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Replacing labor with automated machines has many advantages to the company regarding precision and quality of outcomes and this will reduce the impact of strikes and delays from labor to the production of the company, also this will change the cost structure of the company from variable cost of labor payment (depending on hourly or daily rate payments for labor) to fixed cost of machines with small variables cost contribution due to use of electricity. This change in cost structure will increase the operating leverage of the company due to decrease of variable cost and increase of contribution margin, also increase in fixed cost requires higher sales to reach the breakeven point - Less variable cost means higher contribution margin which means higher operating leverage - Operating Leverage=contribution margin/net operating Income