🤖 Is a Fully Automated Production Facility Worth the Investment? A Reality Check with TEA

What We Expected vs. What We Discovered

Automation is often seen as the golden ticket to efficiency, higher productivity, lower operating costs, and improved scalability. But when we applied Technoeconomic Analysis (TEA) to compare a highly automated bioproduction facility against a standard-operated one, the results were not what we initially expected.

Rather than an obvious winner, we found a complex trade-off between capital investment, labour efficiency, and overall production costs. Here’s what we learned:

The Two Scenarios: Standard vs. Highly Automated Facilities

We evaluated two production setups:

🔹 Standard Equipment Facility (Lower upfront cost, higher labour) 

🔹 Highly Automated Facility (Higher upfront cost, lower labour)

Comparative costs €/kg

Key Insights: When More Automation Doesn’t Always Mean Lower Costs

💰 Capital Costs Are Substantially Higher

• The automated facility requires €17M more in upfront investment.

• Even with labour cost savings, this extends the payback period from 5.96 to 7.44 years.

⚡ Operating Cost Differences Were Marginal

• The cost of production per kg was only €0.30 lower for the automated facility.

• Higher maintenance, insurance, and depreciation costs partially offset savings from labour.

👷♂️ Labor Reduction Is Significant, But at What Cost?

• Headcount dropped from 74 to 27, reducing salary costs by €3M annually.

• However, automation doesn’t eliminate all costs, it shifts them to higher depreciation and maintenance expenses.

⚖️ The Automation Trade-Off: A Business Decision, Not Just a Cost Decision

• If the facility is capital-constrained, a lower-cost, standard-operated facility could be the better option.

• If long-term labour availability is a concern, automation might justify the investment despite a longer payback period.

The Operating Cost Surprise

One would expect automation to drastically reduce operating costs, but the data shows a total production cost of €11.65/kg for an automated facility, compared to €11.95/kg for the standard-operated facility, only a slight improvement.

Why? While salaries are significantly lower, automation brings higher depreciation, maintenance, and insurance expenses, which offset much of the savings.

Comparative costs €/kg

The Government Incentive Factor

One critical factor in automation decisions is government incentives for job creation. Some governments reward or provide tax benefits for each job created, making manual labour a financial advantage rather than just an expense. In regions where these policies exist, reducing headcount through automation could mean missing out on valuable subsidies or financial support.

Why TEA Was Critical in This Analysis

Had we relied on assumptions alone, we might have expected a fully automated facility to drastically lower costs. Instead, TEA provided a data-driven approach that: 

✅ Revealed hidden costs that offset automation benefits. 

✅ Showed the long-term financial implications of automation. 

✅ Enabled strategic decision-making based on actual economic impact rather than assumptions.

The Reality Check: Is Automation Always the Best Choice?

While automation can increase efficiency and reduce labour dependency, this case study shows that it does not always lead to substantial cost of production savings. 

Would you have expected these results?