[2022 National Audit] Kim Kyung-man "Smart Factory Budget Cuts Cause 1 Trillion Won in Sunk Costs"

[Asia Economy Reporter Kim Bo-kyung] Kim Kyung-man, a member of the Democratic Party of Korea (photo), claimed on the 13th that if the government reduces next year's smart factory distribution project, it will lead to a wave of closures among smart factory system maintenance companies, resulting in sunk costs of about 1 trillion won.

Kim, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee, stated during the national audit on the same day, "If the budget for the distribution and expansion of smart factories next year is drastically reduced to about one-third of this year's level, sunk costs close to 1 trillion won will occur," and predicted, "It will lead to a wave of closures among smart factory system maintenance companies." The government reflected a budget of 145.7 billion won for next year's smart factory distribution and expansion, which is about a 60% decrease compared to this year.

Kim opposed the budget cut, saying that companies introducing smart factories have achieved remarkable results in process improvement. According to data submitted by the Korea Technology and Information Promotion Agency for SMEs, from 2014 to 2019, the average quality improvement rate of companies that introduced smart factories exceeded 42%, with a ▲productivity improvement rate of 29.3%, ▲delivery time improvement rate of 16.82%, and ▲cost improvement rate of 15.95%, showing excellent effects across overall quality management.

Kim said, "I strongly regret the indiscriminate budget cuts and disparagement of project outcomes for a project included in the national agenda," and pointed out, "It is problematic that while the government actively pursues tax cuts for the wealthy, it treats the smartization and digitalization of small and medium manufacturing industries lightly."

This content was produced with the assistance of AI translation services.