Use of industrial robots at companies is about to increase threefold, according to research just published by global management consulting firm Boston Consulting Group (BCG). Investment in industrial robots, which up to now has been growing at a rate of 2 - 3% a year, is forecast to rise to 10% per annum over the next decade.
Although industrial robots have been used in factories for several decades, they currently perform on average only around 10 percent of manufacturing tasks, reveals the latest BCG report, before going on to predict that this figure will rise to just under 25% for manufacturing industries across the board worldwide within ten years. Expected major reductions in the cost of robots will be a significant factor. For example ‟the cost of an advanced robotic spot welder has plunged 27%, from an average of $182,000 in 2005 to $133,000 in 2014, and the price is forecast to drop by a further 22% by 2025”, says BCG. A second driver for robot adoption is that the performance of robotics systems continues to improve. With advances in such areas as vison sensors and gripping systems, robots are now faster and more flexible. The combination of declining cost and improved performance will lower the average cost of manpower by 16% by 2025, reckon the BCG experts, an encouraging prospect for manufacturers. However, this average percentage will show considerable variations worldwide depending on the level of development of each country, with those that embrace robotic technology in factories seeing productivity-adjusted labour costs fall by up to 33% over the decade, while those that are slower to adopt robots may be able to trim their costs by some 9%, calculates the Boston Consulting Group. As their performance and return on investment continually improve, robots should in the end be able to win over even the more reluctant manufacturers, in all kinds of industrial sectors and at companies of different sizes.
Robots 15% cheaper than human labour
The mass integration of robotics technology in factories will vary from country to country and by industry, with factors such as wages, productivity per worker, industry regulations and the ease with which tasks can be automated affecting the speed of adoption. Contrary to general belief, Japan is not out in front in the use of robots but figures in third place behind China and the United States, though ahead of Germany and South Korea. These five countries account for nearly 80% of robot purchases, “a share that is likely to hold steady for the next decade,” predict the BCG authors. Nevertheless, other countries are expected to follow suit. The BCG researchers estimate that manufacturers tend to ramp up investment in robotics when the costs of owning and operating a system reach a 15% discount on the cost of employing a human worker. This is already the case in automobile manufacturing in the United States, where it costs around $8 an hour to use a robot for spot welding, compared with $25 for a person, and the cost gap looks certain to widen much further in favour of a robot workforce.
More flexible labour law required?
By contrast, countries such as Mexico and India are proving slow to employ robots in factories. They are however unlikely to lose much competitive ground, because their labour costs are forecast to remain low for the next decade. Meanwhile, many developed economies face inflexible legislation on manufacturing labour, which places obstacles in the way of companies that might wish to replace human employees with robot assistants. Among these countries are Belgium, France, Italy and Brazil, which “have already seen their competitiveness erode over the past decade relative to other export economies owing to rising costs and low productivity.” As their labour costs rise it will be vital for the more developed economies to boost productivity by investing in robotics and other advanced manufacturing technologies, as these economies are likely to see their cost competitiveness decline even further if nothing is done to address this trend, stress the BCG report authors.