Are you worried that robots are going to take over our lives? If you follow tech news, you might be. Google has bought a lot of robotics companies. In the second half of last year, the company bought eight robotics companies, including Boston Dynamics, which makes legged robots that can balance well enough to run and climb over obstacles. It also recently agreed to buy Titan Aerospace, a company that makes drones that could help connect remote parts of the world to the Internet.
Robots in global trade
Industrial robots, with mechanical arms that can weld, paint, and pick up and position products repetitively, transformed assembly lines in Europe, Japan, and the U.S. 40 years ago. Walking across any manufacturer’s floor, from metal shops to electronics plants, may amaze you with how many operations are still done by humans—even ones that might be automated. Simple reasons: economics and capabilities. Given robots’ capabilities, manual labor is still cheaper than owning, operating, and maintaining a robotics system. This is about to change.
The Boston Consulting Group examined 21 industries in the world’s 25 leading manufacturing export economies, which account for more than 90% of global trade in goods, to assess the potential impact of the coming robotics revolution on industries and national competitiveness. We compared five popular robot configurations’ investment, cost, and performance. We assessed every activity in each industry to see if sophisticated robots may replace or complement it or if it will likely remain unchanged. After accounting for labor costs, productivity, and industry mix in each country, we created a rigorous perspective of over 2,600 robot-industry-country pairings and their expected adoption rates.
The Robotics Revolution and Its Global Impact
Some of the most important things that came out of this study are:
Industrial businesses growth: The usage of robotics is about to explode in numerous industries. From an average of around 10% across all industrial businesses in the world today, robots will be doing about 25% of all activities by the year 2025. The catalysts will be large-scale reductions in the price and enhancements to the efficiency of robotic systems. The capabilities and affordability of sophisticated robots have already sped up their adoption in a few industrial sectors.
Industry and economics will determine the level of adoption. The United States, Canada, Japan, and South Korea are leading the pack of high-cost nations using robots; meanwhile, Austria, Belgium, France, Italy, and Spain are further behind. Considering their low labor costs, certain economies are embracing robots at a faster rate than expected. This is true in Thailand and China, for example. Approximately three-quarters of the robots that will be installed in the next ten years will be located in four different types of industrial items: computers and electronic products; transportation equipment; machinery; and electrical equipment, appliances, and components.
Accessibility: Industrial output will skyrocket. Greater accessibility for smaller enterprises is driving the wider deployment of robots, which will increase output per worker by up to 30 percent in the medium future. Not only will other productivity-enhancing metrics, like lean techniques, increase, but these benefits will be on top of that.
Labor saving: Significant savings in labor expenses are anticipated. After accounting for inflation, other costs, and productivity-enhancing measures, increased robotics use is projected to lead to 33% lower average manufacturing labor costs in South Korea in 2025 and 18–25% lower costs in countries like China, Germany, the US, and Japan.
Cost competitiveness: The cost competitiveness of nations will be affected by robots. The manufacturing cost competitiveness of countries that are early adopters of robots will improve relative to the rest of the globe. As an example, assuming all other cost parameters stay the same, South Korea is expected to increase its manufacturing cost competitiveness relative to the U.S. by 6 percentage points by 2025. The relative cost competitiveness of high-cost nations like Russia, Brazil, Spain, and Austria will decline if they fall behind.
Advanced manufacturing: Skill sets related to advanced manufacturing will be highly sought. Humans will have to take on increasingly difficult manufacturing jobs as robots become more commonplace. In many industries, the availability of programming and automation talent, as well as the skill sets of local workers, will become more important than cheap labor in determining industrial competitiveness. The abilities required of employees to thrive in sophisticated manufacturing plants will undergo a dramatic transformation.
The new robot revolution will impact nearly every manufacturing company. On the other hand, it is vital to get the time, money, and place correctly. A significant cost disadvantage compared to global rivals might result from businesses investing in costly robot systems at the wrong time, in the wrong place, or too soon.
Different industries and regions will have different optimal times to shift to sophisticated robots. But businesses should start making plans now, even if that date is still a way off.
Businesses must take a comprehensive strategy to the rise of robots if they want to stay ahead of the competition. Here are some steps that businesses should take:
Learn about the world’s topography:
To start, businesses must have a crystal-clear view of global and industry-specific trends in robot adoption. They should be aware of the current and future trends in the relative costs of labor in each economy where they manufacture, as well as how the price and performance of robots compared to human workers. They also need to think about other factors that help or hurt a particular economy’s robotics adoption rate, such as how flexible the labor regulations are and how many people will be available in the future. Never lose sight of the fact that they are movable targets.
Compare yourself to the competitors:
Any business worth its salt will keep a close eye on the actions of its rivals both now and in the future. The overall cost of systems should be assumed to decline if their sector is likely to have a significant growth in robot revolution. With this information, businesses will be able to better plan for investments, choose when and how much to spend, and choose the best locations for increased capacity.
Keep yourself updated on the latest technical developments:
Because technology is advancing at such a rapid pace, businesses need to monitor how sophisticated robotic revolution systems are doing. They should be able to see clearly how fast innovation is overcoming technical hurdles that have limited robot deployment up to this far, such as the inability to handle materials with unusual shapes or pliability or to work securely in tandem with humans. Equally crucial is the question of when these novel uses will prove to be financially viable. Even small and medium-sized firms may find that deploying robotics is more cost-effective than they initially believed once they consider the new capabilities, pricing, and performance improvements. Keeping an eye on how automation and robots are shaping up might help businesses decide whether to hold out for better tech or institute a new procedure that lets them improve tech without repeating past mistakes. Time is of the essence in several respects.
Prepare the workers:
With the increasing use of robotics in manufacturing, the accessibility of trained labor will play a crucial role in determining the optimal location for production. The capacity of local workforces to acquire new skills is going to be more important as tasks that still need physical labor get increasingly complicated. A growing significance will also be placed on the availability of programming and automation skills. Businesses and governments alike need to do more to train people for high-paying jobs in fields like computer programming and mechanical engineering so that they can survive the robot revolution.
Prepare the company at hand:
Companies should begin preparing their worldwide production processes for the era of robots immediately, regardless of whether the economics support large capital expenditure at this time. To reap the benefits of robots as installations become economically viable in various economies and suppliers automate, they need to ensure that their networks are adaptable enough. They need to educate themselves on the most modern manufacturing technology and plan how to revamp their production methods to make the most of these tools. A lot of factories will have to change the way they do things to accommodate robots.
Companies can’t afford to sit on their hands and wait for the right economic conditions to use robots. Robot revolution rates are expected to rise substantially after the cost inflection point is reached, according to our forecasts. This is a great chance to gain a leg up on the competition. Economies and businesses prepared to take advantage of the opportunity will have a leg up in the manufacturing race throughout the world.