Friday, 11 December 2015

Robot revolution: should investors ignore it?

A new report from Merrill Lynch says robots may have a seismic influence on the labour market, which will present investment opportunities, but could render some industries obsolete.

Up to 35% of UK jobs could be lost to robots, while in other more industrial economies, the toll could be even greater. This type of radical redistribution of labour is not unknown. Economies have long had to cope with the rise of technology, and – in aggregate – it has proved to be a force for greater productivity.

The global market for robots is now $32bn in size and the Merrill Lynch report predicts this might be as high as $153bn by 2020, with robots performing around 45% of manufacturing tasks by 2025.
Electric car maker Tesla uses more than 160 specialist robots in the manufacturing process at its Fremont, California-based factory, including 10 of the largest robots in the world, named after X-Men characters. Toyota has just announced a $1bn investment in a Silicon Valley research company to develop artificial intelligence and robots. Globally, Japan and Germany are currently the largest global users of robots.

Another key beneficiary may be China. China was the largest buyer of robotics in 2014, as it attempts to make its industrial processes more globally competitive. The government has put stimulus packages in place for the adoption of industrial robots. Robotics may be an important part of the ‘new’ China.

Robotics may be bad for some sectors of the labour force, but on balance, they are good news for many companies, improving productivity and efficiency. In some key industries, successful adoption of robots may be a key determinant of future success. Investors have been warned.

Source: International Adviser, 12 Nov 2015

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