Volume 17 | Issue 9 | Year 2014

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A group of workers is poised to dominate industry, according to a report released by PricewaterhouseCoopers and The Manufacturing Institute. They are tireless and silent, and yet, incredibly disruptive.

The “workers” are industrial robots, which have become smarter, faster, more affordable, and offer advanced capabilities such as sensing, dexterity, memory and trainability. The report, titled, “The new hire: How a new generation of robots is transforming manufacturing,” is based on a survey of 120 industrial manufacturers and finds that 59 percent of companies are currently using some form of robotics technology.

Barriers to adoption still exist however, due to limitations such as cost, the lack of perceived need, and access to expertise and skills. Manufacturers have been generally slow to adapt to the workforce change, especially if their current practices continue to generate a positive bottom line.

“The business will dictate how and when they adopt the technology,” said Bobby Bono, PwC manufacturing leader. “If the competition is making the products cheaper and faster, or if different leadership comes in, (manufacturers) will be open to change.”

As with any disruptive technology, the change is not easy. “It’s not just buying a few robots for the factory floor,” he said. Employing the use of robotics forces different ways of doing business down the line, to the manufacturing process itself and changing skill sets of employees. “You have to change the way you think about the manufacturing process and how you recruit talent,” Bono said, adding that the use of robotics also has the very real impact of displacing workers.

Rise of the Robots
According to PwC’s report, more than 1.5 million robots work in factories across the globe, with an estimated 180,000 in the U.S. That number is expected to increase with the global industrial robot market estimated to reach $41 billion by 2020.

“The past several years have recorded a sharp resurgence in orders of industrial robots and this wider adoption comes at a time when manufacturers – both big and small – are trying to squeeze greater productivity from their workforce and respond quickly to customer preferences and expectations,” said Bob McCutcheon, PwC’s U.S. industrial products leader. “The manufacturing industry is primed for a more advanced integration of robotics and the speed of adoption continues to increase with every dollar invested in these new technologies. At PwC, we see this as the ongoing progression toward the ‘factory of the future,’ as disruptive technologies such as 3D printing and robotics have the ability to significantly improve efficiency, quality and operations.”

The report states that a “flurry of investor activity” has accompanied the rise in adoption of robots, particularly through venture capital investments. According to PwC, investments by U.S. venture capital firms in robotics technology companies rose to about $172 million in 2013, nearly tripling 2011 levels, providing a window into what the investment community believes will be a promising and profitable sector. It also indicates that the robotics industry could see an accelerated development as these venture capital-backed companies grow.

“The rise of robots is primarily attributed to large companies as they have the risk capital to deploy in robotics technology. Larger companies along with the venture community will accelerate adoption and drive down prices making robotics scalable for every size enterprise,” continued McCutcheon.

Talent Development
The increased use of robots on the factory floor speaks directly to Bono’s point about a human workforce threatened with displacement while also needing new skillsets.

“As the digital ecosystem continues to evolve with automation technologies gaining a larger presence in production facilities, distribution centers and through supply chains, manufacturers need to manage the benefits but also prepare for the implications of displacing human workers,” according to the report, which continues to point out that 27 percent of respondents believe the biggest impact of robots on the U.S. manufacturing workforce in the next three to five years will be the replacement of workers.

On the other hand, a greater robotic workforce could potentially drive a need for more human talent to train and repair that growing workforce and develop the burgeoning technology. Thirty-five percent of respondents to PwC’s survey reported the biggest impact robots will have on the manufacturing workforce is that they will lead to new job opportunities to engineer advanced robots and robotic operating systems, followed by 26 percent who believe it will lead to more demand for talent to manage the robotic workplace.

While robotics allows for more cost-effective, customized production, Bono said PwC’s goal is to try and help manufacturers “understand the magnitude of the change in the area of employee redevelopment.”

“The use of robotics provides more opportunity for higher skills,” Bono said. “Manufacturers would need to figure out how to re-deploy or re-educate their employees.”

Gardner Carrick, vice president, The Manufacturing Institute, in noting the change necessary in workforce and mindset, said in the report: “As companies continue to embrace robotics and other types of automation and become more data-driven, their success will largely hinge on shaping and building a workforce that can better leverage such technological advances. To do that, manufacturers are feeling a growing need to pull from a wider and deeper pool of talent.”

As with everything that makes its way into the mainstream, robotics must first prove its usefulness to many industrial manufacturers who remain unconvinced. Despite strong momentum surrounding the development and adoption of robotic technology, resistance to its use holds back widespread adoption.

Of those surveyed who do not currently use advanced robotics technology, 27 percent listed the lack of perceived need as the biggest limitation for not adopting robotics in the next three to five years, followed by cost (26 percent) and insufficient resources and expertise (14 percent).

PwC seeks to advise those companies that may not be totally convinced of the edge they can gain through robotics. Bono added, “We want companies to try to understand where they want to be in the future and whether robotics can help them get there quicker.”

PwC’s report, “The new hire: How a new generation of robots is transforming manufacturing,” found that automation technology makes it easier for manufacturers to be closer to their customers and perform better for that local consumer, potentially leading to greater reshoring of manufacturing activity to the U.S. market.

Machine-to-machine knowledge sharing allows companies to switch production from one locale to another, or from production of one product to another without considerable investments in talent, training, set-up time and related costs. It may also help bring manufacturing back to the U.S. as businesses that deploy robotics look to skilled workforces to oversee these advanced manufacturers.

Printers and Sensors: Disruptive Duo
Along with robotics, PricewaterhouseCoopers has identified two other technologies that are set to transform the way things are made. One is 3-D printing technology, a market that is transforming rapidly.

In an earlier report, PwC discussed the impact 3-D printing will have on manufacturing with “robust innovation at established vendors and among entrepreneurs and hobbyists” providing a test ground for filling the market with midrange systems that bring enterprise-class capabilities at lower prices.

Among the problems now with 3-D is the limited functions, which also limit the far-reaching capabilities of this technology. “Today’s market for 3-D printers and services is still largely bifurcated-at the low end are limited-function offerings of interest to hobbyists. At the high end are expensive printers that have a limited total available market,” PwC explained in its report. “The key for market growth is the continuing development of printers in the middle price range to achieve advances in performance, in multi-material capability, and in printing complete systems. PwC expects these continuing developments to open the door to a disruptive expansion in the market.”

The second technology, to be addressed in an upcoming PwC report, involves sensors and the use of data to drive decision-making in factories.

Bobby Bono, PwC manufacturing leader, said this technology is disruptive because it, too, has the same potential to change methods of production.

“The data received from sensors will force people to make decisions from that data, rather than from experience,” Bono said.

Robert McCutcheon is PwC’s US industrial products leader based in Pittsburgh.

Bobby Bono is PwC’s US industrial manufacturing leader based in Charlotte.

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