Artificial Intelligence, particularly when partnered with robots, has been in the news lately, as has an announcement that Google parent company Alphabet has agreed to sell robotics pioneer Boston Dynamics—known for its “Big Dog” line of quadrupedal robots—to Japan’s SoftBank Group, which also makes the Pepper companion robot. What’s also interesting, however, is a growing movement among mid-sized companies in some countries to buy robots and other equipment to automate a wide range of tasks as a means of addressing a growing labor shortage.

 

In Japan, for example, the working-age population peaked in 1995 at 87 million and has been falling ever since. The Japanese government expects it to fall to 76 million this year and to 45 million by 2065, a recent Reuters article notes. As those demographics worsen, Japanese companies will need to search for solutions to the labor shortage problem.

 

“The share of capital expenditure devoted to becoming more efficient is increasing because of the shortage of workers,” Seiichiro Inoue, a director in the industrial policy bureau of the Ministry of Economy, Trade and Industry, or METI, says in the article.

 

It’s unclear how much of that spending is for automation but companies selling such equipment say their order books are growing and the Japanese government says it sees a larger proportion of investment being dedicated to increasing efficiency. Indeed, revenue at many of Japan’s robot makers rose in the January-March period for the first time in several quarters, Reuters notes.

 

For instance, among the robot makers to report stronger revenue in the last quarter was Fanuc Corp. Its revenue was 7.9 percent higher than a year earlier, the first increase in seven quarters. Meanwhile, Yaskawa Electric Corp.’s revenue grew 5.1 percent in January-March from the same period a year ago, the first increase in five quarters.

 

“More than 90 percent of Japan’s companies are small- and medium-sized, but most of these companies aren’t using robots,” says Yasuhiko Hashimoto, Executive Officer at Kawasaki Heavy Industries Ltd’s robot division. “We’re coming up with a lot of applications and product packages to target these companies.”

 

If the investment ambitions are fulfilled, it would help Japan cope with a shrinking and rapidly aging population, however it would also help equipment-makers, lift the country’s low productivity and boost economic growth. Interestingly, the same thing is happening in China.

 

Chinese companies must deal not only with climbing wages, but also a workforce that started declining in 2012—in part because China’s youth have better education than in the past, and recruiting and retaining them in the manufacturing sector is increasingly difficult. That need to save on labor has sparked a surge in demand for robots. What’s more, Beijing in 2015 introduced the Made in China 2025 initiative, designating robots as a key field.

 

Japanese and European manufacturers, who control more than half of the Chinese market for industrial robots, are seizing the moment. A recent article in Nikkei Asian Review points out that industrial robot sales in China totaled 67,000 units in 2015, some 30 percent of the global market, according to the International Federation of Robotics. The organization forecasts 20 percent annual growth in the Chinese market between 2016 and 2019, boosting the country’s share to 40 percent of the global market.

 

What are your thoughts about the use of robots to address labor shortages brought on by aging workforces?