{"id":25245,"date":"2017-11-15T19:46:04","date_gmt":"2017-11-16T00:46:04","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/collaborative-robots-as-a-hedge-against-isolationism\/"},"modified":"2017-11-15T19:46:04","modified_gmt":"2017-11-16T00:46:04","slug":"collaborative-robots-as-a-hedge-against-isolationism","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/collaborative-robots-as-a-hedge-against-isolationism\/","title":{"rendered":"Collaborative Robots as a hedge against Isolationism"},"content":{"rendered":"

The United States has lost 7 million manufacturing jobs since 20001<\/sup> and it is commonly debated whether automation or globalization has contributed more. One argument is that automation enables globalization and makes their impact indistinguishable2<\/sup>. With globalization the target of many political movements, a robotics company in Boston might be able to offer firms a way to hedge their bets in times of uncertainty.<\/p>\n

Rethink Robotics, founded by the former director of CS at MIT, offers an automation solution called the \u201cCollaborative Robot\u201d or \u201ccobot\u201d. Unlike most robots, cobots are certified to work alongside humans without protection. Sawyer, Rethink\u2019s flagship product, learns how to do repetitive human tasks through observation, not manual coding. The company claims that their products can do 90% of the repetitive work that was previously beyond the reach of automation3,8<\/sup>. The robot arms take minimal set up, can be re-trained easily and at $40,000 per arm, are quite affordable4<\/sup>. This might seem like just the next step in automation, but their software driven ability to learn and Rethink\u2019s data platform might be a catalyst for something more.<\/p>\n

It is currently the age of localization \u2013 NAFTA is under review, TPP is dead, countries like India are mandating local production for most FDI or procurements. With so much uncertainty, a lot of capital projects are on hold. The Mexican Association of Industrial Parks found that 37.5% of projects were put on hold due to uncertainties regarding NAFTA5<\/sup>. Rethink could help mitigate this political risk. Labor can\u2019t move across borders with a similar cost structure, but cobots can. Furthermore, they don\u2019t need to be retrained and won\u2019t suffer any loss in productivity. They can also serve as a way to get gains of automation without committing to fixed capital in one site.<\/p>\n

Rethink is currently focused on refining and proving out their technology. In 2017, they released a new AI platform to offer customers better diagnostics and a smaller robot that has been selling better. These releases coincided with a $18M Series E round (investors included Bezos, GE and Goldman Sachs)3<\/sup>. As the first mover in the cobot field, Rethink leads the pack in terms of software innovation. This is not just a competitive advantage, but is arguably the only source of value in a field where competitors such as ABB, Fanuc and Kuka can and are easily catching up on the hardware.<\/p>\n

The variable cost per hour of operating two arms (arguably equal to one human) is $3 per hourA<\/sup>. This is lower than the ~$3.5\/hr for manufacturing jobs in China and is approaching the $1-$2 range that is commonly seen in countries like India6,7<\/sup>. At such competitive costs, the use case for \u201cOn-shoring\u201d is obvious. Positioning themselves as enablers of \u201canti-globalization\u201d, Rethink can offer companies a flexible, disciplined and quickly trained work force that can be deployed and tele-operated across the world. Consequently, Rethink is focused on global growth and has recently signed critical distribution agreements in China, Japan, Mexico and U.K.8<\/sup> \u2013 all countries with changing international trade landscapes.<\/p>\n

As Rethink looks to establish itself as a key player in manufacturing, it needs to partner with a global manufacturer and prove that it\u2019s technology can operate at scale. Operators want to see success stories before investing in new technology16<\/sup>.<\/p>\n

A hypothetical use case could have been Carrier Corporation – a public example in which the US Govt. intervened with $7M in tax credits to save 1,400 manufacturing jobs but instead ended up only delaying inevitable layoffs by a year9<\/sup>. Rethink is not going to buck the trend of political movements and the loss of human jobs to automation. But it can offer firms an economical way to keep production on-shore with the flexibility to consider off-shore in the future. For example, Carrier could have transitioned part of their work force to cobots, and delayed a decision to off-shore or on-shore. Instead, they are now committed to a $16M automation plant.<\/p>\n

While adoption of collaborative robots has been robust, it is an open question whether they support or buck the trend of globalization. While I believe that the technology allows firms to keep their options open due to their ability to deliver flexible and cheap automation solutions, the argument could be made they are truly revolutionary and could enable local manufacturing and standardized processes in all local markets of a global company.<\/p>\n

A. Calculated based on 20 hours of operation for 6.5 days a week, $40,000 per arm, 2 arms per machine and a life of 5 years<\/p>\n

