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DAVID KRUSE

By Staff | Jul 21, 2017

Over the last 25 years we have seen robotics and automation establish an increasingly significant presence in our domestic manufacturing sector. As technology progresses at what approaches an exponential rate, more and more sectors seek to take advantage of the efficiencies provided by increased utilization of robotics and automation. As with any major change this has resulted in some growing pains. Workers have been displaced, and there seems to be a growing worry about the scale on which this may one day occur.

While the fears of everyone losing their jobs to robots may be overblown, they are not without some basis in reality. Studies have found that on average each industrial robot replaces an average of six laborers. Last year more than 250,000 industrial robots were installed worldwide (over a third of these were in China) doing the work of 1.5 million workers. This installation rate has been growing each year and shows no sign of slowing down, particularly in countries such as China that have a small number of industrial robots relative to the size of their workforce.

What is important to remember is what type of jobs are being replaced by automation. As technology advances, robots improve, and Artificial Intelligence (AI) becomes a viable tool, automation will spread into many other sectors, but at this time neither the technology nor the demand exists for this type of automation. Today repetitive low-skilled work such as manufacturing is where robotics truly shines. In the future, truckers may be replaced by autonomous big rigs, bank tellers by advanced robotic ATMs, and fast-food workers by robots who won’t go on strike wanting $15/hr to flip burgers, but today assembly line jobs are the ones to worry about. Countries such as the U.S. and Britain have economies largely based on service industries, which will by and large be immune to these forces, at least for the foreseeable future. Countries such as China who have vast unskilled workforces conducting repetitive easily automated tasks will be the most affected.

While low-skilled laborers are at risk of losing their jobs to automation, this very automation creates new jobs at the same time. There have to be engineers to design the robots, computer programmers to write their code, technicians to troubleshoot and repair these machines, and much more. While these jobs will be fewer in number than the ones lost, they are much higher paying jobs. Additionally these robots help address one of the most persistent and troubling challenges of modern first-world economies, the stagnation of productivity.

The economic boom experienced in the 2nd half of the 20th century was driven by two factors, a rapidly expanding workforce, and the rapid growth of productivity per worker. In the 21st century GDP has grown at a much slower rate, due to a contracting work force and tepid growth in per worker productivity. Over the next decade the Congressional Budget Office (CBO) estimates output per worker to inch higher at only a 1.3 percent growth rate, and due to an aging population despite low unemployment labor force participation is remains at the lowest levels since the Great Depression. To outperform these lackluster predictions and achieve a meaningful GDP growth rate, increased adoption of robotics and automation will be required. Robotics can help to address both of these issues by filling in where there is a shortage of laborers, and making the workers we have that much more productive.

When thinking of robots in the workforce they must be viewed not at a replacement to human labor, but rather as a compliment to human labor. Where we have a shortage of willing workers (think slaughter plants and the like) robots will fill in the gaps. Where we have skilled workers automation will multiply their efforts, reduce inefficiencies and allow them to maximize their productivity.

Prestage Foods is reportedly incorporating a significant number of advanced robotics into its new north-central Iowa pork processing plant. Labor is tight in this region and this plant will startup last relative to new pork plants under construction, so much of the available labor will be taken by others. They will still need to hire 1050 workers late next year. It would be a much higher number if not for the robotics. Robotic processes replace workers but it also increases precision. As just one example of the robotic processes they are adopting, they will use waterjet cutters on robotic arms to slice through bone and meat. They take a picture of the carcass from which the computer can determine meat from bone and program the waterjet cutter to precisely separate the meat from the bone. The process takes seconds so productivity improves as a result. This requires this hog plant to hire a different type of employee. . . those trained in operating and maintaining the robotic equipment. There will be more demand for this type of worker than the supply that currently exists.

The company is reportedly working with the community college at Iowa Central to help them train students for the skill-set that they will need. These are no longer only the jobs of the future but the jobs of here and now. They pay a lot better than the job of meat-cutting on the floor that these plants do or did. This is a great example of the educational system working with industry to train people to do the jobs needed. This benefits everyone. Packing plants will be aggressive adopters of robotic technology because the number of workers to do it the old way does not exist and the productivity gained from robotics generates a strong return on investment.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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