are reaching an inflection point, and large-scale deployment will drive significant changes
in the manufacturing cost competitiveness of the major export economies.”
— The Boston Consulting Group
There’s that term again: inflection point
During our half-day robotics session at the Consumer Electronics Show 2015, Jibo’s Cynthia Breazeal talked about it in regard to consumer robotics; at the same session, Singularity University’s Rob Nail tracked it on a graph for the audience, describing what it all means for the near-term progress of the robotics industry.
Later that January, during our Investing in Robotics webcast, the Foundry Group’s Brad Feld enthused about its effect on startups, incubators and innovation; while, during the same webcast, CLSA Americas Jeremie Capron reiterated the inflection point’s double-digit ramble through the annual $100-billion world of global automation.
Most of us first met up with the arrival of the inflection point in The Second Machine Age, as its authors, Andy McAfee and Erik Brynjolfsson, dropped anchor off its shores and gave us an insider’s tour.
The Boston Consulting Group (BCG), after a deep dive through the statistics, has now surfaced with an enlightening report that quantifies much of the inflection point’s recent surge. Using those numbers they then craft a fascinating look ahead to the coming decade as the inflection point takes off.
Although the BCG report itself won’t be out until later in the year, its authors have released enough of a pre-publication teaser that it actually amounts to a chunky precis of what’s to come in their full report.
Take a glance at the BCG chart above. You can actually see where the inflection point first begins its rise — late 2013. Just about the time that Google scooped up eight leading-edge robotics companies. Coincidence? Or did Google see the inflection point arriving and jump to get itself into play?
Then cast your eye up the chart’s incline toward 2025: that’s nothing short of amazing!
The BCG forecast is quite heady in calling for global robotics installations to increase at a compound annual rate of approximately ten percent over the coming decade. That tops the forecasts for China’s entire economy!
A harbinger of what the full report might reveal when it finally does arrive BCG posted in January: Why Advanced Manufacturing Will Boost Productivity. That article keys the rise in productivity attributable to the “following five technological tools [that] have the greatest potential to influence the manufacturing landscape and improve productivity in the years ahead.”
Topping that list is autonomous robots:
“A new generation of automation systems links industrial robots with control systems through information technology. New robotic and automation systems equipped with sensors and standardized interfaces are beginning to complement — and, in some cases, eliminate — human labor in many processes. This could enable manufacturers to cost-effectively produce items at smaller scale and to improve their ability to enhance quality.”
Also at our half-day robotics session at the Consumer Electronics Show was Alison Sander, director of the Center for Sensing & Mining the Future at The Boston Consulting Group. One chart in her presentation typifies the rise in robotics along all of its fronts: it seems that all boats are rising.
Attractive price-performance makes for productivity gains
“A confluence of forces,” says BCG’s impending report, “is likely to power the robotics takeoff in many industries in the near term. One is declining cost. For example, the total cost of owning and operating 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.
“At the same time, the performance of robotics systems (their speed and flexibility, among other attributes) is likely to continue improving by around 5% each year. The combination of price and performance improvements will greatly accelerate the time it takes for robots to become more cost effective than labor in many industries.”
“Companies are finding that advances in robotics and other manufacturing technologies offer some of the best opportunities to sharply improve productivity.”
As such, robot shipments set new records, with 25,425 robots valued at $1.5 billion being shipped to North American customers in 2014. Shipments grew 13 percent in units and six percent in dollars over the previous records set in 2013.”
And it seems that things are just warming up to get hotter. A recent survey of “U.S.-based manufacturing executives at companies with sales of least $1 billion, shows 72% of respondents claiming that they will invest in additional automation or other advanced-manufacturing technologies in the next five years.”
It’s all about productivity. As Noble laureate in economics Paul Krugman puts it: “Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.”
Five nations will take the lead
“The biggest gains in labor savings,” says the BCG report, “will occur in nations that are at the forefront of deploying industrial robots, such as South Korea, China, the U.S., Japan, and Germany.
“Manufacturing labor costs in 2025, when adjusted for normal inflationary increases and net of other productivity measures, are projected to be 18 to 33 percent lower in these economies when advanced robots are factored in.
“In China, one of the world’s largest markets for robots, greater use of automation could compensate for a significant part of the loss in cost competitiveness that is expected to result from rapidly rising factory wages and the growing challenge of finding manufacturing workers.
“Economies where robotics investment is projected to lag — and where low productivity growth is already a problem — are likely to see their manufacturing competitiveness deteriorate further over the next decade. Such nations include France, Italy, Belgium, and Brazil.”
