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Posts Tagged ‘robots’

In our prior post, we pointed out that China is on the verge of becoming the world leader in the production, sale and implementation of robots, with a stated goal of producing at least half the nation’s own robots for manufacturing by 2025.  The takeaway from that view, outlined recently in Bloomberg BusinessWeek might be that the world has much to fear from the ascendance of this wave of Chinese bots.

But a recent counterpoint to such a robot apocalypse offered by Greg Ip of the Wall Street Journal suggests that in fact, robots aren’t destroying enough jobs, fast enough.

In short, Ip points out that by enabling society to produce more with the same workers, automation like robots becomes a major driver of rising standards of living – in effect, a productivity boost.  While some say that “this time is different” because the technological change is so profound they fear that millions of workers will be out of work or at best consigned to more menial tasks… Ip says the evidence shows we’re moving in exactly the opposite direction.

He notes that while the U.S. “has many problems, job creation isn’t one of them.”  Job creation has averaged 185,000 per month this year and unemployment is down to a ten year low.  Wage gains are even up, slightly.  Ip says that “if automation were rapidly displacing workers the productivity of the remaining workers ought to be growing rapidly.”  Instead, worker output per hour has been dismal in most sectors, including manufacturing.

When slow-growing occupations are compared to fast-growing ones in data going back to 1850 (a proxy for job creation and destruction driven by ‘technology’), they find that churn relative to total employment today is the lowest on record.

Ip’s point is that the past was, in fact, much more ‘convulsive’ than today’s job churn.  American consumption he notes is gravitating toward goods and services whose production is not easily automated.  Societies increasingly are devoting “a growing share of their income to consumption in sectors where productivity [is] stagnant.”  The idea is that robots can replace fewer things that go into GDP than we think.

As examples he cites medical breakthroughs in new, more expensive treatments rather than cheaper existing treatments, and that child-care work has soared because parents won’t leave kids in the care of a robot.  Over the past decade, “low productivity sectors” including education, health care, social assistance, leisure and hospitality have added nearly 7 million jobs, whereas information and finance, where value added per worker is 5 to 10 times higher, have cut or barely added jobs.

His conclusion: We need a change in priorities.  Instead of worrying about robots destroying jobs, we need to use them more, especially in low-productivity sectors.  While robots may one day replace truck drivers, “it’s more urgent to make existing drivers, now in short supply, more efficient,” and to be more concerned about reducing the labor, and thus the cost of energy, rather than worry about jobs added in areas like solar power.  The alternative, notes Ip, “is a tightening labor market that forces companies to pay ever higher wages that must be passed on as inflation.  And that, he notes, “is a more imminent threat than an army of androids.”

 

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Industrial automation continues to progress, and nowhere is that happening at a faster clip now than in China.

Robots are making rapid headway in many plants around the world.  Currently South Korea leads in adoption with some 531 robots per 10,000 workers in 2015, followed by Germany at 301, and the U.S. at 176.  At 49 per 10,000, China lags, but is determined to catch up and surpass other nations.  For the first time, in 2013 more robots were sold in China than anywhere else in the world.  Last year, 90,000 robots were installed in China, fully one-third of the world’s total – all in an accelerating effort to counter higher labor costs.

The same fervor that made China a leader in solar panels and high speed rail is now embraced by its planners in the adoption of robots in factories.  And everyone should be concerned.

China has an aging workforce and increasing labor costs, and industrial automation there is crucial.  But as John Roemisch, a VP at robot manufacturer Fanuc America Corp. says, “There’s nothing keeping them from coming after our market.”  As the CEO of IRobot adds, “China has a great history of being an effective fast follower… The question will be, can they innovate?”  To that end, China has three enormous advantages: scale, growth momentum and money, according to a May 7th article in Bloomberg BusinessWeek.

Through a sweeping proposal released in China dubbed “Made in China 2025,” Beijing will focus on automating key sectors of the economy that include car manufacturing, electronics, appliances, logistics and food production.  At the same time, they plan to increase their own production of robots to over 50% of total Chinese sales by 2020.

A Chinese start-up named E-Deodar has developed proprietary technology that allows it to create $15,000 factory robots, a cost about one-third cheaper than foreign ones.  It has mastered technology for servomotors, drivers and control panels to gain a proprietary competitive advantage, and is said to act much like a Silicon Valley startup.  Says it’s General Manager Max Chu, “People ask me, how long can you make robots?” he says. “I say it’s simple, we will make robots until there’s no more people in factories.”

The U.S. is not sitting idle.  We’ve all seen the Roomba vacuums that promise to make domestic life a bit easier.  China and others nations are now collaborating on building them for the global market.   But while building vacuum cleaners is one thing — the industrial goal is here is much bigger.  Amazon, for instance, hopes to build logistics systems that create near-humanless warehouses with packages delivered by drones or driverless vehicles.  JD.com is rushing to automate its business in the quest to replace tens of thousands of warehouse workers and deliverymen.  It’s currently testing drones to deliver packages in rural regions and experimenting with robots to deliver on college campuses, according to Bloomberg.

