Many times, when I talk about what we do or when I visit a customer, I am asked, will automation and robotics replace our employees?
We have all seen and heard about the risk that industrial automation and advanced robotics impose on the employment market. In Switzerland, for example, some political parties have been discussing the need to start providing a kind of base salary to every citizen in case the new technologies will displace them out of a job.
Personally, I think that industrial automation and advanced robotics will generate employment opportunities, and here is why. (My focus is on industries and the people who produce stuff.)
Before I jump into the discussion – let’s agree on some assumptions.
To increase Gross Profit, which is throughput (TP)  less operational expenses (OE)  we can either increase TP or reduce OE. But there is a limit to how much we could reduce OE. Just imagine if we fired all company employees; we reduce OE, but we would not be able to produce the products we would like to sell.
There is no limit on the TP side; we can grow it as long as there is demand. If we do well (that is, increase productivity), we could funnel money into innovation to invent new products that will help the company generate new demand in new market segments.
To increase GP, we therefore must work on both sides: improve productivity while reducing OE to a level that will not have a negative impact on TP.
We see that internal consumption accounts for the majority of any economy in any country. Internal consumption happens when people who are at the consumer age have enough money to supply their basic needs and can use whatever they make on top of it to buy other stuff – to consume.
To illustrate our story a bit more, let’s look at a company you all know – Boeing. Boeing is one of two main civil aircraft producers worldwide; the other main aircraft producer is Airbus. Boeing has more orders today than they can produce, at least by using their normal aircraft assembly line and methodology, per the Boeing 2015 annual report.
We just heard that the government of Iran has placed a new order with Boeing for 100 new aircraft. By the way, Airbus is more or less in the same situation. There is a growing demand for air travel coming from the Asia Pacific region and the developing world. In other parts of the world, a lot of the existing civilian aircrafts are old and airlines must replace them. Aviation experts believe that these phenomena will last at least until 2040.
Therefore, both Boeing and Airbus are looking into using more industrial automation and advanced robotics so they can produce more aircraft per month to meet the growing demand. The more units per month they can ship, the more TP they have and the more new orders they can accept.
In a company like Boeing that produces big products, automation and robotics will create new opportunities for employment. Some of the jobs that will be automated by robots are routine, physically difficult, complex, and require high quality and repetitiveness. To implement these robots, Boeing will need more experts, but could also retrain some of the current shop floor employees.
On the other hand, by automating these processes, Boeing will be able to increase the TP, produce more products and faster, and improve quality – thus reducing cost of quality while accepting new, larger orders.
My conclusion so far is this: Industrial automation and advanced robotics will help Boeing increase Gross Profit, but also generate opportunity for more employees – people with new skills – that will join to support the growth in production.
Boeing and others embarking on this journey will need more robot experts, automation engineers, robot operators, simulation and virtual commissioning teams. These are all exciting new types of jobs.
In addition, Boeing’s automation productivity gains could be translated into more innovation, thus developing new types of mobility and transportation systems. Once again, the use of automation and robotics throughout the production system will increase employment opportunities and bring new people on board; they could also retrain the existing employees, which will impact the employment market wherever Boeing is operating.
Moreover, Boeing is not working alone. Boeing has an ecosystem full of suppliers, partners and subcontractors; and, as soon as new orders are taken, there is more work for the whole supply chain. Subcontractors that produce parts and sub-assemblies are required to step up and do more. They need to buy more CNC machines, more 3D printers, hire more people to manage these new production systems, train them and deliver to Boeing on time, on spec and on budget.
This is how robotics, industrial automation and technology are helping the economy of a state and a country. This why we at Siemens can say that we are making a positive impact on the lives of many. We’re helping industries digitalize and helping them implement automation and robotics to become more productive, increase TP, reduce OE and create more well-paying jobs.
Industrial automation and advanced robotics have the potential to give companies major advantages in the marketplace.
Some cynical people will say, “Well, Zvi is referring to a major industrial company like Boeing. We are a small machine shop. We have only 20 CNC machines. How will digitalization, automation or robotics help us?”
My answer – our answer – should be: “the same as above.”
Once a production shop becomes more effective, increases TP and reduces OE, they can take bigger risks, take on bigger orders and compete more aggressively. Once they get new orders and projects, they will need to buy more machines, more robots and will also hire more employees to operate these new machines.
There will be a shift in the jobs that are available as advanced robotics become more prevalent in manufacturing. The challenge is to find such people, and this is where a lot of fear comes in to play. The fear of retraining is real to many employees. They fear any new jobs to support industrial automation will take over their existing jobs. This is why technical training and local community technical schools are so critical.
The workforce needs to be more educated to accomplish this industrial automation. In the United States a few decades ago, for example, you could go into a steady job for 30+ years at most automotive plants having no technical or collegiate education, and take few to no continuing education throughout your career, and your job would be fine.
But those days are gone. With this global, fast-moving, ultra-competitive market, companies will lose money if they take that approach. Education, specifically continuing education, is the key.
A well-trained workforce knows how to leverage your digital enterprise and the advanced robotics in your plants to get products to market faster than the competition.
A well-trained workforce determines how well your company does. If your company can’t or won’t provide those opportunities for continuing education,, you’re hurting your employees – and your business – more than you can imagine.
But there is a positive cycle when you have a well-educated workforce than can work in your digital enterprise. Digitalization supports and provides productivity gains, and productivity gains have a direct impact on both TP and OE. Once TP is up and OE is down, the company makes more money, can take bigger risks, buy more production equipment and hire more people.
The bottom line is that if someone is telling you industrial automation and advanced robotics will force you out of a job, your answer should be simple. Industrial automation, advanced robotics and digitalization are driving growth and prosperity.
To remain employable in the coming years, you have to keep up with the changes, look for opportunities to retrain and never stop learning. If you do this, you are safe and your future is bright.
Tell us: How would industrial automation and advanced robotics help your business?
About the author Zvi Feuer is senior vice president of Manufacturing Engineering Software for Siemens PLM Software, a business unit of the Siemens Digital Factory Division. He has more than 25 years of experience in Enterprise Software business management, with a primary focus in the Manufacturing Industries. He has worked for: the Israeli Aircraft Industries (IAI); Digital Equipment, a leading provider of hardware and system integration projects; and since 1995, with Tecnomatix, UGS and Siemens. Feuer’s current responsibilities include leading global teams and initiatives to develop and service customers worldwide and providing Manufacturing Engineering Software solutions. These solutions include optimizing production and service facilities, assembly line design, developing and validating production systems and programming CNC machines in major machine shops. Feuer received his Master of Science in industrial engineering from Technion – Israel Institute of Technology, and also received an executive MBA from UCLA – NUS.
 This is the amount of money being received into the company’s bank account once the products are sold to the customers.
 This is all of the money spent during the production of products. OE includes and is not limited to: facility, inventory, employees (touch labor), energy, IT, quality and waste. These are all of the cost elements you normally see in a Profit & Loss report.