With the stunning achievement of landing a robot on a comet last week, robots and their capabilities have hit the headlines again. This robot enabled progress for science, but what can robots do for sustainability?
We are all familiar with the generally increasing automation of industrial processes, with the use of robotics, sensors, and twenty-four hour continuous production. Such automation clearly improves productivity, reduces energy use, and cuts waste generation in the process, resulting in clear sustainability benefits. There are plenty of examples of robots saving energy consumption by c.15-30% by optimising the manufacturing process, increasing throughput and reducing down-time and start-up phases which are typically high energy. Savings can be as high as 70%.[1] Quality also improves with robotics, leading to reduced breakages and defective parts, and consequently less waste production.
The social impacts of robots are more nuanced, and also more controversial. In the short term, industrial automation clearly substitutes for human labour. But the history of agricultural mechanisation and the introduction of automated manufacturing systems in the 19th Century clearly show that longer-term, the substitution of human labour in ‘dull, dangerous and dirty’ jobs by robots, releases labour for higher value-adding roles and is a net benefit for society.
Robots are becoming smaller, more flexible, more lifelike, and more trusted. Current capabilities have been illustrated with online videos of robots playing table-tennis. They are not quite as good as the video of a play off between a robot and the world champion that went viral earlier this year, but was then revealed to have been painstakingly faked. Robots are not quite ready to take over the world, but there are many tasks, such as painting cars, that they can carry out more reliably and safely, with significantly less paint used or wasted in the process.
We recently completed a theme review of Japanese industrial automation companies. Japan leads the world, both in absolute numbers of robots, and in the number of robots per 10,000 employees,[2] and consequently is the largest market for robotics in the world. The aging demographic in Japan in particular is one of the drivers here. Elsewhere, the market is growing quite rapidly, partly driven by increasing employment costs in many regions. With that, industrial robotics has so far only penetrated c.10% of the manufacturing domain.
Our review analysed seven Japanese companies that are key players in robotics and factory automation. Key players are the likes of Fanuc, Keyence, Omron, and Yaskawa Electric. These companies are global leaders in their chosen markets with dominant market shares in Japan, and increasing market share elsewhere too. We currently hold Keyence which on our analysis has the best track record of sales and earnings growth, as well as the highest margins and returns. We welcomed the the recent decision to triple their dividend which we hope signals an increased focus on shareholder returns in the future. We like the prospects for robotics and factory automation and are considering increasing our exposure to this area.
Robots may not be able to beat the best players at table tennis, but they can reduce energy consumption and waste in manufacturing processes, thereby enabling clear sustainability benefits. Robots are not only helping us discover more about distant comets and planets, but are also helping us live more sustainably on this planet.
[1]http://www05.abb.com/global/scot/scot271.nsf/veritydisplay/c7e3a2d55b891bfec125759100283dfc/$file/63-67%201m921_eng72dpi.pdf
[2] Source: IRC.