As its Chief Technology Officer said recently, it’s all about “who can learn… who can get better faster.  We are all just starting out.”

But while this might be the most disconcerting part of all for today’s low-skill worker, an interesting — and completely opposite — counterpoint has been voiced by Wall Street Journal editor Greg Ip.  We’ll provide Ip’s counterpoint in our next and concluding post on the ascendance of robots. Stay tuned…

 

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robot_plus_personIn a recent article (APICS Magazine, Sep/Oct ’15) entitled “Job Ready” by Ingrid Ostby, the author asserts that the real value in the continuing emergence of robots in manufacturing has little to do with completely replacing human workers.  As Mike Cicco, GM at robot maker FANUC notes, the early concerns about robots had to do with “taking someone’s job.”  Today he says it’s about making processes safer and increasing productivity.  And therein lies the upside.

Cicco goes on to describe a sort of double edged sword – but one that includes an important upside.  While Cicco admits that it’s true that “employment goes down because of the fact that you get rid of operators when you replace those with robots,” he also adds that “You still need the managers [and] the machine technicians.  You add robotic programmers and robotic technicians, and… although the low-skilled labor rates do go down, you increase your production so much that you end up needing more technicians and more managers.”

As Ostby’s article points out, “robotics-focused positons are more satisfying than many other manufacturing jobs because of higher pay and more rewarding work experiences.”  And with modern manufacturing facilities now being built with more robots in mind, there are more conveyors, cylinders and sensors – all requiring still more technicians and programmers to maintain them.

The article goes on to note a 2014 study by PwC that shows in robotics-heavy industries, employment has gone up 20% compared with those companies that incorporate fewer robots in manufacturing.

One of the main drivers of all this automation is increasing productivity… gaining an edge on global competition.  Robotic automation helps augment getting your manufacturing closer to your customer, the article notes.  Plus, with today’s increasingly flexible (as in reconfigurable) robotics designs, production changeovers are easier than ever before, as they cite the example of being able to quickly switch from making, say, a round cookie to a square one, should consumer preferences change.

Today’s robots are the safest ever, and can now work closer to human workers than ever before.  At the same time, they can carry out the most onerous tasks (the 3 Ds: dull, dirty, dangerous) – and do them at dramatically higher levels of efficiency, accuracy and quality – all with a greater degree of safety.

Robots today replace high scrap rates and mind-numbing tasks with high levels of quality and repeatability.  In the end, it leads to fewer low-skill jobs, it’s true, but the high road opportunity is one of increased workplace sophistication and job satisfaction, due to the programming, maintenance and high-skill requirements that will come of working in a truly automated, efficient, production-focused facility.

Besides, in the end, you can’t put the genie back in the bottle.  Today’s challenge is to take competitive advantage of the newest technologies while using that edge to create ever more skilled, higher-paying jobs for today’s automation workers.

 

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3-D Printer baxter robotThere’s a humble sense of ‘validation’ that comes from seeing your opinions and prognostications confirmed by no less an icon of business thought than the Wall Street Journal.  We’ve devoted past articles to two tech topics in particular that have recently been validated in the Journal and which support our thesis that technology is the future of manufacturing.  The two topics in question are how the advent of technologies including (1) 3-D printing and (2) today’s new robots can be the progenitors of not less, but more employment in the U.S. economy.

In the August 8th Journal (page A13) author and former hedge fund manager Andy Kessler opined that the “Luddites are wrong” when The Economist magazine suggested that “technology may destroy more jobs than it creates.”  As Kessler writes:

“The road to wealth does indeed pass through the graveyard of today’s jobs.  But history shows that better, higher paying jobs are always created by technology – even if no one seems to remember this during periods of creative destruction.

The trick is to lower the cost of new machines and inventions that can do things never before possible, making them available for wide use.”

Kessler then goes on to illustrate by examples including blood markers, gene therapy, funding platforms and two more we’ve espoused in the past: 3-D printers – which work almost like laser printers to create actual objects—and which we first wrote about here; and today’s newer robots, like “Baxter” from Rethink Robotics in Boston, which we first wrote about here.  And actually, we wrote about both of these new trends in a single post on 21st century manufacturing here.

He reminds us how 3-D printing is changing how things are made, and can be bought today for between $1,000 and $10,000.  Recall that today’s $200 laser printers were once $10,000 (I remember selling them then) and as much as $17,000 before that.  Already, 50,000 3-D printers have been sold, and with a key patent expiring next year, sales are expected to soar in an industry of hard-to-find auto parts, industrial designs and jewelry.  The printing of human tissue is even now being discussed.

Meanwhile, the $22,000 Baxter robot is as we’ve noted before, easy to train and human-friendly.  It’s destined not to replace people, but to augment them.  They’re especially effective in performing repetitive and/or dangerous tasks.  But best of all, as Kessler notes, “they can do things that haven’t been done before.”  Robots will change the way SMB manufacturers operate, lower costs and “create a hiring binge for those savvy enough to use them.”

