21st century themes: Robotic automation

March 2016

The use of automatic equipment in manufacturing and other processes has been around for decades. Over time, technological advances have enabled more sophisticated automation, giving rise to the concept of intelligent automation, or robots.

What’s probably best described as robotic automation has enjoyed strong growth, around 12%, in the past decade. This strong growth is likely to be sustained owing to improving economic viability and other drivers. Broadly speaking, compared with humans, robots are capable of producing goods more quickly, more cheaply, more safely, with fewer errors and less downtime and to a higher specification or quality. In theory, these benefits translate into lower operating costs and/or higher selling prices (if quality increases), which in turn lead to higher profit margins. The key long-term advantage of robotic automation could be that while the cost of labour nearly always increases over time, the costs of many robotic solutions are likely to decline as technology improves, just as occurred in computing.

The growth in robotic automation should be supported by three thematic factors. The first, almost self-evidently, is innovation. Rapid technological progress is probably the key driver of robotics adoption and three developments should be especially significant. One is uniform messaging system software that enables different robotic expertise to work with each other, significantly lessening a practical barrier to progress. Another is 3-D printing, which makes it easier and quicker for new robotics concepts to move from design to production. The other is cloud computing, which essentially expands robotic capabilities by conveniently and cheaply boosting information access capabilities.

The second thematic is demographics. As societies age and there are fewer workers to support older generations, robotics will be one way to improve productivity. The third thematic is rising demand for robots from China as a way for the country to perform more sophisticated manufacturing, improve the quality of its output and tackle its declining competiveness due to rising wages.

Perhaps the most controversial aspect of increasing robotic automation is the displacement of human labour. As robots become more ubiquitous, it is likely that the dislodgement of workers will create political unease and perhaps draw unhelpful policy responses.

However, while some short-term labour market dislocations could be unavoidable, the collective long-term gains from robotic proliferation should outweigh the losses. At the product level, increased robotics should deliver better-quality and cheaper goods, which means a general rise in living standards. At the firm level, reduced costs and increased profits can free capital for investment in other areas that should lead to job creation and innovation. As industry revenues soar, it is apparent that the robotics industry itself should create jobs. Remember, too, that the global workforce has been adept in the past at responding effectively and creatively to the emergence of labour-displacing technologies.

At a sector level, the more promising areas for robotics include agriculture, e-commerce, healthcare, mining – even the military are using it. All up, the long-term collective benefits of robotics look healthy.