robot_revolution_by_chris_lamberth-d3c77ylThat got your attention, now didn’t it. I’ve been watching this trend for the last year or so and what is happening is that in the area of manufacturing, robotics are replacing humans on the factory line at an unprecedented rate. The International Federation of Robotics noted this month that 2013 will see the second largest number of robotic installations behind 2011. The U.S. now has the highest number of robots, second only to Japan, however with robots spawning in China at a rate of 20% CAGR, that lead is going to fall away rapidly. Here’s another interesting statistic, New Zealand and Australia are nearly growing robots at the same level.

Why the explosive growth? Simple. Greed. OK, maybe not that simple, but it works like this. Large manufacturers have been suffering in the last few years and their shareholders are not happy. Neither are their staff. Once we manufactured things in our home country, then we outsourced it to third world nations who initially, provided great slave labour. However, as the middle class grew, wage demand increased and problems started to occur. The costs started creeping up.

The latest move sees the replacement of those jobs by a robot. Robots are then collectively powered by a Cloud Computing backend that allows for extremely complex calculations to be carried out very fast while lowering the production costs for the robot significantly given that no real processing power is required within the unit.

“Between 2007 and 2012, the compound annual growth rate (CAGR) of robot supplies to Asia/Australia [including New Zealand] was about 8% on average. With Japan excluded, the CAGR was about 20%.” – International Federation of Robotics

It’s not just manufacturing either. Robots are replacing sushi chefs in Japan, security guards, first responders, taxi drivers, surgeons, and are increasingly militarised. Recently the U.N. called for caution on the deployment of robots as, literally, autonomous killing machines. The rise of the robots in the military now allows for drone operators to manage multiple drones as opposed to the old 1:1 ratio.

“By 2020, the labor reduction effect of digitization will cause social unrest and a quest for new economic models in several mature economies.

Near Term Flag: A larger scale version of an “Occupy Wall Street”-type movement will begin by the end of 2014, indicating that social unrest will start to foster political debate.

Digitization is reducing labor content of services and products in an unprecedented way, thus fundamentally changing the way remuneration is allocated across labor and capital. Long term, this makes it impossible for increasingly large groups to participate in the traditional economic system — even at lower prices — leading them to look for alternatives such as a bartering-based (sub)society, urging a return to protectionism or resurrecting initiatives like Occupy Wall Street, but on a much larger scale. Mature economies will suffer most as they don’t have the population growth to increase autonomous demand nor powerful enough labor unions or political parties to (re-)allocate gains in what continues to be a global economy.”- Gartner

At an even more basic level, as manufacturing jobs are lost in new economies through the deployment of robots, unemployment will rise and the middle-class will be impacted, particularly in India, China, and other parts of Southeast Asia. As we all know, anyone who screws with the middle-class is going to be on the end of revolution.

“Robots will crush their human competition.” – Fastcompany

The increasing use of robots in manufacturing is likely to create a downward death spiral eventually. While televisions may be made cheaper by the use of robotics, no one will be able to afford to actually purchase them.

“So computerization is not reducing the quantity of jobs, but rather degrading the quality of jobs for a significant subset of workers. Demand for highly educated workers who excel in abstract tasks is robust, but the middle of the labor market, where the routine task-intensive jobs lie, is sagging. Workers without college education therefore concentrate in manual task-intensive jobs — like food services, cleaning and security — which are numerous but offer low wages, precarious job security and few prospects for upward mobility.” – How technology wrecks the middle-class

Those who argue for the the robots, including Google’s Schmidt; “Individuals might lose their jobs, and entire sectors might die, but the economy as a whole would employ as many people as it did before. Requiring one-tenth the labor is fine as long as GDP has grown 10x: Everyone’s still employed, and even better, everyone is sharing in the output of a much bigger economy” are living in a ideological fantasy world. We know that even if the GDP grows ten fold, the money that is generated will still be going to that one percent, or less. We don’t live in a socialist utopia where positive GDP is distributed equally to all citizens.

Cloud is a disruptive technology in ways that we are only just beginning to learn. What is clear, is that the old business models and market dynamics are in a state of chaos. For the ICT workforce, this means profitability, as the industry thrives on change and we’ll be seeing a lot more of that in the next two decades.

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