Lack of workers led automation decisions in 2023

0

Why did businesses automate in 2023? New data from HowToRobot shows the role of labor shortages, inflation, and employee well-being in automation decisions.

Ongoing labor shortages in the manufacturing sector were among the leading drivers for business decisions to automate in 2023.

New data from the global automation market platform HowToRobot reveals the most common business reasons for automating last year. 80% of all projects measured aimed to free employees from some manual tasks and move them to other more value-creating tasks, HowToRobot finds.

“From our daily conversations with manufacturers worldwide, it’s clear that the lack of labor has been the driving factor behind business decisions to automate in 2023,” says HowToRobot CEO, Søren Peters.

The finding confirms that businesses are seeing automation and robots as a supplement to – and not a replacement for – human labor:  

“By automating the most cumbersome tasks, businesses have been freeing employees to take on other tasks needed to maintain production levels and fulfill customer orders. Not one we asked did this because they wanted to lay off people,” Søren Peters adds.

Labor shortages peaked in North America and Europe following Covid around the Spring of 2022 and continued at elevated levels in 2023. In the US, manufacturing job opening rates averaged 4.5% in 2023, almost twice the pre-pandemic average of 2.8% during 2013-2019 according to data from the U.S. Bureau of Labor Statistics.

The labor shortages have also been restraining businesses’ ability to expand their production capacity with manual labor, further increasing the need for automation. 60.6% of automation projects in 2023 sought to increase capacity through automation, making it the third-largest motivation to automate according to HowToRobot’s data. 

Productivity increases are also primary targets for automation

The second-biggest motivation for automating in 2023 was to increase productivity, with 70.9% of projects having this goal.

Increasing productivity is one of the most important aspects of automation because it reduces the labor hours needed to produce the same output. This, in turn, enables businesses to increase wages, lower prices, and grow their profits, leading to overall stronger economic growth. With high inflation levels over the past three years, this has been particularly important for businesses according to Søren Peters. The hourly compensation in U.S. manufacturing alone grew by 18% between 2019-2023 according to data from the U.S. Bureau of Labor Statistics.

“When costs are rising rapidly, what do you do as a business? Either you cut down or invest in areas that increase your productivity. We are seeing that many of those who had the foresight – and funds – to invest in automation are now coming out on top. They are more competitive and can afford to pay their employees better,” says Søren Peters.

Improving quality and working environment: Moderate drivers for automation

About one-third (36.2%) of automation projects last year sought to improve product quality and uniformity with automation, marking it as an important, although moderate, motivation for businesses.

Varying product quality and uniformity can be one of the challenges with manual operations for certain parts of the manufacturing process, leading to more customer claims and resource waste. As businesses struggle with high input costs, reducing waste and claims is increasingly important according to Peters.

“We also see a growing awareness about the environmental impact of wasteful processes and how robots and automation can help reduce the ecological footprint of manufacturing operations,” he says.

In addition, many businesses looked for automation to improve the working environment last year. Almost one-third (31.5%) of automation projects in 2023 had this goal according to HowToRobot’s data. By taking on the most physically demanding tasks involving, for example, highly repetitive motion, heavy lifting, or hazardous environments, automation can free employees to take on less backbreaking and more meaningful tasks. With 2023 being a year of growing investments among manufacturers in employee well-being to improve staff retention, this aspect of automation is also gaining ground:

“It’s becoming clear for a growing number of businesses that investing in employee well-being also involves automation,” says Søren Peters. 

Share.

About Author

Comments are closed.