Today you can rent a robot worker, and it costs less than paying a human
Polar Manufacturing has been producing metal hinges, locks and brackets on Chicago's South Side for more than 100 years. Some of the company's metal presses, huge machines that loom over the operator, date back to the 1950s. In 2021, to meet growing demand amid a labor shortage, Polar hired its first robot employee.
A robot arm performs simple, repetitive work: it lifts a piece of metal into the press, which then bends the metal into a new shape. Like a human, the robot worker is paid for the hours it works.
Polar production line manager Jose Figueroa said the cost of a robot rented from Formic works out to $8 an hour, while a human's minimum wage is $15 an hour. He said deploying the robot freed up a person to do other work, boosting productivity.
“Small companies sometimes struggle because they cannot invest capital in new technology. We are simply trying hard to cope with the rise in the minimum wage”
The fact that Polar did not have to pay $100,000 up front to buy a robot, and then spend more money programming it, was crucial. Figueroa said he would like to see 25 robots on the line within five years. He does not plan to replace any of the company's 70 employees, but Polar may not need to hire new workers.
Formic buys standard manipulators and rents them out along with its own software. They belong to a small but growing group of robots that find tasks in the workplace on a pay-per-use basis.
The coronavirus pandemic has led to labor shortages in many industries, but many small firms are reluctant to write big checks for automation.
"Anything that can help reduce the size of the workforce or the need for workers is an obvious plus right now," said Steve Chmura, chief operating officer of Georgia Nut, a confectionery company in Skokie, Illinois, which struggled to find staff and also rents robots from Formic.
The "robot as an employee" approach could help automation spread faster to small businesses by changing the economics. Companies such as Formic see an opportunity to build a large business by serving many small firms. Many of them harvest the data they collect to improve their products and improve customer service.
Formic investor Shahan Farshchi compares the current state of robotics to computing before personal computers, when only rich companies could afford to invest in massive computer systems that required significant expertise to program and maintain. Personal computers were made available by companies such as Intel and Microsoft, which made the technology cheap and easy to use. "We are now entering the same moment with robots," Farshchi said.
In recent years, robots have taken on new jobs as the technology has become more capable, as well as simpler and cheaper to deploy. Some hospitals use robots to deliver supplies, and some offices have robot security guards. The companies that build these robots often offer them for rent.
Jeff Bernstein, president of the Association for Advancing Automation, said growing demand for automation among small companies is fueling interest in robotics as a service. He said the approach is especially popular among firms involved in warehouse operations.
Over time, paying robots to do all kinds of work could become the norm, Bernstein said, pointing to RoboTire, a startup developing a robot that can change tires on a car.
“As more and more companies automate their processes across various industries, you are seeing greater openness to robotics as a service”
The International Federation of Robotics, an organization that tracks robotics trends worldwide, forecast in October 2021 that the number of robots sold would rise 13% in the following year. According to one market analysis conducted in 2018, the number of industrial robots rented out or used under subscription software will grow from 4,442 units in 2016 to 1.3 million in 2026.
"Lower costs are very important for the spread of the technology," said Andrew McAfee, a principal research scientist at the Massachusetts Institute of Technology who studies the economic impact of automation.
McAfee said that in recent years robots themselves have become cheaper and more convenient for users, thanks to falling costs of sensors and other components, and he expects this trend to continue.
Dustin Pedersen, chief financial officer of Locus Robotics, a company that rents out robots for use in warehouses, said his company's revenue grew sixfold over the past year amid rising demand from e-commerce and a shortage of workers.
“The ability to use a subscription model makes automation much more accessible. And we are still at an early stage of broad robot adoption in the warehouse industry”
Even for economists, it is still unclear how the growing use of robots will affect the supply of jobs. Research by Daron Acemoglu and Pascual Restrepo, economists at MIT and Boston University respectively, shows that the introduction of robots between 1990 and 2020 led to job losses and lower wages overall.
But one study of robot deployment in Japanese nursing homes, conducted in January 2021, found that the technology helped create more jobs by allowing greater flexibility in work methods. Another study, conducted in 2019, also found that robot adoption at Canadian companies often affected managers more than workers, due to changes in business processes.
Lynn Wu, a professor at the Wharton School of the University of Pennsylvania and co-author of the 2019 study, expects robots paid by the hour to become more common. But she notes that, unlike many information technologies, few businesses know how to use robots well: "It will take longer than people think."
Today, most robots used in industrial settings are relatively dumb, repeating precise movements. Robots are gradually becoming smarter through the use of artificial intelligence, but machines still struggle to respond to complex conditions or uncertainty. Some researchers believe that adding AI to robots will push companies to reorganize in ways that have a bigger impact on jobs.
Saman Farid, CEO of Formic, said the company hopes to position itself so that in the future it can offer more capable robots to a wide range of companies.
“Over the next 5 to 10 years, robots will be able to perform far more tasks. As machine learning improves and reliability reaches a higher level, we will start deploying them”
