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  • Jonathan Poyer

Robots...Coming For Your Job? Or Filling The Job You're Not Taking?

This Forbes article got us thinking about robotics and filling the worker gap that appears to be abundantly staring the economy in the face. Especially in the area of distribution centers and online consumption. From the article:

Until 2020, online purchasing was growing rapidly. Then came the pandemic, and it exploded. Today, orders are overwhelming distribution facilities, labor is near impossible to find or keep and customers expect next-day delivery.

All these factors are driving the need for expanded, faster fulfillment. Global warehouse capacity is expected to double from 3 billion square feet in 2020 to 6.3 billion in 2025, according to data research firm Interact Analysis. The firm also found that investment in warehouse automation is expected to balloon from $8 billion (2020) to $20 billion in 2025.

Hiring and keeping employees has become a real issue in these environments. In fact, many of these companies say that robotics are a necessity and not a convenience and not even necessarily a cost saving enterprise.

Another article, this time from WBUR in Boston, highlights something similar in saying that the pandemic has highlighted labor shortages and thus even smaller companies are being forced to invest in and utilize robots.

"The demand for labor in warehouses exploded," Dubois said. "There weren't enough people to meet that demand, so companies have been accelerating their implementation of technology to kind of bridge the gap."

Since the start of the pandemic, 6 River Systems has doubled its staff. Dubois predicts demand for its robots will keep growing. According to a McKinsey survey of leading retailers, 80% say they plan to invest more in automation in the next two to three years.

Is it a gap or are robots just taking over jobs because they are cheaper and more efficient overall? I tend to think that this is a cooperative venture especially given scary demographics trends. But there are definitely some jobs that are going to be replaced by robots.

The jury is out as to how robotics will impact workers. The WBUR article mentions that companies using robotics and automation increases the wage and income gap. There are also many benefits in output with collaboration between people and robots as well.

But the question we are asking here at AlphaWatch is when we will see investment returns matriculate to investors in robotics and automation companies. You would think that with the obvious increase in demand and even supply, regardless of how choppy that trend is, that investors would be benefitting, especially after the pandemic with folks forced to stay at home. But the investor returns do not seem to have matriculated.

What gives?

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