The history of manufacturing is to some extent the history of substituting capital for labor. Devising a way of making things that is more reliant on equipment (or an organizing principle like the Ford assembly line) allows workers to be more productive and generate more output per hour worked. But capital requires, you know, capital. Adding new equipment like robots requires an upfront investment and having that investment payoff depends on scale at which the business operates. Big firms like Roger-&-Me era GM can afford robots even if they have limited capabilities but smaller firms have a harder time taking the plunge. Until now that is, if the Wall Street Journal is to be believed (Robots Work Their Way Into Small Factories, Sep 17).
Robots have been on factory floors for decades. But they were mostly big machines that cost hundreds of thousands of dollars and had to be caged off to keep them from smashing into humans. Such machines could only do one thing over and over, albeit extremely fast and precisely. As a result, they were neither affordable nor practical for small businesses.
Collaborative robots can be set to do one task one day—such as picking pieces off an assembly line and putting them in a box—and a different task the next. …
Small businesses often need flexibility “because they’re not just packaging cookies endlessly,” says Dan Kara, a robotics expert at ABI research, a market-research firm in Oyster Bay, N.Y.
Here is a graphic of describing some of the machines discussed in the article.
At $25 grand and up, these cannot be paid for out of petty cash but these are certainly much more reasonably priced than the kinds of systems that are implemented on, say, an auto assembly line. The cost can also be compared to the labor it displaces. The article gives the example of a machine shop using a Universal Robots machine instead of paying an operator $16.50 an hour. $16.50 per hour works out to about $33,000 per year without including any taxes or benefits. Further, they can run the robot past eight hours without paying up for overtime. Clearly, this is an investment worth considering.
To my mind, what makes this work is the flexibility mentioned at in the quote above. Smaller firms are unlikely to have one item that they are producing in huge volumes so they cannot justify an investment on a robots ability to do one thing a million times in a week. Even if a firm is doing some task in sufficient volume that it can have a robot dedicated to it for months at a time, flexibility still matters since it implies a lower cost in getting the robot set up.
To some extent there is an analog here between robots and computers. When the only computers were mainframes, only big firms could afford them for tasks like payroll and accounts receivable. Once personal computers became available (even when they cost several thousand dollars), smaller firms could justify buying them — both because they were cheaper than the incumbent technology and because they were flexible and could be put to multiple uses.
The computer analogy points out another issue: Support services. Big firms could have IT departments that babysat their computers. Smaller firms needed to be able to manage their systems with a lot less. The same applies for robots. The ultimate success of these systems depends on smaller firms being able to set these things up and keep them running without having to take on a slew of technical staff.