Yoon Administration's National Task 'Smart Factory' Faces Issues from First Year of Advancement

Doosan Expands Support for Partner Companies' Smart Factory Construction
(Seoul=Yonhap News) Doosan announced on the 24th that it will help digital transformation of production sites by applying the Manufacturing Execution System (MES) to 10 partner companies in 2020 and support the establishment of automated production lines through the introduction of collaborative robots.
The photo shows a collaborative robot introduced by Doosan to build smart factories for partner companies performing tasks at a production site. 2020.11.25
[Provided by Doosan. Redistribution and DB prohibited] Photo by Yonhap News

[Asia Economy Sejong=Reporter Dongwoo Lee] There are concerns that the Yoon Seok-yeol administration's national agenda of advancing smart factories will inevitably face setbacks from the first year of its term. Although the government aimed to achieve 40% advancement in smart factory construction over five years, next year's budget has been significantly cut.

According to data from the office of Kim Jeong-ho, a member of the National Assembly's Industry, Trade, Energy, and Small and Medium Enterprises Committee from the Democratic Party of Korea, the government's budget for new smart factory advancement projects next year is 99.3 billion KRW, a 67.9% decrease compared to the previous year (about 310 billion KRW). This budget can advance 520 smart factories next year. Compared to the need to advance an average of 1,000 new factories annually to achieve the 40% target by 2027, this is only about half.

A smart factory refers to a factory that applies information and communication technology (ICT) combined with digital automation solutions in production processes such as design, development, manufacturing, distribution, and logistics. To advance smart factories, technologies must be introduced that analyze not only equipment and material data but also industrial environments and market conditions.

This project was also a key initiative during the previous Moon Jae-in administration. Budgets of 135.1 billion KRW in 2018, 398.8 billion KRW in 2019, 456.7 billion KRW in 2020, and 437.6 billion KRW in 2021 were invested. As of last year, 25,039 smart factories were established, among which 5,468 were advanced to stage 1 and 343 to stage 2.

The problem is that with the reduced budget next year, it is inevitable that the government's goal of advancing at least 4,500 smart factories over five years will face setbacks. Considering that stage 1 advancement requires 200 million KRW and stage 2 requires 400 million KRW per factory with government support, it is estimated that an annual budget of 240 billion KRW is needed to achieve the goal.

In response, the Ministry of SMEs and Startups stated that the budget was cut due to a strategic shift from quantitative expansion of smart factories to advancement.

The smart factory project is a representative private-sector-led manufacturing innovation policy project that has invested 1.677 trillion KRW over nine years since 2014. Major advanced countries are increasing related budgets to strengthen their manufacturing competitiveness. The United States doubled its manufacturing enhancement budget from 170 million USD this year to 370 million USD next year, and Germany increased its budget from 57 million euros last year to 115 million euros this year.

Assemblyman Kim pointed out, "The government needs at least 1,000 advanced factories annually to keep its promise on the national agenda, but it seems unable to fulfill this from the first year of its term."

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