Cheaper robots could replace more factory workers: study

The falling cost of industrial robots will allow manufacturers to use them to replace more factory workers over the next decade while lowering labour costs, according to new research.

Robots now perform roughly 10 per cent of manufacturing tasks that can be done by machines, according to the Boston Consulting Group. The management consulting firm projected that to rise to about 25 per cent of such "automatable" tasks by 2025.

In turn, labour costs stand to drop by 16 per cent on average globally over that time, according to the research.

The shift will mean an increasing demand for skilled workers who can operate the machines, said Hal Sirkin, a senior partner at Boston Consulting.

Factory workers "will be higher paid but there will be fewer of them," Sirkin said.

The research found a tipping point for installing robots: Companies tend to start thinking about replacing workers when the costs of owning and operating a system come at a 15 per cent discount to employing a human counterpart.

For example, in the US automotive industry, which is predicted to be one of the more aggressive adopters of robots, a spot-welding machine costs $8 an hour versus $25 an hour for a worker.

A robot that can perform certain repetitive tasks costs about one-tenth as much as it did more than 10 years ago, Sirkin said. Costs tied to one commonly used robotics system, a spot welder, are expected to fall 22 per cent between now and 2025.

Three-fourths of robot installations over the next decade are expected to be concentrated in four areas: transportation equipment, including the automotive sector; computer and electronic products; electrical equipment and machinery.

Adoption is forecast to be slower in industries in which tasks are more difficult to automate or labour costs are low, such as food products or fabricated metal.

Certain countries also are expected to be more brisk adopters. China, the United States, Japan, Germany and South Korea now account for about 80 per cent of robot purchases and are expected to maintain that share over the next decade.

Labor costs have climbed in countries such as China that have been popular for outsourcing production, while technological advances for robots allow them to be more flexible and perform more tasks, said Jim Lawton, chief marketing officer at robotics company Rethink Robotics.

"People have come to believe this is going to be an important part of how manufacturing gets done," he said.