Rise of the machines: Study sees robots cutting labour costs in factories 24%

WASHINGTON — Cheaper, better robots are expected cut labour costs at Canadian factories by 24 per cent over the next decade as more companies replace human workers at a faster pace, according to a report issued Tuesday.

Globally, labour savings are expected to be reduced by some 16 per cent by 2025, the report by the Boston Consulting Group predicts.

Overall, the growth of robot usage is forecast to rise by 10 per cent a year in the world's 25-biggest exporting countries, up from two per cent to three per cent a year now. The investment will pay off in lower costs and increased efficiency.

Robots are getting cheaper. The cost of owning and operating a robotic spot welder, for instance, has tumbled from $182,000 in 2005 to $133,000 last year, and will drop to $103,000 by 2025, Boston Consulting says.

And the new machines can do more things. Old robots could only operate in predictable environments. The newer ones use improved sensors to react to the unexpected.

Robots will cut labour costs by 33 per cent in South Korea, 25 per cent in Japan and 22 per cent in the United States and Taiwan. Only 10 per cent of jobs that can be automated have already been taken by robots. By 2025, the machines will have more than 23 per cent, Boston Consulting forecasts.

In a separate report, RBC Global Asset Management notes that robots can be reprogrammed far faster and more efficiently than humans can be retrained when products are updated or replaced — a crucial advantage at a time when smartphones and other products quickly fade into obsolescence.

"As labour costs rise around the world, it is becoming increasingly critical that manufacturers rapidly take steps to improve their output per worker to stay competitive," said Harold Sirkin, a senior partner at Boston Consulting and co-author of the report.

"Companies are finding that advances in robotics and other manufacturing technologies offer some of the best opportunities to sharply improve productivity."

Boston Consulting studied 21 industries in 25 countries last year, interviewing experts and clients and consulting government and industry reports.

The rise of robots won't be limited to developed countries with their aging, high-cost workforces. Even low-wage China will use robots to slash labour costs by 18 per cent, Boston consulting predicts.

Increasing automation is likely to change the way companies evaluate where to open and expand factories. Boston Consulting expects that manufacturers will "no longer simply chase cheap labour."

Factories will employ fewer people, and those that remain are more likely to be highly skilled. That could lure more manufacturers back to Canada and the United States from lower-wage emerging market countries.