Robots In The Manufacturing Sector – We’re Lagging Behind

March 14th, 2019 by Tom Lynch

In 2013, Oxford professors Carl Frey and Michael Osborne published what became a highly read, highly cited and highly criticized study suggesting that machines could replace 47% of America’s jobs over the following 25 years. This landed like a stink bomb on the robotic revolution.

The study, which examined more than 700 US occupations, found that jobs in transportation, logistics, and administrative and office work were at “high risk” for automation. “We identified several key bottlenecks currently preventing occupations being automated,” said Dr. Osborne when the study was released. “As big data helps to overcome these obstacles, a great number of jobs will be put at risk.”

Following the study, academics and pundits jumped into the middle of the debate to argue its conclusions. In 2015, Forrester Research’s J. P. Gownder authored The Future Of Jobs, 2025: Working Side By Side With Robots and updated it two years later in 2017. Gownder concludes that, yes, AI will replace many jobs, but it will also create many jobs. He suggests a net job loss of perhaps 9.1 million, or about 7% of the workforce. Seven percent isn’t 47%, but 9.1 million jobs are a lot of jobs. And a lot of people who could be swept away by the rise of the robots.

So, clearly, the robots are coming. And, just as clearly, there is now, and will continue to be, human collateral damage. We should do everything in our power to help the millions of people the robots will displace. It would be outrageously stupid, and immoral as well, not to do that.

But if you believe development and adoption of robots is essential to keep the country competitive and prosperous, then you should be concerned, because other countries are outpacing us. By long shot.

A new report from the Information Technology & Innovation Foundation (ITIF) finds the US ranks 7th in the world in the rate of robot adoption in the manufacturing sector.

When controlling for worker pay, the situation is even more bleak. In that case, we’re 17th in the world.

The report relies on International Federation of Robots data for industrial robot adoption rates but adjusted the rankings to control for differences in manufacturing worker pay. The decision to use robots usually weighs the cost savings that can be achieved when a robot can perform a task instead of a human worker, and those cost savings are positively related to the worker compensation levels. Higher wages lead to faster payback, making more robots a more economical investment.

On a compensation-adjusted basis, the report found that southeast Asian nations significantly outperform the rest of the world in robot adoption, with South Korea, Singapore, Thailand, China, and Taiwan the top five nations, in that order. Moreover, China’s rate of robot adoption is so high, fueled by massive government subsidies, that if China and South Korea’s respective growth rates continue, by 2026 China will lead the world with the highest number of industrial robots as a share of industrial workers, when controlling for compensation levels.

Robert Atkinson, ITIF’s President, has some sensible suggestions for how we can catch up. Policy makers should listen to him.

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