Will the economy be automated

Corona drives automation : Now is the time for robots

The coronavirus has already changed the world enormously. It has shown the vulnerability of people who have long viewed themselves as societies above nature, and the vulnerability of an economy that depends on international supply chains. Is the crisis now possibly heralding the end of globalization?

Dalia Marin is convinced of it. The professor of international economics at the Technical University of Munich estimates that the increased uncertainty caused by the pandemic will cause supply chains to collapse by 35 percent. "The pandemic changes the company's calculations," says Marin. Because of the risks that are difficult to calculate, the supply chain business model is no longer worthwhile despite the cost advantage.

For Marin, the corona crisis means the end of the "age of hyperglobalization", in which world trade grew faster than world domestic product due to exploding supply chains. Instead of efficiency, resilience is particularly important after the pandemic.

Only South Korea and Singapore are more highly automated

But how can a high-wage country like Germany keep up with the competition when companies are increasingly producing locally again? This is where robotics comes in. Germany is already one of the countries that have automated their production the most. According to figures from the International Federation of Robotics (IFR), there are 388 industrial robots for every 10,000 workers in Germany. There is more only in Singapore and South Korea, the international average is 99.

"In some sectors Germany is very advanced, in others it has so far relied on importing from abroad," says Susanne Bieller, Secretary General of the IFR. Especially in the electrical industry in Germany, the know-how is sometimes no longer available to produce here. "Since it is difficult to bring process steps back again."

When it comes to automation, the automotive industry is a pioneer, in which 59 percent of all robots installed in Germany are used. It is followed by the metalworking industry with 14 percent and the plastics and chemical industries with eight percent.

Different effects have been observed as a result of the crisis, says Bieller. Because of production stops in China, for example, the automotive industry should have stopped production. In addition, due to distance rules, not as many workers as before could work in factories.

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"It has been shown that factories that are partially automated had an advantage," says Bieller. Both effects would mean that even companies that were previously skeptical about automation would now deal with it.

Independence and sustainability are becoming more important

Arburg is one of the companies that are already relying on automated on-site production. The medium-sized company produces machines for plastics processing and employs 3200 people worldwide. The company's main production site is the main factory in the Black Forest spa town of Lossburg.

“One of Arburg's strategic goals is to maintain the Group's financial and political independence,” says Guido Frohnhaus, Managing Director for Technology at Arburg. This applies in particular to the areas of technology and supply chains.

Wherever production came to a standstill, Arburg did not experience any negative effects from the coronavirus situation within its own supply chains. “We were and are able to deliver without restrictions,” says Frohnhaus. The company has now also started to produce breathing masks and protective goggles and feels that its strategy has been confirmed.

Frohnhaus believes that other companies will follow suit. He sees more opportunities and options for action than in large-scale industry in medium-sized companies, which tend to be long-term and geared towards sustainability.

"An unbelievable kind of digitization accelerator"

So is the robotics industry experiencing a boom right now? Susanne Bieller is careful. First of all, as in other industries, there was a slump in demand. However, she expects that business will slowly pick up again and that new orders will then come.

Patrick Schwarzkopf, managing director of the Robotics and Automation division of the German Engineering Federation (VDMA), agrees. “Even robotics cannot decouple from the economic downturn,” says Schwarzkopf.

The demand for robots in individual areas is increasing enormously, but it cannot compensate for the failures in automobile production, for example. Nevertheless, Schwarzkopf is optimistic about the future. "The crisis was an unbelievable kind of digitization accelerator."

In the industrial sector, too, digital technologies, which, for example, can be used to put machines into virtual operation, are now more accepted. “That will not decrease after the crisis,” Schwarzkopf is certain.

Thomas Staufenbiel, who founded the Berlin company Gestalt Robotics together with two colleagues in 2016, is also hoping for this. The service provider for industrial automation develops strategies for intelligent automation together with companies. Among other things, a robot cell for the Gillette plant in Berlin that can take blades out of a machine independently.

What does automation mean for the workforce?

Even Gestalt Robotics was not spared from the crisis, says Staufenbiel during an interview in the company's Kreuzberg office. He anticipates that investments will be withheld for the time being in the next few months. "First of all, savings are always made in the innovation area."

In the long term, he also considers automation to be indispensable if production is to be brought back to Germany. "Companies that wanted to set up their production domestically anyway are now encouraged to do so again," says Staufenbiel. This can also be seen in the case of Gestalt Robotics.

So the industry is in good spirits. But what does increased automation of production mean for workers in German factories? "It is important that automation does not lead to layoffs," says Moritz Niehaus, IG Metall political secretary for the digitization of industrial work.

The trend towards robotics, which has continued unabated since the 1980s, has already automated many workplaces. This does not only affect the simply qualified, but also skilled workers. Some activities, such as welding, are rarely carried out by humans today.

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Susanne Bieller from the IFR emphasizes that jobs are not lost through the use of robotics, but only shifted. “The companies that invest in robotics are becoming more competitive and can continue to grow their business,” says Bieller. This would create new jobs in the areas of service, marketing and sales.

A study on the topic published in 2017 showed that the use of robots in Germany contributed almost 23 percent to the decline in employment in the manufacturing sector. However, this decline has been more than offset by additional jobs in the service sector.

Also a chance to improve working conditions

Niehaus is skeptical of such calculations. “These are macroeconomic effects,” he says. “They don't directly help those employees who have lost their jobs.” IG Metall is therefore committed to ensuring that employees are re-qualified. “That often has to be driven by unions and works councils,” says Niehaus.

At the same time, robotics also offers an opportunity to replace repetitive or very physically difficult work and thus improve working conditions. More production in Germany could also create more jobs that were previously outsourced. And that also when production processes are partially automated.

The trade unionist Niehaus also sees this potential for more and better work. “It's not the technology in itself that is good or bad,” he says. "The decisive factor is how it is used."

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