Assessment of Philippine MSMEs’ Shop Floor Automation Level and Barriers to Their Technology Upgrading

Abstract

Micro, small, and medium enterprises (MSMEs) have a significant role in the development of the Philippine economy. MSMEs generate millions of jobs and contribute billions of pesos to the gross domestic product (GDP) of the country. It is vital to help them become more competitive by taking advantage of new technologies for better efficiency and productivity. This study aims to identify the level of shop floor automation across MSME categories to establish a baseline of the current technological levels that will aid in formulating future scientific interventions and policies. In this study, pre-selected MSMEs in different regions in the Philippines were assessed to determine the technology level of their shop floor operation. The MSMEs were also given technology upgrade recommendations based on their existing requirements. Results showed that the shop floor automation of 90% of the MSMEs has a basic level wherein workers monitor, control, and execute production processes with the assistance of manual or semi-automatic equipment. Furthermore, 51% of the total upgrading proposals provided to firms employed Industry 2.0 technologies, and 47% utilized Industry 3.0 level solutions. Looking into the shop floor automation level and the technology upgrades that were recommended, the production technologies of most MSMEs are still transforming from Industry 2.0 to Industry 3.0. The readiness for Industry 4.0 of MSMEs in the Philippines is currently inadequate. Lack of technical knowledge about available new technologies, financial aspects, lack of technically skilled workers, and other socio-cultural and organizational issues are influencing the low technology adoption of MSMEs.