Robots are the key to winning the productivity war

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For those who believe the renewed interest in warehouse automation and robotics was just a pandemic ride that will fade as the job market loosens, meet Malcolm Wilson.

He is the CEO of GXO Logistics Inc., which operates approximately 900 warehouses, primarily in the United States and Europe for clients such as Nike and Nestlé. The Greenwich, Connecticut-based company, which tinkers with different types of robots tailored to a customer’s needs, posted another record revenue of $475 million in the second quarter and has a project pipeline of automated logistics that extend until 2024.

Even though GXO is one of the most advanced warehouse operators, the trend towards automation has only just begun. About a third of GXO’s warehouses are automated, double the percentage from about five years ago. GXO expects 60 to 70 percent of its warehouses to be primarily machine-operated over the next five years, he said. The warehousing industry as a whole is only about 5% automated, he said in a phone interview.

This is going to change, and it is a transformation that is accelerating. In the United States, industrial robot orders hit a record high of 40,000 last year, down from 31,000 in 2020 and 30,000 in 2019. In fact, the United States lags behind in robot adoption. robots. According to the latest global data from the International Federation of Robotics, installations of 266,000 robots in Asia in 2020 more than six times that of the Americas. For robot density, which measures the number of such machines per 10,000 workers, the United States is seventh, behind manufacturing powerhouses such as South Korea, Japan and Germany.

The pandemic and the ongoing labor shortage that accompanies it will accelerate this adoption of automation, which should be seen as beneficial to the economy, to businesses, and even to workers. It boosts productivity, which allows wages to rise without increasing inflation.

This latest wave of warehouse and factory automation in the United States is unique because it comes at a time of near-full employment, helping to allay some of the fears that robots are coming to take everyone’s job. This rapid increase in demand for robots has not put thousands of workers on the streets. Manufacturing employment increased by 271,000 in the first six months of this year and the unemployment rate fell to 3.5%, matching the pre-pandemic level in 2019 which was the lowest since the end of the 1960s.

There will still be warehouse jobs for people for a long time to come. In some of GXO’s operations, such as performing sub-assembly work for Boeing, the volume is not large enough to warrant automation. Workers will still be needed to tend to machines and perform tasks that involve troubleshooting. And while arm’s length tools for robots have advanced rapidly, nothing comes close to the dexterity of the human hand – and won’t be for decades.

Still, that doesn’t mean there won’t be labor disruption. About 6.2 million people work as laborers and movers, the U.S. Bureau of Labor Statistics category that best matches warehouse work. They earn just under $15 an hour, and even with automation, jobs in the industry are expected to grow by 7% from 2020 to 2030, which is about as fast as average, according to the bureau.

Companies have been forced to think during the pandemic about which work can be done remotely and which needs to be done in person, McKinsey & Co. said in a study last year. Automation will accelerate for the restaurant and customer service industries in the United States and lead to a loss of 4.3 million jobs, according to the report.

Jobs, however, will expand for health care providers, technicians and managers, the study notes. This will force people to raise their skill levels for these new positions as low-wage work is phased out. “More than half of low-wage displaced workers may have to move into occupations in higher wage brackets and requiring different skills to stay employed,” the study says.

In the warehouse, some of the most tedious tasks, like packing items into a box or walking miles every day to pick up goods from a shelf, can be done by an array of different robots. Businesses gain efficiencies through automation and can often reduce the size of their warehouse operations as goods are processed and moved faster. And with robots, warehouses become safer as lifting strains and repetitive motions are reduced, Wilson said. GXO has a better track record of retaining workers in automated facilities compared to non-automated ones.

Frontline workers’ attitudes toward robots also changed during the pandemic, especially in warehouses and factories where labor shortages were acute and workers were being asked to work extra shifts. to keep pace despite the risks of catching Covid-19. During the pandemic, machines weren’t so much replacing humans as coming to the rescue. That’s because the machines are most cost-effective for repetitive tasks or jobs where lifting heavy loads can strain someone’s back in a hurry. It is the handy fruit of automation. Technology has also allowed companies to insert robots safely alongside humans, who increasingly see them as helpers rather than something threatening and isolated behind a cage like most robots do. were more than ten years ago.

This current robotic revolution could not have happened sooner because the technology was not ready. In the past decade alone, industry has begun to manufacture robots that stop their action when approached by a worker, freeing many of these machines from their cages that keep humans away from the powerful steel arms that move at deadly speeds. These large robots isolated from humans are still the case in heavy manufacturing like car factories, where large robots can easily circle around a half-built vehicle. Just over five years ago, autonomous mobile robots hit the scene and revolutionized warehouses. From now on, it is trays and bins that are brought to people and not the other way around. With cameras that allow machines to “see” and tools at arm’s length that can now grab almost any item, robots are able to pick and pack specific items. Machine learning software helps them improve these capabilities and share this knowledge instantly with other robots with a simple software update.

Throughout history, machines have lightened the physical burdens of labor and increased worker productivity, allowing wages to rise without triggering inflation. It’s a little counterintuitive, but these machines have also paved the way for an overall increase in employment, although automation can certainly eliminate specific jobs directly. Think of the steam shovel that replaced dozens of workers with hand tools. The Hoover Dam would not have been possible to build with only shovels and pickaxes to dig and wheelbarrows to pour the concrete. That said, it is crucial that workers participate in productivity gains through higher wages and that displaced people have new opportunities. The robot revolution is coming, however, and the industry will be better off for it.

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This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners. Thomas Black is a Bloomberg Opinion columnist covering logistics and manufacturing.

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