What are the Costs Associated with Industrial Automation?

Jun. 23, 2025

What are the Costs Associated with Industrial Automation?

The newest wave of automation is driven by the same factors that first brought robotics and automation into the workplace: to perform highly complex tasks at a high rate of speed, while improving quality by eliminating errors and reducing variability. Automation also aims to cut manufacturing costs by replacing increasingly expensive people with more cost-effective machines. Today’s most advanced automation systems have additional capabilities, however, enabling their use in environments that have not been suitable for automation up to now and allowing the capture of entirely new sources of value in manufacturing

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Although automating production processes can be extremely cost effective, the initial capital investment with the cost of industrial automation can be significant. This tends to make smaller firms reluctant, meaning they lag behind, in the long term. However, the investment can frequently be paid off or provide a return on investment within 2-3 years, even for smaller firms.

It’s important to note that systems do not have to be fully automated and incremental automation and innovations can be implemented over time to reduce the costs long term. There has been an acceleration in the growth of fully automated production facilities as cheaper, more capable and flexible technologies emerge overseas.

Lower operating cost after installation

Industrial automation eliminates healthcare costs and paid leave and holidays associated with a human operator. Further, industrial automation does not require other employee benefits such as bonuses, pension coverage etc. Although it is associated with a high initial cost it saves the monthly wages of the workers which leads to substantial cost savings for the company. The maintenance cost associated with machinery used for industrial automation is less because it does not often fail. If it fails, only computer and maintenance engineers are required to repair it.

High initial cost

The initial investment associated with making the switch from a human production line to an automatic production line can be very high. Also, substantial costs are involved in training employees to handle this new sophisticated equipment.

Savings from high quality & high flexibility

Automation alleviates the error associated with a human being. Further, unlike human beings, robots do not involve any fatigue, which results in products with uniform quality manufactured at different times.

Adding a new task in the assembly line requires training with a human operator, however, robots can be programmed to do any task. This makes the manufacturing process more flexible.

Increases Efficiency & Handles Complex Tasks

Automated production machines can be programmed to complete their functions the same way every time. There’s almost no variation in the way they operate from product to product, which allows assembling to be performed uniformly and consistently, helping to save money. The use of automated production lines is scalable from miniaturized print circuits to automobiles, and provides a predictable output continuously, allowing time for employees to focus on more meaningful responsibilities. Beyond that, automation can address complex situations that humans are not capable of.

Final Thoughts

Generally, in the cases that we see, the ROI when looking to automate manufacturing processes outweighs the reasons to not invest. The overall value of automation is to decrease costs and increase revenue. This is done by increasing the throughput, improving the quality, increasing repeatability and reducing the labour related costs. Your customers want it faster, better and cheaper. Your competitors are closing in and the stakes are getting higher for sustained profitability.

Mitchell Machine is a custom machine builder in Springfield, Massachusetts. To request a quote for automation or any of our other myriad manufacturing solutions, call (413) 749-.

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We enjoy new manufacturing challenges and offer confidential, technical and budgetary reviews of your planned automation projects. Please contact our application engineers to discuss specifics of your products and processes today.

5 Reasons Why Production Automation May Increase Your Costs

You have done back-of-the-envelope calculations. You want to purchase a machine for one million RMB, for a useful lifetime of 10 years. When you take the depreciation and the electricity consumption into account, it will increase your costs by 150,000 RMB a year. This is much less than the current costs of a manual production line.

Are you interested in learning more about Automatic Production line? Contact us today to secure an expert consultation!

Should you do it? Not yet!

First you should think of other costs induced by the introduction of automation in your factory. Keep reading as we explore 5 reasons why production automation may increase your costs...

1. Interest

Most Chinese factories run low on cash, so they need to borrow money to finance their investments. They generally pay 5-12% interest on capital expenditures.

Let’s say you purchase a machine for one million RMB, at an interest of 8% a year. On the first year alone, that’s a cost of 80,000 RMB a year.

2. Replacement Parts

Complex equipment needs new parts in order to remain in its original condition years after it was purchased. An entire field of study (reliability-centered maintenance) developed around this topic. The key is to predict when a part needs to be replaced or checked & maintained, based on estimates of ‘mean time to failure’ and ‘mean time between failures’.

The bottom line is, you will need a budget for this. Don’t cripple an old broken machine – it might cost you much more in the long run.

3. Hiring highly-skilled engineers

Production automation can help you eliminate operator-level positions. However, high-tech machinery will require engineers for setups and maintenance. You should not only take into account their salaries, but also their initial training, and the cost of hiring and training their replacements once they leave.

4. Watching the machines

You might think, a machine is supposed to work on its own. And yes, generally that’s the case. However, you have probably noticed a 1:1 ratio between operators and machines in most Chinese machine shops. This might also be necessary in your factory.

Why does one operator have to tend to each working piece of equipment? Because the cost of a machine working improperly is extremely high. Imagine a machine that processes 200 meters of high-quality stainless steel sheets an hour. If a blade breaks and nobody notices it for a day, up to 2,000 meters of metal might be wasted. That’s much higher than the monthly cost of having someone look regularly at what happens and stop the machine when there is an issue.

The concept of human-machine interaction – what Toyota calls ‘jidoka’ – is pretty complex. Unless you can detect automatically and immediately when something goes wrong on your equipment, you might have to hire “watchers”. They can take care of some logistical tasks, but most of their time will be spent observing and checking…

5. Quality issues

As I noted above, production automation doesn’t eliminate quality issues. It merely changes their nature and the speed at which they appear. Some machines make 100 pcs a minute – imagine all the scrap if they get off-spec for 10 minutes, while people get a break, go to washroom, or hide and smoke a cigarette.

The sad truth is, you probably won’t be able to avoid a massive quality issue once in a while.

If you want to learn more, please visit our website High Efficiency Double Head CNC Lathe.

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