Study: Labor market crisis forcing companies to invest in digitization

Aurel Dragan 07/06/2019 | 12:43

Two-thirds of Romanian companies are determined to invest significantly in digitization over the next 3 years, with 80 percent facing, among other things, the problem of skilled human resources. 79 percent target investment in production, 50 percent in control and 46 percent in planning, according to a survey of more than 300 companies in the Romanian industry.

The problem of lack of work-force affects the entire Romanian labor market, and the companies in the industry are increasingly moving towards technology, automation and process digitization, according to the conclusions of the study of “Digitization in Romanian Industrial Companies”, conducted by Cult Market Research, at the request of the Industrial Academy.

According to the study, most companies (74 percent) believe that digitization, represented by new technologies, robotics, cloud services, intelligent systems and Big Data, is the main factor contributing to the efficiency of the business. In addition to digitization, modernization and training of the workforce are also aspects that can increase the efficiency of companies, in the opinion of 61 percent of companies.

49 percent of the companies rely on digitization for process reorganization, 25 percent for improving working conditions, and 15 percent for mechanization.

For approximately two-thirds of the industry, digitization is a recent priority, which has begun to emerge over the last 3 years.

Large companies with over 1,000 employees and significant budgets interested in investing in the digitization of production (79 percent), activity control (50 percent) and planning (46 percent) are at the forefront. 28 percent of respondents rely on digitization for general operating processes and 26 percent for decision support.

“The Fourth Industrial Revolution, Generic Industry 4.0, is still on the road in Romania. Although in the early stages of digitization implementation, industry companies regard digitization as the primary way to increase business efficiency. However, companies do not take full advantage of new technologies,” says study findings.

There are insufficient financial and infrastructure conditions – only one third of the industry’s companies have the budgets and infrastructure needed to digitize their business. Beyond budget and infrastructure constraints, firms face a lack of people trained in the field.

Technology is for differentiating in the future

The first industrial revolution was mechanization, water and steam power. The second revolution followed, characterized by mass production, assembly lines and electricity. The third industrial revolution was the automation and the use of computers.

Nowadays, the global economy is in a new phase, Industry 4.0, the fourth industrial revolution, characterized by the computerization of industrial processes, which leads to the creation of a merger between the physical world and the digital world. Industry 4.0 essentially involves a partial transfer of decision-making autonomy to cybernetic systems. Currently, Industry 4.0 focuses its efforts on innovation and the creation of new business models.

And Romanian businesspeople seem to understand that in a global economy, competitiveness and performance will be conditioned by how they will implement new technologies. Currently, one in four companies is investing in digitalisation continuously, and 3 out of 10 companies have made an investment plan for digitization.

The study shows that most industrial companies have declared their intention to invest in digitization in the future, even if they have not yet made any concrete plans. The proportion of companies seeking investment over the next 3 years reaches 97 percent.

In the forefront lies the IT industry, which invests the most in continuous digitization.

For comparison, the textile industry is more confronted with the lack of qualified work in digital skills and financing difficulties compared to other industries. On the other hand, the electrical and electronic equipment industry has the most financial resources to carry out digitization (according to its own needs, according to its own assessment),

“The technologies currently in place are efficient, but Industry 4.0 brings innovations that impart a fast-paced change of pace that the Romanian industry has to follow in order to stay competitive. At present, planning, production and control processes are the most prioritized areas for digitization implementation. This is a natural one as companies have begun and continue to digitize in order to increase their efficiency, have better control over their work and reduce work times,” the study’s findings show.

Robotization and Big Data

According to the results of the study, the companies in the Romanian industry currently only partially implement the technologies of the 4.0 industry.

The situation is a good one on process optimization, data collection and analysis, automation, networking, and the internet, being notions present in over 50 percent of companies.

However, there is room for improvement in other key issues such as robotics, cloud services, digital competences, intelligent and Big Data systems.

“The Romanian companies in the industry are aware of the beneficial impact of digitization on the activities. However, implementation of digitization in the Romanian industry is at a slow pace. The lack of necessary resources (human, financial, time, etc.) is mentioned by representatives of industry companies. Thus, not having all the resources needed to implement digitization, industry companies are forced to make a selection of priorities,” says the study’s findings.

Only 42 percent of company representatives have reported estimates of investments in specific digitization projects. The other companies either do not have such projects, or budgets cannot be estimated, budget allocations being made according to other criteria.

77 percent of companies are focused on process optimization, 75 percent on data collection and analysis, 72 percent mentioned process automation, and 69 percent – connecting devices to the network

“Digitization refers mostly to data collection and analysis, process improvement, IT security and transparency and control of operations. In the case of industry companies, digitization refers less to replacing human resources through mechanization, remote control of processes and the expansion of the company’s electronic systems,” the study’s findings show.

The study of “Digitization in Industrial Companies in Romania” was conducted by Cult Market Research, commissioned by the Industrial Academy, between October 2018 and March 2019 by the PAPI (face-to-face paper questionnaire) and CAWI online questionnaire).

The survey responded to 300 representatives of companies from different industrial branches, from the machinery and machinery industry, the automotive industry, the wood processing industry, the food industry, the textile industry, the metallurgical industry, the IT industry, the plastics industry, etc.

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