The Robots Are Coming

This is something that we heard for a number of years. For most, it simply is hype. The reality is robotics has not really penetrated the marketplace on a large scale. Certainly, we saw the entry into manufacturing decades ago and that continues at a steady pace. The rest of the workforce, has largely been exempt.

It is a situation that is changing, depending upon where one is. There are some areas that are forced to take a look at this issue in a different manner than before.

Robotics is becoming a necessity. This is what is going to likely drive the adoption throughout the rest of this decade.

Demographics Are Driving Automation

We are seeing a demographic issue that is really starting to affect many countries. This results in the need to push automation at a greater pace. It is also causing things to break along national lines.

Leading the charge are Germany and South Korea. Since they have less workers in the 21-55 age brackets, they are seeing more adoption of robotics. Of course, they join Japan how is at the top of every list in dealing with the demographic issue.

The United States is the leader in Artificial Intelligence but lags in robotics. While it has some of the demographic issue, it is not a priority since there is a large Millennial population.

"The U.S. has a huge technological advantage in a bunch of areas - including software and (artificial intelligence)," said Acemoglu. "But in robots, it's Germany, Japan and recently South Korea, that are further ahead."

Naturally, companies are seizing upon this opportunity. Naturally, you go where the action is.

Of the world's top 15 robotics companies, seven are based in Japan and seven in Germany, Acemoglu said.

Source

A recent study out of MIT by economists show how much of an impact demographics is in driving this trend.

The study finds that when it comes to the adoption of robots, aging alone accounts for 35 percent of the variation among countries. Within the U.S., the research shows the same pattern: Metro areas where the population is getting older at a faster rate are the places where industry invests more in robots.

Source

Demographics might start the trend, but it does not end there.

All About Profits

Companies are now complaining about a shortage of workers. There are many reasons for this, most of which are outside the scope of this article. However, the demographic situation is not going to ease up. In fact, for those countries mentioned, it is only going to get worse.

The challenge we see is that once the process starts, it does not stop. Corporations will focus upon automation to replace worker shortfalls. Yet, once the technology is sufficient for real world use, it will be applied to more than just areas of worker shortage.

For example, there is a gap in the number of truck drivers needed. Hence, the trucking industry is really concentrating efforts of developing autonomous technology. This makes sense since the need to move products around is not going to diminish.

For now, the idea is that the shortfall of 25% can be filled with automation. This poses a problem though. Once the autonomous trucks are good enough for real world driving, why do the companies need the other 75% of the drivers? Here is where the true job destruction takes place.

Do not think for a second these corporations will not improve their bottom line by slashing payroll. Perhaps it is unrealistic to see 100% of the trucker go, but a vast portion of them will find themselves automated out.

This is exactly what happened in the manufacturing industry. Companies started to automate certain parts of their process. Over time, this spread to more jobs. When we look at an automobile factory, it looks nothing like it did in the 1970s. Nor does the employment rolls mirror that generation either.

In the United States, we continue to increase our manufacturing output yet we see labor declining.

Meanwhile, here is how the labor in the manufacturing segment looks.

This is a drop of near 6 million manufacturing jobs from the peak. It is also the impact that automation has.

We are now going to witness this take place in sectors outside manufacturing. Retail, warehouse, and healthcare are all going to see automation entering the picture. Of course, the aforementioned driving industry is going to be obliterated by autonomous vehicles, especially in the trucking sector.

Those areas that have the demographic issues are going to see advancement first. However, do not believe for a second that it will not spread. The companies that create a robot that works in Germany or Japan is very willing to sell it for the same use case to an outfit in the United States or UK.

Many seem to want to stick their head in the sand on this issue. We see from these charts the damage that is inflicted. Also shown is how things can change within a decade or two.

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