So while some politicians and policy makers blast technology for destroying jobs, the truth is, the upside potential to create even more, better jobs is the place to bet.

Fortunately, those same pundits, politicians and policy makers will be there to take the credit when the time indeed comes.

 

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robot2As we noted in our previous post, robots are becoming a fact of life in many areas of manufacturing automation.  When we concluded the first of our two posts here, we noted that robots are picking up much of the grunt work previously provided by humans, and more efficiently.  While that’s a potential boost for overall GDP according to economists, it’s little gain to us if it only drives unemployment higher.  In conclusion, we asked (in a question posed by Bloomberg BusinessWeek in its Dec. 7th issue): “What happens when labor is not just transferred from one group of people to another (outsourcing) but to machines?”

Their conclusions?

For one, since idle hedonism is not the best lot in life for humans, they note that “we excel when we are creative and productive.”  So while we can’t ignore or prevent the growth of automation, we can use our creative resources to determine what that future might look like.  Here, as in many countries, but especially in the U.S. it will require, as we’ve always done, innovation and entrepreneurship, as well as policies that foster those things, like immigration reform to retain high-skill workers, a corporate tax rate and structure that encourages investment in domestic, not off-shore production, and, may I add, an educational system that is geared toward producing effective, problem-solving, communicative workers.

And if the threat of robots taking jobs proves overblown, and automation is less “transformative” than predicted, then none of those efforts will have been in vain.  They answer the threats to our jobs not just from robots, but from economic competition and the many other issues that challenge our economic potential.

As Northwestern Univ. economist Robert Gordon notes, “If you’re looking for new problems, it’s not robots.”  It makes more sense to adapt to robots taking our old jobs (just as farmers now comprise only 2% of the population, versus 90% two centuries ago), than to fighting against it.  Better we spend our economic and intellectual capital on finding new ways to work with them, and to solve our current challenges by increasing innovation and investment in U.S. jobs through better policy across the board.

And that’s going to be the biggest economic and political challenge for us in this (still) early part of the 21st century.

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robot1As economist Paul Krugman wrote in the Dec. 9th New York Times, “there’s no question that in some high-profile industries, technology is displacing workers of all, or almost all kinds,” adding that many of those jobs are “high-skill and high-wage.”  But just as sophisticated machines and automation will inevitably replace jobs, points our Sam Grobart in the Dec. 17th issue of Bloomberg BusinessWeek, “it’s already bringing fresh economic opportunities as well.”

If we’ve learned anything since the 80s, when the digital revolution started to really take off, it’s that technology can create industries, as surely as it can level them.  As automation increases, and more robots take to factory floors, it’s up to us to decide how we prepare for the new era.  History is punctuated with previous automation scares, as BusinessWeek points out in an article entitled “What Machines Can’t Do.”

For example, in the late 18th century 90% of our population was involved in farming.  Today, it’s 2%.  Meanwhile, a modern economy has evolved, where today’s workers are as likely to write mobile apps as they are to be farmers.  That’s a job that didn’t even exist little more than a decade ago.  America, more than any country probably, has proven especially resilient in the face of technological change.

Why would robotics, with its ever-increasing presence in manufacturing, be any different?  The key is to employ robot technology in places that displace the jobs most humans don’t want to have, and free up people to do more interesting, creative and progressive tasks.  It’s one thing to have robots move merchandise around the warehouse, for example, but as Quiet Logistics, an order fulfillment center in Massachusetts has found, it makes more sense to have humans fold, package and ship products.  The decisions and dexterity required for these jobs are better suited to humans.

Humans have another advantage: they’re a more flexible work force.  Amazon decided to hire 50,000 part-time workers this holiday season, instead of buying robots.  Why?  Because come January, notes supply-chain consultant Jim Tompkins, “all that automation’s going to be staring you in the face.”

This is the state of what BusinessWeek calls the ‘robotic arts’ today: a point where humans and robots share labor, with robots taking on the simple and repetitive tasks, and humans “taking care of the complex and dynamic.”  Just as personal computers did not get rid of office workers, but merely changed the jobs they did (and granted, allow them to do a lot more of it), when it comes to robots, as Rodney Brooks of Rethink Robotics says “It’s not a one-for-one replacement.  People are so much better at certain things.”

In manufacturing, there’s already a lot of innovation going on.  Some economists fear that as robots get smarter the GDP will expand at a healthy clip, but that this positive data will mask reduced employment and lower wages.  I think it’s already happening today.  While GDP expands then, the real operative question will become: Can everyone benefit?

We have organized our economic system largely around the exchange of labor for income.  As BusinessWeek asks, “What happens when labor is not just transferred from one group of people to another (outsourcing) but to machines?”  We’ll provide some answers in our next, concluding post.

 

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