Analysis and Opinion »

Rise of the Robots

Charles Sizemore
Share on StockTwits
Published on
charlessizemore.com

Rodney Johnson has some interesting comments on the rise of robots as a labor replacement.  Robots have been replacing assembly line workers for decades.  But now, they’re starting to replace retail clerks too…sort of:

Just as desktop computing, voicemail, and email erased much of the need for secretaries, robots are quickly gaining ground in areas such as machine operation in manufacturing… but they might not be ready to replace retail clerks just yet…

The cost of the collaborative robots has fallen to as low as $20,000 making them affordable for even the smallest of operations. Compare that with the wage of a machine shop operator of $22.42 per hour as reported by the Bureau of Labor Statistics.

This operator, who gets sick days, holidays, time off every day after work and benefits will cost a company roughly $44,000 per year. The robot, which can operate 24 hours per day and never calls in sick, would save the company money over hiring the operator in just under six months. And that’s if they simply worked the same hours.

Of course, not every new use of a robot turns out to be a great idea.

Lowe’s Home Improvement (LOW) is rolling out two retail robots in a subsidiary store, Orchard Supply Hardware, in San Jose, CA. The units will greet customers at the door and ask if they need assistance.

Customers can ask where products are located, place a bolt, nut or nail on a 3D scanner that will determine the exact size and where replacement pieces are located in the store. It’ll even provide video conferencing with personnel who can assist clients with their needs for projects.

The robots then travel with the customers to the appropriate location in the store to locate the exact product in question…

There is a big problem here. As Rodney pointed out later in the article, most people going to a hardware store don’t know how to articulate what they want, and they don’t have a replacement part to scan. And waiting for the robot to call a customer service rep via teleconference would probably cause me to smash in the robot’s iPad face with the first heavy-duty tool I could get my hands on.  At the very least, I would leave the store and head to the Home Depot (HD) next door.

As Rodney continues,

Both of these developments — collaborative and guide robots — increase the speed at which people are being replaced in the workplace. Such displacements have happened throughout history, constantly killing different types of employment, driving would-be weavers, carriage makers, secretaries and now machine operators into other jobs.

While there’s no doubt that society as a whole is better off with greater productivity, the picture isn’t so bright for the would-be machine operator. With median income falling as the middle class loses ground, we need a faster method for retraining displaced workers and training those new to the workforce in jobs that are unlikely to be automated in the near future.

Otherwise, we’ll end up with many potential workers who can’t even get a job at McDonald’s… because that company is also automating the ordering process.

You can view the full article here.

We’re still a long way off from having guides replace customer service personnel.  But self-checkout lines have already reduced the number of cashiers at Home Depot, Lowes, and even Walmart.  Again, all of this is great for productivity…and keeping labor costs in check.  But it does raise the uncomfortable question of where low-skilled workers will find jobs a decade from now.

Related: Labor replacement is not only making low-skilled labor redundant.  It’s also weeding out stockbrokers and financial advisors: Running a financial advisory practice in the age of the robo-advisor.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays. 

This article first appeared on Sizemore Insights as Rise of the Robots

Share on StockTwits