Issue: Robots and Automation Robots and Automation By: Bill Wanlund Pub. Date: February 9, 2015 Access Date: September 26, 2021 DOI: 10.1177/2374556815571549 Source URL: http://businessresearcher.sagepub.com/sbr-1645-94777-2641309/20150209/robots-and-automation ©2021 SAGE Publishing, Inc. All Rights Reserved. ©2021 SAGE Publishing, Inc. All Rights Reserved. Will technological advances help businesses and workers? Executive Summary Fueled by advances in computer and sensor technology, robots are growing in sophistication and versatility to become an important—and controversial—sector of the world economy. Once largely limited to manufacturing plants, robots now are found in households, offices and hospitals, and on farms and highways. Some believe robots are a job creator, a boon to corporate productivity and profits, and a way to “reshore” American manufacturing that had migrated to countries where labor was cheaper. Others fear that the growing use of robots will wipe out millions of lower-skilled jobs, threatening the economic security of the working poor, fostering social inequality and leading to economic stagnation. Today's managers need to understand how humans and machines can best work together; government and industry must decide how best to manage robots' design, manufacture and use. Overview Drew Greenblatt, president and CEO of Marlin Steel Wire Products of Baltimore, says introducing robots into his manufacturing operation was “imperative: Our choice was either extinction or transformation.” When Greenblatt bought Marlin in 1998, the company—then based in Brooklyn, N.Y.— made steel baskets for bagel shops. And the overseas competition was murderous. “We were confronted with finished baskets from Asia that cost less than my cost for the steel alone,” Greenblatt says. “We had an untenable business proposition, where we were losing money on every basket. We had to transform.” Marlin made its first investment in automation—a robotic wire bender with a built-in robotic welder—in 1999. Today, the company uses five robots and expects to add three more by the end of 2015. Marlin's human workforce has grown, too, from 17 employees in 1999—“most of them earning minimum wage with no benefits,” or about $15,000 a year, Greenblatt says—to 29 today. The lowest starting salary now is $35,000, he says, and the company provides a 401(k) retirement savings plan and health insurance for every worker. Robots have allowed Marlin to expand production beyond baskets to other wire-formed and sheet metal products. And, he adds, sales are up—from $800,000 in 1998 to $6 million in 2014. Robots “saved the company,” Greenblatt says. Robots “saved the company,” says Drew Greenblatt, CEO of Marlin Steel Wire Products in Baltimore. Marlin's automated workers are among the estimated 230,000 industrial robots in use in (Matt McClain/The Washington Post via Getty the United States, according to the Robotic Industries Association (RIA), a trade Images) organization based in Ann Arbor, Mich. But robots are relatively scarce in places like Marlin—small and medium-sized enterprises (SMEs), says RIA President Jeff Burnstein. “The automotive industry accounts for more than half” of U.S. industrial robots, Burnstein says, while “only about 10 percent of the U.S. companies that could benefit from robots have installed any so far. Most of the 300,000 SMEs [in the United States] have yet to install even one robot.” Industrial Robots Drive Growth in Spending Worldwide spending on robotics, $U.S. billion, 2000–25 Page 2 of 19 Robots and Automation SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. Note: 2015, 2020 and 2025 figures are estimates. Source: Alison Sander and Meldon Wolfgang, “The Rise of Robotics,” Boston Consulting Group, Aug. 27, 2014, http://tinyurl.com/mo6r8pm According to projections, industrial users will spend more than $24 billion on robotics by 2025, the largest share of the projected $67 billion global spending that year. Analysts predict commercial robotic spending will jump by $11 billion between 2015 and 2025, while personal market spending will grow by $6.5 billion. Robots are a boon to business because they can increase labor productivity, reduce payroll costs (thus allowing U.S. manufacturers to better compete with foreign competitors), increase profit margins and fill jobs suffering from worker shortages, say robotics proponents. Business consultant Jeff Holmberg of accounting firm Froehling Anderson in Minneapolis says, “Robots can far outperform their human counterparts at precision or repetitive tasks, both in terms of processes per hour and the number of hours that they can operate. As an added bonus, robots don't get bored, need time off or complain.” But some economists fear the robot revolution will lead to massive job losses as machines take over work that had been the domain of humans. Karl Fogel, a partner with technology consultants Open Tech Strategies, told the Pew Research Center, “The reason [businesses] are investing in machine agents is precisely that they will replace more [lower-paid] humans than the number of [more highly paid] humans needed to build and maintain the machines…. We're going to have to come to grips with a long-term employment crisis and the fact that— strictly from an economic point of view, not a moral point of view—there are more and more ‘surplus humans.’” 