Prior to the coronavirus outbreak, economies in the industrial world were moving along fairly smoothly. There were reliable supply chains with “just in time” component arrivals, predictable product deliveries, low interest rates, little inflation, abundant reasonably priced energy, and an adequate workforce in a seemingly peaceful world.
It was a set up for a perfect storm.
That cataclysmic eruption two years ago slammed countries worldwide just like what happened with World War I and the Spanish Flu plague just over a century ago. As if the coronavirus pandemic wasn’t enough, Russia’s invasion of Ukraine threatens world peace and international supplies of wheat, corn, natural gas and valuable metals such as nickel.
Who could have imagined a war torn Eastern Europe, a run on toilet paper, and parents driving miles to find infant formula? Who would have thought the price of a gallon of gas would soar past $6 and truckers would pay $7 a gallon for diesel?
No one pictured empty car lots and six-to-eight months wait lists for new vehicles. When was the last time Boeing’s 737 production line in Renton stopped because of a lack of parts?
That’s the COVID world we live in and the claw back to a more predictable and stable time is challenging.
Today, inflation is spiking at an 8.26% average for the last year, and nationwide job openings are currently pegged at 11.4 million. That’s prompted companies of all sizes to order robots to maintain production and lower costs. Further exacerbating the labor shortage is 4.4 million Americans quit their jobs in April even though the labor department reported the United States economy added 428,000 nonfarm jobs.
“The average paycheck for American workers has gotten bigger during the pandemic. Ordinarily that would be cause to jump for joy. But the reason for this increase is grim: Millions of low-income jobs are gone, and that has pushed average pay higher,” Anneken Tappe, CNN Business reported.
Wage increases have been offset by higher prices for groceries, energy and rent.
The one consistent bright spot has been demand for robots and semiconductors which rely on abundant electricity and skilled workers, not vaccines. As employers struggle to find workers, stabilize output, rebuild dependable supply chains and control costs, robots are rapidly showing up in businesses. Companies, such as Intel and TSMC, are spending hundreds of billions increasing semiconductor fabrication capacity in Arizona and Ohio.
Orders for workplace robots in our country jumped 40% year-over-year in the first quarter of 2022 as U.S. companies are leveraging automation to combat ongoing labor shortages and cut costs as inflation continues to hover near a 40-year high, FOX Business reports.
According to the Association for Advancing Automation (A3), during the first three months of 2022, more than 9,000 robots collectively worth $544 million were sold in the United States. Across North American, robot sales were the most ever for that same period.
Interestingly, many of the robots come from China. Data released by the International Federation of Robotics shows Chinese sales of industrial robots increased by 19% in 2020.
Long before the pandemic, China’s national goal was to shake the image of just being a nation for low-cost manufacturing. Instead, it is becoming known for producing cutting edge, reliable and high quality products, even making robots.
The accelerated switch to robots is across business sectors.
“Companies of all sizes, and increasingly small and medium-sized companies, are deploying robotic and automation because it’s more feasible than before,” A3’s Alex Shikany told Fox Business.
The bottom line is as wages surge ahead, robots are replacing jobs. The key is to have more highly trained workers prepared for a world where robots are increasing at an accelerated pace.
Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.