Rise of the Robots

Robots: The new low-cost worker

The use of robotics in industry is nearing a take-off point that could trigger a surge in productivity gains in the years ahead, some experts say. 

"What we're witnessing is that economically, in certain industries, it is now cheaper to use robots than humans," said Hal Sirkin, a senior partner at Boston Consulting Group (BCG) and co-author of the firm's series of reports on the shifting economics of global manufacturing. 

BCG estimates that by 2025, the adoption of advanced robots will boost productivity by up to 30 percent in many industries, and lower total labor costs by 18 percent or more in the world's biggest exporting countries such as the U.S., China, Japan and Germany.

Baxter robots
Jessica Rinaldi | The Washington Post | Getty Images

Analysts say that the use of robots has moved away from the large, heavy, expensive machines used for the last few decades in industries such as the automotive sector, to much more complicated robots that are capable of carrying out a number of tasks. 

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One example is Baxter, a $25,000 collaborative robot launched in 2012 by Rethink Robotics. It works alongside humans on a factory floor to do repetitive tasks and according to Rethink Robotics, is in use across North America by a number of firms. 

Staying competitive

"I believe the manufacturing sector is undergoing a sea change," said Elaine Chen, a senior lecturer at MIT Sloan School of Management. 

"Companies have historically outsourced production work to countries with lower labor costs, such as China.  As labor costs soar across the world, including in China, the economics of outsourcing becomes very murky," she added.  

"By adopting automation, countries with rising labor costs can get and stay competitive, and can continue to produce affordable goods to serve their end customers."

According to research from BCG, investment in industrial robots will rise sharply over the next decade to around 10 percent per annum, from annual growth of 2-to-3 percent now.

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"Our robots are assistants to factory workers, so productivity goes up," Tadahiro Kawada, president of Kawada Industries, a Japanese company that makes "collaborative robots," told CNBC last month.

"The robots can do the repetitive jobs and people can be creative and improve the ways to do manufacturing. This can make it more efficient and cost-effective," he said. 

Control this robot from where you are
Control this robot from where you are

BCG's Sirkin added that in the auto sector, producing an item with a robot was already more cost-effective than using a human. 

"In the automotive industry, the crossover has already been made – in other words the economics of producing autos with robots makes more sense than with human labor," Sirkin said.

He added that BCG expected the human-to-robot cost-effective crossover point to take place in the U.S. electronics sector in 2018, and in the furniture industry around 2023.

Tailor-made… by robots?

Sirkin said there were other implications of the growing use of robotics in manufacturing. 

"You are still likely to have large-scale factories, but we will see smaller factories, where you could make things quickly and on a smaller scale with robots," he said. 

"In these smaller factories, it would also be easier to make tailor-made goods."

This is something with which sportswear maker Adidas is experimenting. The German firm said last month that it was testing automated production units that would allow it to shift manufacturing from Asia to closer to shoppers. Production could even take place in its stores, allowing customers to personalise their goods. 

"I believe robotics (in the broadest sense of the word) will become a major part of everyday life 10 or 15 years from now," added MIT's Chen, who previously led the engineering team behind Baxter.