Funding set to smarten 900 small manufacturers

The government said Tuesday it would spend 4 billion won ($3.4 million) to help small manufacturers around the country automate their production systems. The intent is to make them more cost competitive, stimulate sluggish exports and stimulate domestic demand.

The Ministry of Trade and the Ministry of Strategy and Finance said the money will come from the government’s supplementary budget and would be available to about 900 manufacturers to convert their production lines to “smart production systems.”

Provincial and local governments will contribute an additional 10 billion won in total to the project, the ministries said.

The ministries said 280 factories have already automated their systems; if this latest push is successful, Korea would have nearly 1,200 small “smart factories” by the year’s end. That means products are assembled by software-controlled robots.

Rather than simply using isolated programmable machines, smart factories use networks of linked robotic processors that can communicate with each other, thus saving power and allowing machines to alert a human if something goes wrong.

According to the Korea Chamber of Commerce & Industry, the 280 small manufacturers who have implemented smart systems were able to reduce the number of defective products by 33 percent and lowered production costs by 23 percent. Participating companies said they are now able to shorten production time by an average of 27 percent.

The North Gyeongsang Center for Creative Economy and Innovation, operated by the Samsung Group, and the Gwangju Center under Hyundai Motor, are now helping parts manufacturers in those areas to set up smart production systems.

With the new funding, all 17 creative economy centers will begin to supply the required software and hardware. Factories will be converted in stages, beginning with production management systems, and then enabling communications between the plant’s automated machinery.

The government will start receiving applications from interested manufacturers today; the 900 recipients will be chosen by the end of the month. Money will begin to flow in early September.

The United States, the ministries noted, has seen the return of some of its manufacturing that fled to low-wage nations in the past few decades; they cited Ford and GE as examples.

BY KIM JI-YOON [kim.jiyoon@joongang.co.kr]