The robots are coming

Robots and manufacturing got me thinking about future businesses in August 2011. I was interested in whether better, cheaper robots could change some of the reasons for locating manufacturing far from development.

Robots and manufacturing as an alternative

I started with a news story about Foxconn and compared labour with automation. The figures in the video were information I recounted from the news and my memory.

I also described a visit to the Jelly Belly factory in California, where I’d seen robots working with pallets. Their precision had impressed me.

Could some manufacturing come home?

My thought experiment was that differences in labour costs could matter less if more processes were carried out by machines.

I thought proximity between manufacturing and development might then become more important. I imagined some Western companies would bring more manufacturing home.

I also made guesses about future iPhones. That was an expectation in 2011, not evidence of where later models were actually assembled.

Look at the repetitive tasks

I applied the idea to a smaller business: Which tasks did you repeat every day, and which could perhaps be automated?

I wanted to prioritise the opportunities rather than only looking at how long each task took. A small routine could add up to a lot of time.

The video’s comparisons between countries and employees are my assessments at the time. The story doesn’t provide a current overview of robotics, labour rules or a guarantee that automation will pay off at any particular point.

Also read about getting to know new technology alongside daily operations.

Robots and manufacturing: A news story that set me thinking

It’s been a few days. I only get the camera out when I have a thought that might interest you. This time, it’s about the future and something I knew about but hadn’t thought much about.

I’ve read a headline about Foxconn, which assembles Apple’s iPhones, among other things. In the video, I recount figures of around 1.2 million employees and a plan for a million robots. I’m a little unsure about the name and how many robots they already have. The figures are my account of the news story that sparked the thought.

Why would a company with cheap labour buy so many robots? That question got me considering whether some manufacturing might actually start moving back to the West.

Why we put work in other countries

Some of Amino’s development takes place in Denmark and some in the Philippines. Pay is one reason. There are also more people to choose from in a larger country when we’re looking for skilled staff.

When iPhones are assembled in China, I see low costs as an important explanation. Part of the model is breaking work down into very small processes.

If one person has to assemble an entire phone, that takes many skills. If they just have to put a particular widget into a particular hole and press a button, it’s easier to learn.

My wording in the video is that you make the task so simple anyone can do it. That’s not because I think Chinese people are idiots. It’s a description of making each job less dependent on specialist knowledge.

I imagine that a large number of people needing work creates intense competition for simple jobs and keeps wages down. I also mix up millions and billions along the way. The point is the large pool of labour, not the individual figure.

Working conditions and the environment cost money too

I compare it with running a factory in Denmark or the USA. I’m thinking about requirements for space, noise, repetitive work, pensions and treating employees properly.

I also mention that toxic fumes and wastewater need handling and filtering rather than simply being released into nature. Those considerations cost money.

That’s my broad comparison in 2011. I’m not giving a precise account of the rules in the different countries. I’m trying to explain why wages, working conditions and other costs affect where you locate manufacturing.

So you might think more and more assembly work would simply move to China, Vietnam or the Philippines. But I’m not sure that’s the whole future.

The robots at the Jelly Belly factory made an impression

Robots aren’t new. What’s new to me is that they’re getting better and cheaper.

On holiday in California, I visited the Jelly Belly factory. Among other things, I saw robots stacking pallets of sweets.

If you’ve seen an industrial robot at work, you know how fascinating its precision can be. It really impressed me.

I also describe them as reliable. They don’t take sick days or time off for a sick child. They don’t go home early with a headache. With power and maintenance, they can keep working. That’s the difference I’m thinking about.

Development and manufacturing can move closer together

My expectation is that some American, Danish and other Western companies will start bringing manufacturing home again.

If robots do more of the work, differences in wages matter less. Whether a robot stands in Denmark or China doesn’t change wages in the same way as manual assembly work.

So I imagine more manufacturing of clothes, electronics and other products in Denmark and other Western countries.

As I see it, much research and development still takes place in the West. I also stress that the Chinese are catching up. But an American development team, for example, can benefit from working close to the people making the product.

It’s easier to walk over to a production team in the same building than to coordinate across thousands of kilometres, time zones and cultural differences.

I make a very optimistic guess that electronics could soon be assembled entirely by robots. I say I wouldn’t be surprised if the iPhone 8 or 9 were made and assembled entirely in the USA. That’s my prediction in the 2011 video, not a description of where the later phones were actually manufactured.

I also think about patriotism. I imagine Americans might be willing to pay a little more for an American product, and that it could generate goodwill.

Programming is a different kind of work

At the same time, I think programming and other demanding work will continue to be located in other countries. That’s a different situation from repeating a simple movement on an assembly line.

In my experience, the programmers we work with in Manila are at least as skilled and innovative as the people in Denmark. I find them eager and ready to go the extra mile when things get urgent.

I also quickly say that our Danish programmers are exceptionally good, nice and very service-minded. I don’t want to end up putting them down in a crude comparison.

But in the video, I compare it with my experience of the more usual eight-to-four culture and Denmark slowing down in summer.

I say provocatively that although many take three weeks off, things run at lower capacity for six weeks because holidays are staggered. Then those left behind can also come in a little later, leave a little earlier and take more breaks.

I don’t experience that same summer slowdown with the people in Manila. Those are my experiences and generalisations at the time, not a study of all Danish or Filipino employees.

Review the small routines in your own business

If your work mainly consists of simple, repetitive movements, I think your big future competitor may be technology rather than a person in another country.

What that means for your business depends on what you do. But my advice is to look at as many opportunities for automation as possible.

If you have an online shop or manufacturing operation, go through the processes. Which tasks do we spend time on today? Could something be set up to run by itself?

Perhaps you say: I just have to click here ten times a day and collect the payments through PBS. But when you go on holiday, someone else has to sit and do it.

Automating a task like that might cost ten thousand kroner, and you may not have the money right now. Then you need to prioritise and do things in a sensible order. You’ll find more of my experiences of building and developing businesses in Iværksætter til jeg dør.

But if you have the opportunity, calculate the time too. Ten minutes every day multiplied by three hundred and sixty-five adds up to many hours. So perhaps the investment can pay off, and perhaps you can also avoid stress and use the time on something that creates more value.

In the video, I say it can often pay for itself within a few months. That’s my assessment, not a guarantee for any particular task or business.

Use your head where you make a difference

What you spend your day on should be something where your mind and particular abilities make a difference. Something you do better than a robot or someone else who can handle the simple routine.

If, on the other hand, you say the task is really something anyone could do, consider who or what should do it instead of you.

That’s the thought I want you to take away. Take care.

De bedste hilsner

Martin

Ps. Historisk invitation fra 2011: Jeg inviterede til Aminotastic den 10. september 2011. Se Aminos aktuelle hjemmeside.