(749 words)<\/p>\n

Endnotes<\/p>\n

    \n
  1. Worstall, Tim. “The U.S. Lost 7 Million Manufacturing Jobs–And Added 33 Million Higher-Paying Service Jobs.” Forbes. October 19, 2016. Accessed November, 2017. https:\/\/www.forbes.com\/sites\/timworstall\/2016\/10\/19\/the-us-lost-7-million-manufacturing-jobs-and-added-33-million-higher-paying-service-jobs\/#752b30164a20<\/a>.<\/li>\n
  2. Tyson, L. (2017, June 07). Labor Markets in the Age of Automation. Retrieved November, 2017, from https:\/\/www.project-syndicate.org\/commentary\/automation-labor-market-inequality-by-laura-tyson-2017-06<\/li>\n
  3. “Rethink Robotics Announces $18 Million in New Funding.” Rethink Robotics. December 23, 2016. Accessed November, 2017. http:\/\/www.rethinkrobotics.com\/news-item\/rethink-robotics-announces-18-million-new-funding\/<\/a>.<\/li>\n
  4. Khalid, Asma. “How A Robot Is Changing Furniture Making At A Factory In Fitchburg.” How A Robot Is Changing Furniture Making At A Factory In Fitchburg | Bostonomix. October 30, 2017. Accessed November, 2017. http:\/\/www.wbur.org\/bostonomix\/2017\/10\/30\/automation-factory-work<\/a>.<\/li>\n
  5. Graham, Dave. “Trump’s threats chill corporate investment plans in Mexico.” Reuters. December 09, 2016. Accessed November, 2017. http:\/\/www.reuters.com\/article\/us-usa-trump-mexico\/trumps-threats-chill-corporate-investment-plans-in-mexico-idUSKBN13Y2JB<\/a>.<\/li>\n
  6. Jessica R. Sincavage, Carl Haub, and O.P. Sharma, \u201cLabor costs in India\u2019s organized manufacturing sector,\u201d BLS Monthly Labor Review (May 2010).<\/li>\n
  7. Yan, Sophia. “‘Made in China’ isn’t so cheap anymore, and that could spell headache for Beijing.” CNBC. February 27, 2017. Accessed November 15, 2017. https:\/\/www.cnbc.com\/2017\/02\/27\/chinese-wages-rise-made-in-china-isnt-so-cheap-anymore.html<\/a>.<\/li>\n
  8. “Rethink Robotics Expands Global Reach with Domestic and International New Distribution Partners.” Rethink Robotics. Accessed November 15, 2017. http:\/\/www.rethinkrobotics.com\/news-item\/rethink-robotics-expands-global-reach\/<\/a>.<\/li>\n
  9. Paquette, Danielle. “Analysis | Trump said he would save jobs at Carrier. The layoffs start July 20.” The Washington Post. May 24, 2017. Accessed November, 2017. https:\/\/www.washingtonpost.com\/news\/wonk\/wp\/2017\/05\/24\/here-is-the-number-of-jobs-carrier-is-moving-to-mexico-after-trump-said-hed-save-them\/?utm_term=.0b50bc499ae1<\/a><\/li>\n
  10. “The manufacturing jobs delusion.” The Economist. January 04, 2017. Accessed November, 2017. https:\/\/www.economist.com\/blogs\/buttonwood\/2017\/01\/economics-and-finance<\/a>.<\/li>\n
  11. Lawton, Jim. “In The Race To Advance Manufacturing, China Is Betting On Robots.” Forbes. September 28, 2017. Accessed November, 2017. https:\/\/www.forbes.com\/sites\/jimlawton\/2017\/09\/21\/in-the-race-to-advance-manufacturing-chinas-betting-on-robots\/#1fe25e3f78cd<\/a>.<\/li>\n
  12. Reese | November 11, 2015, 4:00 AM PST, Hope. “Why China is scooping up robots from Rethink Robotics to solve its manufacturing problem.” TechRepublic. November 11, 2015. Accessed November, 2017. https:\/\/www.techrepublic.com\/article\/why-china-is-scooping-up-robots-from-rethink-robotics-to-solve-its-manufacturing-problem\/<\/a>.<\/li>\n
  13. Reilly, Michael. “Will this small, precise robot be the next automated factory worker?” MIT Technology Review. February 08, 2017. Accessed November, 2017. https:\/\/www.technologyreview.com\/s\/603608\/rethinks-sawyer-robot-just-got-a-whole-lot-smarter\/<\/a>.<\/li>\n
  14. Rotman, David. “Here’s how to use AI to make America great again.” MIT Technology Review. May 22, 2017. Accessed November, 2017. https:\/\/www.technologyreview.com\/s\/603465\/the-relentless-pace-of-automation\/<\/a>.<\/li>\n
  15. “Manufacturer Adoption of Collaborative Robots is Strong, Becoming More Aggressive in the Near Term.” PR Newswire: news distribution, targeting and monitoring. August 31, 2017. Accessed November, 2017. https:\/\/www.prnewswire.com\/news-releases\/manufacturer-adoption-of-collaborative-robots-is-strong-becoming-more-aggressive-in-the-near-term-300511734.html<\/a>.<\/li>\n
  16. Smith, Jennifer. “A Robot Can Be a Warehouse Worker’s Best Friend.” The Wall Street Journal. August 03, 2017. Accessed November, 2017. https:\/\/www.wsj.com\/articles\/a-robot-can-be-a-warehouse-workers-best-friend-1501752600<\/a>.<\/li>\n<\/ol>\n

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