New economic trend: deautomization of industry?

Toyota's latest export: Factories on the cheap, for China

FORTUNE/The Truth About Cars -- Today, I saw a new, and so far the finest specimen of Japan's new export products: A car factory. Recall the press about a new Toyota factory in the Miyagi Prefecture with a U-shaped assembly line where the assembly time is cut down to a third? Not only did they get it wrong. They missed the best part of the story: Budget car factories, ready for export.

The article describes the opening of Japan’s latest car factory, and coincidentally the first new Japanese auto plant in nearly 2 decades. The interesting part is that it is very simple with little automation. Toyota figures that 60% of a typical vehicle’s cost is the plant (and its lifecycle cost), 25% is raw goods and 15% is labor. The idea here is to design simple inexpensive modular car plants for places like China and Indonesia where labor is cheap (note the two PLA officers present at the plants opening) and to shift that proportion back to labor cost. As the article points out, if people are cheaper than robots in Japan, just how much cheaper are they in China?

What does this mean for the future of industry though? The history in industry in the first world has been the mechanization of labor intensive processes. A steel mill that used to employ 10,000 now does the same work with just 500. Mechanization is primarily what keeps developed economies competitive with developing ones for value added products.

Does this mark the begging of a trend where this key advantage can be eliminated, speeding the already steep rate of first world deindustrialization?