1 Economist Erik Brynjolfsson, director of the MIT Center for Digital Business, says that technological change is contributing to job losses and to stagnating incomes. “It's the great paradox of our era,” he said. “Productivity is at record levels, innovation has never been faster, and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and organizations aren't keeping up.” 2 Rob Atkinson, president of the Information Technology and Innovation Foundation, a Washington think tank that promotes incorporation of innovative technologies into public policies, disagreed. “Automation has never led to fewer jobs in the economy in the past and never will in the future, for the simple reason that automation lowers prices, which increases demand for goods and services, which in turn creates jobs,” he said. 3 Jeff Trinkle, program director at the National Science Foundation for the National Robotics Initiative (NRI), a multi-agency federal initiative that supports robot research in areas of national priority, says, “The continued evolution of robotics will lead to job creation in some areas and losses in others, with an overall gain in productivity and standard of living. This has been the case for essentially every major technological advance in modern history. If the U.S. were to decide not to develop robotics further, because robots might take away some jobs, I believe we'd be making a big mistake. The rest of the world would continue on with robotics development, and would gain in productivity relative to the U.S. By focusing on ways that people and robots can work together, the U.S. will remain strong leaders in robotics and will be able to ensure that robotics technologies are deployed equitably.” Page 3 of 19 Robots and Automation SAGE Business Researcher ©2021 SAGE Publishing, Inc. All Rights Reserved. A 2014 poll of 1,896 technology experts found respondents split over how advances in artificial intelligence and robotics will affect employment. Fifty-two percent thought the technologies would either have no effect on overall employment or would create “new jobs designing, building, servicing, and utilizing the same technologies that are displacing other types of work.” But 48 percent were more pessimistic. Dave Kissoondoyal, CEO of business consulting firm KMP Global, told the pollsters, “Networked, automated, artificial intelligence applications and robotic devices will have displaced more jobs than they have created by 2025.” 4 Cage-Free Robots In the past, industrial robots worked in isolation, caged off to keep humans out of harm's way as they manipulated, welded and sorted the objects at dizzying speeds on the assembly line. Mike Taubitz, former global director of safety and ergonomics for General Motors and now an independent industrial safety consultant, says that, in the 1980s, “big, clumsy hydraulic robots were the rule. Control wasn't very good, employees trying to program one were at risk of the thing running off in an unpredictable direction. So we put guarding and cages around them, with interlocking systems.” But caged robots have drawbacks. They typically use expensive proprietary software that requires considerable programming expertise, their safety cages occupy valuable factory floor space and many of them are priced beyond the budget of small or medium-sized businesses. Now a new generation of industrial robot is emerging, designed to work safely alongside humans. They are relatively inexpensive—prices generally run $20,000 to $35,000 per unit, compared with $60,000 and up for a new “conventional” preprogrammed caged robot. These machines, known as co-bots, can easily be programmed to perform a variety of light, repetitive tasks such as moving, sorting and shipping merchandise, according to their manufacturers, and they are fitted with sophisticated sensors to stop their processes immediately if unexpected contact—such as bumping into a human worker—occurs. Social roboticist Heather Knight, who studies human-robot interaction at Carnegie Mellon University (CMU), thinks co-bots offer a good social as well as industrial automation model. “Instead of replacing a factory worker with a robot,” she says, “you could have … humans and robots working side by side, making use of what the person is good at and what the robot is good at. You would have these human- robot teams that would function as a unit of creation.” Co-bots have been fairly slow to catch on. Universal Robots of Odense, Denmark, a co-bot manufacturing pioneer, has sold only about 2,500 worldwide since it began manufacturing them in 2008.