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Technology Trends: The Robotics Revolution

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At a business conference last week in Park City, Utah, I heard a terrific speaker, Erik Peterson, Director, Global Business Policy Council, A.T. Kearney.  Unlike the President during last week’s debate, Mr. Peterson did not seem to be adversely affected by the thin mountain air.

In his presentation, Mr. Peterson identified four significant trends in technology:

  • Big data and hyper-computing, focusing on Sequoia, the world’s fastest supercomputer.
  • Biotech, including as the result of the completion of the Human Genome Project.
  • Nanotechnology, including Disney’s use of 3D printing in the lighting of some of its toys.
  • A revolution in robotics.

This week I will consider what effect the robotics revolution might have, using Mr. Peterson’s observations as a starting point.

A fairly recent report of The International Federation of Robotics (IFR) identified three types of jobs performed by robots:

  • Jobs requiring precision, consistency or lower costs
  • Jobs where conditions were unsatisfactory
  • Jobs for manufacturers in developing countries, with high labor costs, that compete with manufacturers in low-cost developing countries

To summarize, robots perform jobs that humans aren’t fully capable of doing, won’t (or shouldn’t do) or aren’t cost-effective in doing.

An example of more precise, and more cost-effective robots is the Philips Electronics plant in the Netherlands that manufactures electric razors.  The plant has one-tenth of the employees of a similar plant in China.  And the robots are more dexterous than their human counterparts.

An example of dangerous work performed by robots is unmanned aerial vehicles (UAVs), such as the recent Mars space probe conducted by the Mars Spacelab Mission. Clearly, the risks and logistics of sending a manned spacecraft on a lengthy mission are more daunting than sending an unmanned space probe to Mars.  Drones are another example. Mr. Peterson reported that now more military pilots are being taught to operate UAVs than fly a manned aircraft.

Mr. Peterson noted that robotics are playing an increasingly important role in manufacturing.   I wonder if robotics will have a positive or a negative effect on job creation? As I have discussed previously, historically the creative destruction of capitalism has dislocated companies or even entire industries.  Certainly as an engine of the creative destructive of capitalism, the robotics revolution has the potential to dramatically change the world’s economy.

But I am skeptical about whether the change will be positive, as there are many examples of robots replacing workers in manufacturing. Apparently some economists are skeptical too, including Martin Ford, a Silicon Valley entrepreneur. A recent book review summarizes Mr. Ford’s views :

The Lights In The Tunnel [is] a book which explores the economic implications of a world which is becoming increasingly automated. Ford proposes that in the upcoming years robots and computer programs will edge human workers out of their jobs and that unless we take drastic actions this will reduce mass market purchasing power, destroy consumer confidence, and shut down the global economy.

Nevertheless, as a fan of capitalism, I am open to the possibility that the robotics trend will result in not only wealth creation, but also good jobs. The IFR concluded that the robotics industry was responsible for 8 to 10 million jobs, including 150,000 jobs that were generated directly and another 150,000 jobs that supported the direct jobs.

But how is that possible? How will robotics create manufacturing jobs? The question may turn on whether the focus is global jobs picture or employment in the United States (and perhaps the rest of the developed world).

Not surprisingly the President of the Robotics Industries Association (RIA), Jeff Burnstein, contends, in an editorial for Bloomberg BusinessWeek, that industrial robots will help US companies compete, ultimately leading to better jobs for American workers.

He argues that robot sales are increasing, US robotics companies are increasing in size and stature, and the US robotics industry is growing rapidly. Singularity Hub summarizes the RIA’s position:

According to the RIA, there are about 1 million industrial robots actively employed in the world, of which about 196,000 are in the US (second only to Japan). If you include non-industrial bots, the number ramps up to close to 8 million. Those robots have a significant impact on the global economy by increasing production levels and decreasing (over the long term) production costs while requiring less human labor. As impressive as these numbers are now, there’s little doubt that they’ll see big growth in the years ahead….Automation is likely to continue to expand into industries and jobs that we don’t normally consider vulnerable. Whether it’s with robots or computer programs, human labor is going to see itself replaced at some level in many different fields.

Burnstein argues that robots enable US (and European) companies to compete against manufacturers in countries with lower labor costs, such as China or Mexico. Although pure manufacturing jobs may be replaced by robots, jobs supporting robotics in maintenance, supervision and sales could stay in the US.  Another source of jobs in the US is the creation of robots.

One interesting question is whether the rise in robotics will result in a battle between automation and out-sourcing, enabling the US and Europe to compete with developing countries. In that event, robotics could lead to a net loss of jobs globally, even as wealth and high-paying jobs are created in the developed world.

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