push themagainst wheels that grind, buff and polish. A few minutes later, they repeatthe moves with another sink. And then another. Automated carts swing byand collect the finished products.

So far, nine of these robotic machines have taken the place of 256 workers here.

"They cost less and take up less space. And they're far easier to manage,"said Chen Conghan, deputy manager of the company. "Workers get sick. They have down days. They make mistakes. Robots can work 24 hours a dayand always finish the job on time."

Supplyof cheap labour drying up

The industrial robotsmight also solve a growing problem:China's dwindling supply of cheap,low-skilled labour. For three decades, that was the magic ingredient thatpushed this economy to become the secondbiggest in the world. Millions oflabourers left the countryside and flooded the industrial cities, liftingthemselves out of poverty and their children into the middle class.

But now, there aren't enough of those children. The population is aging. Theso-called demographic dividend is fading.

"It's becoming harder and harder to recruit workers and to keep them," saidChen."This work is intense and tiring, so we have to pay people more andmore to lure them and keep them."

The wage in this plant is around $1,200 amonth, more than double the average in this region.

Young people, especially, are turning away from the tedious, repetitivefactory work their parents sought.

And as overall wages have been skyrocketing in China at a rate of 10 per centa year, the cost of industrial robots has been plummeting. It cost the Ying Aofactory about $4millionto install the nine robots, about the same amount as a year's worth of salaries for the 256 workersthey replaced.

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The cost is expected todrop by a further 20 per cent worldwide in the next decade, according to astudy by the Boston Consulting Group.

"This is the future of 'Made in China,'" said Zhang Tao, the deputy managerfor intelligent manufacturing in the hub city of Foshan. "I think it may betoo optimistic to say robots will replace humans in three years but youcould say there will be much more co-operation."

China buying up robot makers

The shift from human to machine isn't just a business move by individualfirms. It's a fundamental shift in labour for the world's biggestmanufacturer, a national movement spurred on by political slogans anddirectives. Chinese President Xi Jinping has called for a "robot revolution"as thegovernment has promised generous subsidies. Guangdong province alonehas set aside almost $200billion for the transition.

For the past three years, China has been on a shopping spree, becomingthe biggestbuyer of industrial robots in the world. By 2018, it is expected to bepurchasing150,000 of the machines annually, according to the International Federationof Robotics, an industry group based in Germany. That's more than all the other big users of industrial robots Japan, South Korea, Germanyand North America combined.

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China stilldoesn't use as much automation as these countries, but it's catching upquickly.

China isn't only buying the machines. It's also buying the foreign companies thatmake them. Just this month, Chinese appliance giant Midea paid$6billion for more than 85 per cent of Germany's Kuka, one of the biggestmakers of industrial robots in the world.

The German government was hesitant to let the deal go through, worriedabout the transfer of technology to China, but no domestic buyer wasinterested.

One way or another, the robots are moving in. Two dozen of them fill aGuangzhou workshop, where technicians program each for different tasks.

One welds shelves, another polishes metal chairs. Others cut, drill andassemble barbecue parts.

And what of the workers whose jobs disappear with each new robot? Theyare slowly being retrained.

Jia Jinfu struggles with the coloured wires in front of him, but he isdetermined to finish the program at Suzhou Technical College and becomean electrician. At 56, he was laid off from a local chemical plant when itmoved into a modern, more automated facility.

"This kind of labour turnover will be the trend," he said with a sigh. "Low-end jobs will keep disappearing, and we'll need to know special skills."

Next to him, Hou Bingtao agreed.

"My friends who don't get trained will becompeting with machines," he said. "I will have a better life through thislearning until I get replaced by a robot, as well maybe in 10 or 20 years."