Automation spending risks stalling without skilled workers
The region's appeal is shifting from cheap labour toward technology readiness and supply-chain resilience.
Southeast Asia's manufacturers are pouring capital into automation, but a shortage of skilled workers, fragmented regulation and immature data practices could stop that spending from delivering the productivity gains investors expect.
Foreign investment, government-led digitalisation and China-plus-one strategies are drawing production into Vietnam, Thailand, Malaysia, Singapore and Indonesia. The shift is pushing factories towards specialised manufacturing, integrated systems and higher-value output.
“It’s no longer a strategy of leveraging low labour,” said Stephane Pianigiani, business unit manager at Storopack Hong Kong Limited. “It’s moving to more specialised products, integrated solutions, and more cost-effective and efficient solutions.”
The transition is raising execution risks. Manufacturers must recruit workers capable of operating advanced systems whilst managing different regulatory requirements across regional supply chains.
Vanessa Moreno, EPC and large project pursuit manager at Rockwell Automation, said companies also need to maintain productivity, strengthen cybersecurity and improve visibility as they connect more technologies. Higher energy costs and continued supply disruption are adding pressure.
Many firms have invested in digital tools without developing the processes, skills and data-led culture required to use them effectively.
“Technology alone is not enough,” Moreno said. “The success comes when you connect the people, when you connect the processes, and when you connect technology to deliver measurable business outcomes.”
Investors are therefore looking beyond labour costs towards digital maturity, infrastructure, workforce capability and the ability to scale technology.
Pianigiani said investment decisions should also account for total operating costs. Packaging represents only 25% of a Storopack customer’s costs, making warehouse integration, efficiency and product protection more important than cheaper materials.
Without stronger workforce readiness and operating discipline, automation spending risks becoming stranded capital rather than a source of productivity growth.
