GOTHENBURG -- Swedish bearings maker SKF is betting on automated manufacturing to help it stay global market leader in an industry hit by sluggish demand and weak pricing, with its first fully automated assembly line set to be running by early 2017.
The move by the world's largest maker of industrial bearings shows how even traditional engineering firms, grappling with years of tepid global growth, are seeking to harness new technology to cut costs, boost efficiency and win new business.
SKF has invested 190 million crowns ($22 million) in its new Gothenburg product line for bearings used in industries such as car making, mining and wind energy. It says it will need 20 staff compared with 100 previously, while raising productivity.
"It is a huge step. And it is also on a product line which is a core product line for SKF in Sweden," Luc Graux, SKF's head of bearings operations and manufacturing, told Reuters.
The contrast is striking.
In the new area, where SKF is doing early production runs, the new machines can instantly adjust themselves according to the individual specifications, such as the size, shape and quality, of the part being made. Automated vehicles will soon be on patrol, serving parts for the different manufacturing steps.
A few steps away, staff are still using hammers in a manual product line.
Whereas resetting an assembly line in Gothenburg could previously take as much as four hours, SKF has now virtually eliminated reset time on some of the new machines, allowing it to take on smaller custom-made orders and slash lead times.
With around 45,000 employees across the world, greater automation could have far-reaching consequences for jobs at SKF, as well as the company's overheads.
And Graux, who oversees about 60 manufacturing sites worldwide, said more factory revamps were already in the works.
The setup in Gothenberg, for example, is being replicated at a U.S. plant in Flowery Branch, Georgia, where SKF announced a 150 million crown investment in June.
"We are working on three other models, for different product lines for different countries, preparing that with the same thinking," Graux said. "We believe from a management perspective that we can run three projects a year of this size."
SKF, whose like-for-like sales have dropped for five straight quarters, has embarked on a cost-cutting campaign during CEO Alrik Danielson's first 20 months at the helm, consolidating plants and cutting thousands of staff.
Shares in the company, which counts Germany's Schaeffler as its main rival, have fallen 14 percent during that period, underperforming a 10 percent rise in the STOXX Europe 600 Industrial Goods & Services index.
But in a sign the firm is looking to improve manufacturing as well as cut costs, Graux was promoted to group management earlier this year, and he has high hopes that in five-to-ten years SKF's manufacturing will look "radically different."
"Today it is a pilot. But by then it will be standard and maybe we will be thinking about the next thing, whatever that is."