The true extent of the robot revolution
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The true extent of the robot revolution

Last week, we commented on Ford’s decision to drop its new plant in Mexico and invest $700 million into its domestic operations in Michigan instead. We suggested that, while the incoming administration claims this will mean more jobs for American workers, it may well be industrial robots that provide the labour. Now, we decided to follow this up with a second report: this time on the true extent of automation worldwide and the forecast for its growth.

The shocking figures we’re about to reveal make one thing pretty clear: if you don’t currently hold an investment in the robotics industry, such as the one provided through our Global Trends Managed Fund, you need to seriously consider adding one to your portfolio.

A Kingdom of Robots
China is installing more industrial robots than any other country in the world

SOURCE: International federation of robotics

If you want to know who’s buying all the robots, the above graph is a direct answer to your question. Now, it’s pretty clear that China is the big player when it comes to purchasing of industrial robots. There are a few obvious reasons for this: first, the sheer size of the country means that, proportionately, it will require more machines to replace a similar percentage to other parts of the world. And second, China is set to experience an ageing crisis as bad as any in Europe within another generation (the fallout from a decades long ‘one-child policy’). China already has whole factories staffed by robots. If the analysts are right, they’re not looking back.

No Immunity
Many of the jobs done in developing countries can be automated

SOURCE: The World Bank

It’s also true that automation’s scope is increasing daily. A decade or two ago, industrial robots were expensive, suited only to specific industries like auto-making, and required outside assistance. Today, almost any manufacturing job can be automated. As artificial intelligence continues to advance, and robots get smarter, more dexterous, and cheaper to make and run, the range of work it is possible to automate will expand dramatically. This obviously doesn’t bode well for jobs, but at least some commentators see the possibility for a blossoming of work in the services and creative sectors, where a human touch is likely to remain advantageous.

Room for Growth
China has a low concentration of robots relative to the size of its industrial workforce

SOURCE: International Federation of Robotics

Perhaps most important, a glance at the number of industrial robots per 10,000 industrial workers across various countries shows that we may be just at the beginning of the trend towards automation. For example, China, the world’s biggest buyer of industrial robots, and certainly one of the countries with the greatest need for them, has only 49 per 10,000 human industrial workers. When you consider that South Korea has 531, and Singapore, Japan, and Germany all have over 300, it’s pretty clear that there, for industrial robots, the best years are yet to come!

Disclosure
Dominion hold a number of robotics companies in its Global Trends Managed Fund.



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Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.