Problems Associated with Investment in Advanced Manufacturing Technology from the Management Point of View JOSEF HYNEK, VÁCLAV JANEČEK, LIBUŠE SVOBODOVÁ Faculty of Informatics and Management University of Hradec Králové Rokitanského 62, 500 03 Hradec Králové CZECH REPUBLIC Josef.Hynek@uhk.cz; Vaclav.Janecek@uhk.cz; Libuse.Svobodova@uhk.cz http://www.uhk.cz/fim/ Abstract: - Utilization of advanced manufacturing technology is considered as one of the key factors that help manufacturing companies worldwide to reduce the cost of manufacturing, improve the quality of their products, increase the throughput as well as production flexibility and altogether it should help them to maintain or even enhance their competitiveness on global markets. Moreover, manufacturing companies in economically developed countries cannot rely on cheap labor force and massive investments into advanced manufacturing technology seem to be inevitable necessity for them. On the other hand, these companies are under constant economic pressure and their managers are pushed to economize and cut cost whenever possible. Taking into account that investment into advanced technology is as a rule rather expensive, long-term nature and associated with a higher degree of risk especially if the particular company lacks experience with the particular type of technology, it is clear that the relevant decision making processes are not easy and straightforward ones. We will describe here some problems associated with investment into advanced manufacturing technology from the management point of view. We will demonstrate that managers show rather reserved attitude towards relevant projects and admit many difficulties when deciding about investment into particular advance manufacturing projects in their companies. We will support our views by selected results of two surveys that we did in the Czech Republic and we will compare our findings with outcomes of the similar surveys in other countries too. Key-Words: - advanced manufacturing technology, management attitudes, short-termism, survey results 1 Introduction It is widely accepted that manufacturing companies in economically developed countries tend to use advanced manufacturing technology (AMT). They cannot rely on cheap labor force and such technology should help them to reduce the cost of manufacturing, improve the quality of their products, increase the throughput as well as production flexibility etc. Altogether, it should help them to maintain or even enhance their competitiveness on global markets. As we stated above, these ascertainments are reckoned to be truth but is it really like this? Do managers of manufacturing companies in economically developed countries welcome advanced manufacturing technology projects and are they eager to promote the respective investment decisions? Or are there some difficulties that technology promoters must face to in order to see the technology deployed? We are afraid that the latter statement is quite common and we will provide some pieces of evidence of this ascertainment in the paper. First of all, we will briefly review some earlier studies in this field that indicated that there are some clear obstacles and difficulties when studying the management behavior concerning the advanced manufacturing investment decisions. Secondly, we will enrich it by the selected outcomes of two surveys that were conducted in the Czech Republic. We will compare our results with the findings derived from similar surveys that were done in other industrially developed countries too. And finally, we will make an attempt to explain the motives of managers for such behavior and we will try to suggest some possible ways to change their attitudes towards investment into AMT too. 2 Previous Work We proudly acknowledge that the biggest motivation to start our own investigations in the field of AMT came from the work of Lefley and Wharton [1], Lefley [2], and Lefley and Sarkis [3]. These authors examined carefully the investment appraisal processes in the United Kingdom and the United States of America. They undertook extensive surveys both in the UK and the USA in order to learn more about current practices in respect of capital investment in AMT projects, to identify if there were perceived difficulties in appraising WSEAS TRANSACTIONS on SYSTEMS Josef Hynek, Vaclav Janecek, Libuse Svobodova ISSN: 1109-2777 753 Issue 6, Volume 8, June 2009