Industrial robots steal a march in east Asia

Feb 13, 2015

Robots will replace a growing number of jobs in industries including automotive and electronics in the next few years, particularly in east Asia, according to new research.

Worldwide sales of industrial robots rose 23 per cent last year and are on course to double by 2018, driving radical change in many manufacturing sectors, Boston Consulting Group said.

Although robots have been used in industry for decades, recent advances in technology have cut their costs and increased their capabilities, as a new generation of reprogrammable, multipurpose machines comes into service.

The prices of industrial robots have been falling steadily, dropping about 14 per cent in the past four years to $133,000 for a typical system, while capabilities have been expanding.

Some robots are even cheaper: the Baxter robot from Rethink Robotics has a listed base price of $25,000, making it accessible to smaller companies that might have found it difficult to invest in earlier generations.

Five countries — China, the US, Japan, Germany and South Korea — are expected to account for about 80 per cent of investment in industrial robots over the coming decade.

Advanced robots are set to cut costs and raise productivity, reducing employment in manufacturing in developed countries, while raising the skill levels demanded of the staff that remain.

They are also likely to make labour costs a less significant factor for manufacturers making decisions about where to invest.

About 200,000 industrial robots were shipped last year, BCG estimates, up from 163,000 in 2013, and in three years' time the number could rise to 400,000.

In the manufacturing sectors that are the most readily automated, including cars and other transport equipment, computers and electronics and electrical equipment, about 85 per cent of tasks can be performed by robots, according to BCG.

Those sectors are likely to use the most robots over the coming decade, but other areas such as chemicals and metals are also likely to see increasing adoption of the newer, more flexible machines.

Hal Sirkin of BCG said: “Historically robots have been very rigid, and unable to apply logic to what’s in front of them . . . The new generation of robots will be applying logic to the environment and making their own decisions.”

The uptake of industrial robots will vary between countries as well as between industries, depending on factors including wage costs and labour regulations that could limit employers’ ability to replace workers with robots. BCG expects the fastest adoption will come in South Korea, Taiwan and Thailand, which have heavy concentrations of the industries that are capable of high levels of automation, higher labour costs than some of their low-wage competitors, and limited employment protections that would prevent job cuts.

Other relatively rapid adopters are expected to be China, Japan, the US, the UK and Canada.

The countries likely to be slowest to embrace the new robots include more heavily regulated economies of Europe including France, Italy and Spain, as well as Brazil and India, according to BCG.

US manufacturing productivity growth has slowed significantly over the past decade. It averaged 4.3 per cent over 1990-2000 and 3.7 per cent in 2000-07, but just 1.7 per cent during 2007-14, the US Bureau of Labor Statistics says. That slowdown was mirrored by a similar, although less abrupt, slowdown in productivity growth in the US non-farm business sector overall.

However, Mr Sirkin raised the prospect that the application of advanced robots to manufacturing could lead to an acceleration of productivity growth.

“Doubling productivity takes a long time,” he said. “Doubling computer power takes just two years.”

Source: THE FINANCIAL TIMES