Will The Great Resignation Lead to a Rise of the Robots?
As businesses struggle to fill open job listings and many Americans rethink their career options, a growing number of companies are looking to automation to keep operations running.
Orders for robots in North America are up 37% from a year ago, according to the Association for Advancing Automation (A3), totaling nearly 29,000 since January. That’s nearly $1.5 billion in machinery.
The numbers represent an all-time high, besting the previous record, set in 2017, by 5.8%. And it could continue to grow. In the third quarter alone, companies ordered 9,928 robots valued at $513 million.
“With labor shortages throughout manufacturing, logistics and virtually every industry, companies of all sizes are increasingly turning to robotics and automation to stay productive and competitive,” said Jeff Burnstein, president of A3. “Sales are on track to make 2021 the biggest year ever for robotics orders in North America. We see many current users expanding their applications of robotics and automation throughout their facilities while first time robotics users are emerging in a wide range of industries such as automotive, agriculture, construction, electronics, food processing, life sciences, metalworking, warehousing and more.”
It's a trend that seems to have legs. A McKinsey study predicts that roughly half of all existing work activities could be automated in the next few decades, with more than 50 billion devices connected to the Internet of Things by 2025.
“This will occur as robots become ever-more intelligent and capable,” says McKinsey. “Production will gain scalability even as production lead times decline. This trend will shift competition toward capital-expenditure investments in automation technology and toward the social, emotional, and technological skills needed as intelligent machines take over more physical, repetitive, and basic cognitive tasks.”
Those changes won’t be limited to factories and agriculture, either. A recent Verizon survey of over 600 U.S. small businesses found that 30% have already adopted digital tools to compensate for their worker shortage during the pandemic.
Whether you call it the Big Quit or the Great Resignation, there’s a shift happening in the U.S. labor force. In September, a record 4.4 million people quit their jobs, according to the Bureau of Labor Statistics Job Openings and Labor Turnover survey.
And some companies are using that as a jumping off point to shift to automation. An Arby’s drive-thru outside of Los Angeles, for example, now uses an artificial intelligence voice assistant to take orders and send them through to the line cooks. Starbucks, meanwhile, is automating its inventory tracking. And an increasing number of restaurants allow diners to order and pay for their meal via their phone, bypassing the server.
While automation in the manufacturing field has been expected for some time, this rise in the service sector has caught some people off guard. But experts have been warning about this since the start of the year.
“Pandemic events accelerate robot adoption, especially when the health impact is severe and is associated with a significant economic downturn,” said the International Monetary Fund in a research paper published in January. “Our results suggest that the concerns about the rise of the robots amid the COVID-19 pandemic seem justified. … As automation intensifies following the COVID-19 crisis, more workers will need to find new jobs, especially those who are less skilled.”
The World Economic Forum estimates as many as 85 million jobs could be displaced by automation by 2025, but says another 97 million positions will emerge. That looming shift – and the job changes it will entail – is being referred to as the "Fourth Industrial Revolution." And a key component of it will be a culture of lifelong learning, which will help the workforce remain relevant, productive and employable.
“The entire concept of work is evolving quickly,” reads the report. “And the upheaval brought on by the COVID-19 pandemic further crystalized an urgent and complex global employment challenge: how to prepare people for the future of work in ways that serve individuals, businesses and communities.”
A future that includes increased automation, though, could benefit workers who aren’t displaced and don’t leave their jobs. McKinsey, in a separate study earlier this year, found automation (and other factors) had the potential to accelerate annual productivity growth by about one percentage point in the period to 2024. That’s more than double the pre-pandemic rate. And in the U.S., it could mean a per capita increase of about $17,000.
“The use of technologies such as digitization and automation appears to have accelerated in some companies during the pandemic,” the firm wrote. “With the right conditions in place, this has the potential to raise productivity by substituting employees or contribute to raising output per worker.”
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