Robots not displacing workers yet

Singapore

HYPE is building up around robots again, with worries that their presence in the supply chain will make Asian workers redundant. However, John Calverley, head of global thematic research at Standard Chartered Bank, calls for some perspective. He said that robots are still limited in what they can do, and can be costly for smaller companies relative to flesh and blood workers.

"You've got Cambodia and Vietnam with cheaper wages than China. The trend towards low cost (manufacturing) is going to go on for some time," Mr Calverley, who is based in Canada, told The Business Times in a recent interview in Singapore.

While larger production lines can be disrupted by automation, smaller companies may still find it worthwhile to make their goods in low-cost Asean countries, he said.

Workers in Cambodia and Vietnam cost around US$2,000 a year, while the latest Baxter robot - touted as an alternative to outsourcing menial tasks like packaging - can cost around US$20,000.

Meanwhile, the trend of reshoring seems to be more talk than reality, he said. Reshoring is a term used to apply to American companies adding manufacturing jobs back home as Asian workers become more expensive to hire.

Reshoring is happening but on a limited scale, he said. While high-tech products could be made in the US, products such as toys, computer chips, electric motors and cheap clothing are still likely to remain outsourced, he said.

The rapid growth in Asian markets also makes it attractive for global companies to produce in Asia, he added.

Meanwhile, lower phone call costs and video conferencing technology also mean it is easier for a company to keep up a global supply chain, he said.

On the whole, robot development is akin to where the Internet was in 1990-91, Mr Calverley said.

Nevertheless, there have been significant breakthroughs. Most robots currently work in the car industry and can be dangerous. Baxter, by contrast, can work beside people and be easily programmed, he said.

A September 2014 report by PwC noted how robots are not just taking on repetitive tasks, but are developing human traits such as sensing, dexterity, memory, trainability, and object recognition. This allows them to handle jobs like picking and packaging, testing and inspecting, and electronics assembly, it said. But companies surveyed are still resisting their adoption, due to a perceived lack of cost-effectiveness and relevance, PwC said.