The accelerating rise of the robots

Reshoring and labour constraints, particularly in the developed country regions, have been driving up spending in automation of every kind - the question being not if automation will drive the future, but when.

While artificial intelligence (AI) has been gathering significant attention and investment, it is a completely separate industry. What differentiates artificial intelligence from robots is the word ‘intelligence’. Robots simply execute defined instruction sequences. While AI can ‘mimic’ a certain level of human intelligence.

Robotics remains a more established industry. The first industrial robots were released in the 1960’s – but new technologies are helping significant enhancements in the industry. The integration of AI technology into robotics systems is expected to drive growth, enabling the development of more sophisticated and intelligent systems.

This opens up new possibilities for applications across a wide range of industries – manufacturing, food picking, building-site robots, robot nurses, semiconductor handling robots – even the sensitive handling of microchips in high-tech manufacturing.

Leaders in nearly every industry are scrambling to automate whatever processes they can and companies that have a consistent need to lower costs and to improve margins may address both with automation. This increases the importance of automation spending.

Rather than a cyclical need, automation has become a ‘must-have’ and a permanent margin enabler across manufacturing, warehousing, distribution, healthcare, agriculture, and high-touch services businesses to name a few.

• Reshoring and nearshoring initiatives
  Companies are increasingly bringing manufacturing back to their home countries (reshoring) or moving it to nearby countries (nearshoring) to reduce lead times, minimise supply chain disruptions, and respond more rapidly to market demands. This shift is driven by the need for greater control over production and a desire to mitigate the risks associated with long, complex supply chains.
• Trade tensions and protectionism
  Rising trade tensions and the adoption of protectionist policies by some countries have made global manufacturing more challenging.
• Supply chain vulnerabilities
  Continuing conflicts with the war in Ukraine, and now Israel, has been exacerbating delays in robotics parts deliveries through shipping channels – making it even more of a priority for global leaders to expedite onshoring initiatives. In 2016, China passed Japan to become the country with the largest population of industrial robots and in 2021, China became the first and only country in the world to have a robot population exceeding 1m units.

In the US, manufacturing adds $2.85tn to the US economy, accounting for 10.3% of the U.S. GDP. The manufacturing industry employs 13 million people, and there were 601,000 manufacturing job openings to be filled as of December 2023.

With the retirement of experienced workers from baby boomers and a lack of skilled workers in younger generations, the US manufacturing labour shortage becomes more concerning and presents major risks to the continued growth of the US economy.

The automation of manufacturing and other processes is not something new, but when combined with other developments such as AI it looks to dramatically change the world we live in and become a major investment theme.