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Dear ,
Robots, robots; the future of Manufacturing?
I ran across an article this weekend that was pretty fascinating. It told about the advances in robotics that are starting to hit factory floors. The advances in robotic technology have been incredible. Here is the link to the article which appeared in the NY Times.
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The earlier generations of robotics were somewhat limited in the movements that they could make. There just wasn't much dexterity. They were really good at repetitive tasks that happened at the same exact place time after time. As an example, on an assembly line a robotic arm could reach out to the same spot time after time and put in a spot weld. Each time a car came by on the assembly line is was exactly so many inches from where the robotic arm was stored and it was moving at exactly a certain speed so that the robot "knew" right where to put the weld. Well look at what robots can do now.
"One robot arm endlessly forms three perfect bends in two connector wires and slips them into holes almost too small for the eye to see. The arms work so fast that they must be enclosed in glass cages to prevent the people supervising them from being injured. And they do it all without a coffee break - three shifts a day, 365 days a year."
Wow! Robots now have the dexterity to bend things and thread wires through tiny little holes and they can do it way faster than a human can. Not only are the robots of today more flexible, the costs are coming down rather dramatically which makes them infinitely more practical from a financial standpoint. In fact they have become so cheap that even the Chinese are starting to use them to replace their low wage human labor.
How cost effective are they? Take a look at this paragraph from the same article.
"In one example, a robotic manufacturing system initially cost $250,000 and replaced two machine operators, each earning $50,000 a year. Over the 15-year life of the system, the machines yielded $3.5 million in labor and productivity savings."
Think about that. This one robot can replace two people making $50,000/yr each. So at a cost of $250,000 it is paid for in 2.5 years just by the savings on payroll. It can do the work faster and more exact. You don't have to worry about labor contracts, health insurance, vacation time, etc. And at the end of the 15 year life of the robot your $250,000 investment has yielded $3.5 million in savings and productivity. Seems like a no brainer to me!
Take a look at this short video for a demonstration of the newer robots abilities. It really is amazing. (it's in Japanese so you will have to read the subtitles)
 | | Industrial Robots That Imitate Human Wrist Movement : DigInfo |
What Does This Mean for Manufacturing?
Folks, this could be huge for manufacturing. This will be devastating from the human worker standpoint but it will be huge for manufacturing. Outsourcing is a big issue right now and one of the main reasons for the outsourcing is the cost of labor here vs. overseas. If we can dramatically reduce the number of humans involved in the manufacturing process then we are back on equal footing with the countries we are losing out to via outsourcing.
"In their minds, the advent of low-cost automation foretells changes on the scale of the revolution in agricultural technology over the last century, when farming employment in the United States fell from 40 percent of the work force to about 2 percent today. The analogy is not only to the industrialization of agriculture but also to the electrification of manufacturing in the past century, Mr. McAfee argues." As you can see from the paragraph above, there are those that think we are on the verge of automating manufacturing to the extent the farming was automated last century. Once we get the costs of production back in line with other countries through robotics there is a huge incentive to move those jobs back to our country. Why? Because after production, shipping is quite often your next biggest expense. If the cost to build becomes relatively the same through robotics than it would make all the sense in the world to move production back here to save the shipping. Why do you think the Japanese have so many car plants here? The cost of shipping those cars across the ocean is so much that they would rather build the cars here than pay the shipping.
Is There An Opportunity Here? You bet there is. Several. I'll mention one. If you have kids and grandkids that are getting ready to go to college, robotics and manufacturing would be an excellent course of study. Those high paying jobs on the factory floor are going away but they are going to need people to design, setup, and maintain these robotics systems, at least until they teach the robots to do that for themselves also! What other opportunities do we see? Give us a call and we tell you! Reading Between the Lines, Again!
Ran across this article and while I'm not going to spend a lot of time on it I do want to call your attention to two paragraphs that are buried towards the bottom of the article.
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"The government rescued Fannie and Freddie in September 2008 when massive losses on risky mortgages threatened to topple them. The Treasury has pumped nearly $188 billion into the companies. In return for that support, the government has received senior preferred shares of stock that pay a 10 percent dividend.
Currently, Fannie and Freddie make dividend payments to the Treasury every quarter. That has forced them to borrow money from the government and use that money to repay the government in periods when they didn't turn a large enough profit to cover the dividend payments. "
That would be like buying a house and then having the bank loan you the money to make your mortgage payment every month so that you don't fall behind. So next time you read the stat that so far Fannie and Freddie have paid the government over $46 billion in dividends, you'll know the whole story!
Until next week , Protect Your Wealth!
Sincerely,
   
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