Automate Nearly Anything with Universal Robots
While some would argue that the Washington Post has largely become a factory for politically motivated fluff pieces, yesterday there was actually an insightful article about how robotics are taking factory jobs in America that just can’t be filled. This is a drastically different story than what we’ve been told about robots stealing jobs from people. As it turns out, the robots are filling a void that the article describes as follows:
The robots were coming in not to replace humans, and not just as a way to modernize, but also because reliable humans had become so hard to find. It was part of a labor shortage spreading across America, one that economists said is stemming from so many things at once. A low unemployment rate. The retirement of baby boomers. A younger generation that doesn’t want factory jobs. And, more and more, a workforce in declining health: because of alcohol, because of despair and depression, because of a spike in the use of opioids and other drugs.
It seems like the younger generation no longer sees a factory job as a stepping stone to success, but rather as something that’s above them. These are the same sorts of people who are the driving force behind companies having to change interest rates into “monthly fees” because interest rates are just too difficult a concept for some to grasp. We found this article to be an eye opener, and we immediately wanted to know more about who is capitalizing on this sad state of affairs in rural America. Our journey takes us to a place called Odense Denmark, a place where people with thick Danish accents are building tomorrow’s workforce.
Founded in 2005, Odense Denmark startup Universal Robots had taken in an undisclosed amount of funding to “make robot automation accessible to all levels of industry” by creating “industrial robots that automate and streamline, monotonous, and mundane industrial processes“. In other words, they’re looking to free people up to work on “more value added activities”. In 2015, the company was bought by Teradyne, Inc. (NYSE:TER), a $6.6 billion company involved in mainly automatic test equipment for electronics. At the time of the acquisition, Universal Robots was said to be the global leader in the “cobots” segment having shipped more than 4,000 cobots to date. If you’re unfamiliar with the term “cobots”, these refer to robots that work alongside humans, like Rethink Robotics. Here’s a look at the three cobots on offer from Universal Robots:
The breadth of applications that these robotic arms can be used for is simply mind blowing. Look:
- Pick and place
- Injection molding
- Quality inspection
- Screw driving
- Gluing, dispensing, welding, etc.
It’s hard to think of an industry that couldn’t benefit from using these cobots. Spend just 5 minutes on the Universal Robots website thumbing through all their use cases and you’re going to realize very quickly that the factory workers of today (and there are still many of them with the strong work ethic that made America what it is today) are in some serious trouble.
Now let’s go back to that WaPo article for a minute. The Wisconsin company that was bringing in the robots, Tenere Inc., had 132 job openings at the time that article was written and that’s even after they opened a metal fabrication facility in Monterrey, Mexico last year. Someone in human resources at Tenere said that “finding people was like trying to “climb Everest” — even after the company had loosened policies on hiring people with criminal records“. They’re practically begging for people to work, and those who do show up just want to know what’s in it for them. There are probably 100s of factories with the same hiring problems, but they are also entrenched in decades of legacy traditions and will adopt new technologies only if they are seamless to implement and come with no up-front costs. That’s where our next startup comes into play by offering “robots as a service” or RaaS.
Founded in 2015, Tennessee startup Hirebotics has taken in an undisclosed amount of funding to develop a business around renting robots to factories for an hourly rate. What people don’t really realize is that while 40 hours a week seems like a lot of time, your average week has 168 hours. This means that theoretically, a robot can work 168 hours a week (not considering any downtime for maintenance). When you can’t find a human that’s willing to work even 40 hours a week, suddenly this looks quite appealing.
Hirebotics uses the three Universal Robots we highlighted earlier, and base cost starts at $15 an hour with a minimum of 80 hours a week. These robots will work for the $15 minimum wage that everyone is fighting for but that nobody wants to work for and they don’t require overtime. There is no long-term commitment aside from providing a 30 day notice if you want to “fire your robot” but we’re guessing that’s not going to happen much. These cobots generally see a 10-20% productivity increase over humans with cycle times that vary by no more than 100 milliseconds.
Let’s go back to our earlier story about how that small Wisconsin company, Tenere, brought in cobots to do the jobs that humans didn’t want. In that particular example, a human working an 8-hour shift could process 1,760 widgets per shift (including smoke breaks, lunch, bathroom breaks, etc.). The cobot was able to manage 3,032 per shift without any breaks. If you let it run all day, that’s 9,096 worth of widgets which is almost twice the output of three humans working three shifts.
If you’re an investor looking at picking up some shares in Teradyne to play the cobots theme, just be aware that at the moment “industrial automation” revenues make up a small fraction of overall revenues for TER. While these revenues are growing by leaps and bounds, the segment is also still losing cash but that trend is moving in the right direction as seen below:
That’s not to say that this isn’t a compelling investment for the future, but just be aware of what you’re actually investing in before you buy shares.
We have entered the era of the ultra competitive knowledge worker. Today’s youth better spend less time telling jejune stories of victimization and more time trying to scrap their way to success in a STEM degree program through hard work and long hours because the alternative is not looking very good right now. If you decide to study anything but STEM in today’s day and age, or if you decide even more foolishly that “a degree is a waste of time” and that people should just throw money at your unbridled genius, then you have
nobody no robot to blame your future unemployment on but yourself.