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Labor shortage catalyst for investments in robots

by Marco van der Hoeven

In 2023, businesses across various sectors increasingly turned to automation as a response to persistent labor shortages and the aim to enhance productivity, according to new data from the global automation market platform HowToRobot. The trend of automation was significantly influenced by labor shortages, particularly in the manufacturing sector, which had its roots in the aftermath of COVID-19. This shift towards automation is not just a technological upgrade but also a strategic response to changing market conditions and workforce dynamics.

The CEO of HowToRobot, Søren Peters, emphasized that the lack of available labor was a primary factor driving businesses to automate in 2023. The data indicates that 80% of automation projects were directed at relieving employees from manual tasks, allowing them to focus on more value-added activities. This trend suggests that businesses view automation as a complement to human labor, rather than a replacement. Automation was used to handle more cumbersome tasks, thereby enabling employees to engage in other necessary operations to maintain production levels and meet customer demands.

In North America and Europe, labor shortages were especially pronounced, reaching a peak around the Spring of 2022 and continuing through 2023. This is evidenced by the U.S. manufacturing job opening rates, which averaged 4.5% in 2023, almost double the pre-pandemic average of 2.8% during the years 2013-2019. These shortages hindered businesses from expanding their production capacity through manual labor, leading to a heightened reliance on automation. Notably, 60.6% of automation projects in 2023 aimed to increase capacity.

Another significant factor driving automation was the goal of increasing productivity. Accounting for 70.9% of automation projects in 2023, this focus on productivity is essential in reducing labor hours for the same output, which can result in higher wages, lower prices, and increased profits. This is particularly pertinent in the context of high inflation levels experienced over the past three years. The increase in hourly compensation in U.S. manufacturing, which grew by 18% between 2019-2023, underscores the economic impact of these productivity enhancements.

The data also reveals that improving product quality and uniformity was a moderate yet important driver for automation, with about one-third (36.2%) of projects pursuing this goal. Automation can address issues of varying quality and uniformity in manual operations, which can lead to customer claims and resource waste. Moreover, automation is increasingly being recognized for its potential to reduce the ecological footprint of manufacturing processes.

Additionally, improving the working environment was a significant consideration in automation decisions. Nearly one-third (31.5%) of the projects in 2023 focused on this aspect. Automation can alleviate the physical demands of certain tasks, like repetitive motions or heavy lifting, thereby enhancing the overall work environment. This is particularly relevant in the context of growing investments in employee well-being to improve staff retention.

The move towards automation in 2023 was a multifaceted response to labor shortages, the need for increased productivity, quality control, and the improvement of working conditions. These factors highlight the evolving landscape of manufacturing and other sectors, where technology and workforce management strategies are increasingly intertwined.

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