The ins and outs of industrial automation in Egypt: Last week, we looked at how Egypt’s manufacturing industries are faring when it comes to industrial automation. We found that the industry as a whole is late to the shift by global standards, despite showing strong potential and capacity for automation. In Part II, we look at the companies that are embracing the shift, diving deeper into the drivers behind automation for manufacturers and the effects it has had both on companies’ internal processes, and on their organizational culture.

Here’s what we’ve found: The initial cost of purchasing machinery and equipment for automation is hefty, Industrial Development Group Marcom Manager Monica Salama told Enterprise. The average cost for new equipment can range widely from USD 28k for a standalone robotic arm to hundreds of thousands of USDs and up for a complete industrial automation system, according to Swedish automation company SDC.

But once you have the infrastructure in place, maintaining and upgrading the machinery and software is much less costly, cement manufacturer LaFarge Egypt’s Industrial Director Niels Ledinek told us. LaFarge built its plants with infrastructure that enabled easy implementation of automation 20 years ago, which helped to easily upgrade the facilities later on as soon as new technology was introduced, Ledinek added. GB Auto also first installed robots in its plant over a decade ago — when robots cost near USD 1.5 mn — and has now automated most of its assembly lines at a much smaller cost, Chief Manufacturing Officer Ramez Adeeb told us.

The mn-USD question is: Is it worth the investment? The overwhelming consensus from those who implement it is yes. Our ROIs from automation cover perhaps up to a year in terms of efficiency, with little capital investment, Ledinek said, adding that energy efficiency gains are 5% a year, which translates into beyond USD 1 mn in energy savings per year.

Robots also save about 70-80% of human errors in manufacturing in our experience, Adeeb added, which means production levels are optimized in both volume and quality, and waste is reduced. Robots also help save raw material, due to their precision and the removal of incidences of error, he noted, adding that the company now saves about a third of the amount of car paint that would be used manually. For Eva Pharma, automation helped the company save on compressed air generation — a significant utility cost — by ensuring there are no leaks, CEO Riad Armanious said.

Some even report zero product rejects and defects: Our automated facilities have led to maximum productivity with almost zero defects, Armanious said. Alert systems allow for quick intervention before failures can occur, which reduces failure rates and applies functions like environmental controls to avoid complications, especially in sterile operations, he added.

Sustainability also plays a role in manufacturers’ decisions to automate: Many companies — especially corporates and multinationals — are driven to automate in order to meet sustainability pledges and ensure their performance aligns with environmental, social and governance (ESG) expectations, IBM General Manager Marwa Abbas told Enterprise. The machines we provide to manufacturers all have a carbon emission quota that we monitor for our client as part of our larger net-zero emission pledge, Abbas said, noting that this alone helps companies monitor and cut back on emissions.

As does improving the quality of exports: Any manufacturing company producing or manufacturing on behalf of a large corporate firm or multinational will likely have automated its factories in order to comply with global manufacturing standards, especially when exporting, Abbas explained. Exporting pharma products, for instance, requires compliance to certain data integrity regulations that can only be met by automating our processes and having in place a strict quality control regimen, Armanious explained, so automating Eva Pharma’s factories actually helped open up new markets for export.

But how much do companies actually invest in automation? About 15% of our annual budget goes towards automation, Armanious said.

For other firms, investments are allocated on an as-needed basis: The numbers are running all the time, because it really depends on the company’s needs and the rise of new automatable technologies, which you can’t really predict, Adeeb explained. We don’t really budget anything for digitalization, Ledinek echoed. We look at the cost and benefits of any new solution, and if it can get us really fast rates of return in less than a year for example, we do it regardless of whether or not it is budgeted, because we will be getting the money back fast, he added.

Some are prepared to shell out investments of any size in order to make the shift. Abou Ghaly Motors’ new assembly plant — which is expected to come online within five years — will be entirely automated, and we have no problem investing whatever is required to ensure the plant is fully automated, the company’s group commercial director, Tamer Kotb, told Enterprise.

Automation also reshaped organizations’ hiring processes: We’re starting to hire more people with a digital background like data analysts or scientists to ensure proper application of automated systems and to come up with ways to develop our digital solutions based on the pain points we have, Ledinek said. In Eva Pharma’s case, automation has helped absorb the additional work needs generated by expansion, and helped them save on future hires, Armanious told us. One cartoning machine it purchased, for example, made up for some 15 new operators the company would have needed for the task.

Most are reassigning their employees to managerial or supervisory roles: Current human resources were reassigned for automation control or management activities rather than physical activities, Armanious and Adeeb both explained. Our focus has shifted to hiring talent for roles that “only humans can uniquely do,” Armanious added.

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Your top industrial development stories for the week:

• Eastern to let Philip Morris make smokes in Egypt: The Egyptian arm of tobacco giant Philip Morris is on course to manufacture cigarettes in Egypt after reaching an agreement with Eastern Company.
• Alternative fuels requirements for cement factories? Alternative fuels could soon need to account for at least 15% of cement factories’ energy consumption under a proposal being studied by the Environment Ministry.
• Egyptian exporters want to open RUB bank accounts: The Egyptian Businessmen’s Association wants Egyptian businesses to be able to open RUB bank accounts, in order to maintain trade between the two countries amid western sanctions imposed on Russia for its invasion of Ukraine.