And why businesses don’t actually like most robots
It’s an undeniable fact that the pandemic has changed a lot about everyday life. The real question now, however, is how lasting will some of these changes be?
Some, like the acceptability of remote work for jobs that allow it, may persist. Others, like high-fashion face masks, likely have less staying power.
At Creative Ventures, we look at how macro trends impact technology adoption. In this case, we’ve seen a massive acceleration in the adoption of automation technology (robotics and AI) in a wide variety of industries from food services to logistics.
Acceleration, not revolution
In most cases, the pandemic acted as an accelerant for trends that were already in place.
We were already investing in food services and logistics before COVID. These industries, and many other manual labor jobs, were already characterized by high turnover and hiring shortages that were worsening over time. Warehousing and logistics famously has 75%+ turnover rates (even in the early 2000s—it’s since gotten worse). That’s much higher than median US turnover of 8-9%. The food services industry is almost identical, with turnover estimates also at more than 75% and rising.
These trends and challenges would have continued even without the pandemic.
Not a silver bullet
Contrary to popular belief, robots aren’t taking jobs, at least in most sectors we see.
People envision competing with science-fiction Terminators. In reality, our current generation of manual-labor robots are mostly clunky, dumb, and slow.
Flippy, the media darling hamburger flipping robot, was a good example that exemplifies what usually happens. It got ripped out almost as quickly as it got put in.
In our own interviews with food services, heavy industry, logistics, and agriculture, we tend to hear the same reasons, over and over again, why technology tends not to be adopted. The technology is not as flexible as a human being—and even with turnover and (in certain sectors) absenteeism, there’s a fear as to the reliability of new technology.
If you’re suddenly reliant on a robot to actually run a critical part of your operation and if it goes down, you’ve suddenly brought your entire revenue generating operations to a halt. Most of these sectors do not have high margins to spare.
Because of this, the first choice is almost always more human labor, especially in these industries that tend to be famous for being resistant to change. Automation is a last resort.
As such, even with a worsening labor crisis in these industries before the start of the pandemic (and a whole new set of challenges after), automation solutions that actually work are generally few and far between, and often cleverly integrate new technology with old, foolproof technology. Picnic, a robotics solution capable of making 300 fresh, custom pizzas per hour, is a good example. It uses newfangled computer vision and 3D printing technology to ensure ingredient placement, but its base is nothing more than a boring, old, reliable conveyor belt.
Automation, when it’s better AND when it’s worse
The pandemic caused enormous pain in the restaurant industry. In the US, as many as 110,000 restaurants have closed and food services sales have fallen by $255B. As a result this exacerbated the existing problem: low margins and high turnover. Costs are more painful than ever. Now, suddenly, workers also can’t stand next to each other.
On the opposite end, logistics on all levels (from warehouses to sorting facilities to last mile) have surged due to online orders. It’s basically a constant holiday rush for FedEx and UPS with 25% surges in volumes and tripling in profits over the first quarter of 2021 — with the added stress of trying to encourage and maintain social distancing in sorting facilities.
These two industries are mainly useful examples because they encompass both rising demand and falling demand—but in many of these cases where labor was already scarce, the pandemic, ironically, only exacerbated the situation with fear of infection—actual infection—shutting down operations, and safety measures decreasing worker density.
The future didn’t change, it just came sooner
While it’s a popular pastime of pundits to wax philosophical about what “The New Normal” will look like, the simple reality is most trends have just been accelerated.
Remember, despite all of the current talk about video conferences, Zoom IPO’ed in April 2019, long before anyone could guess what a disaster next April would become.
While you can often go wrong just extrapolating the past, the suddenness of the pandemic forced us to reach for solutions that were already within reach—which accelerated what was already happening.