Leveraging Collaborative Robots(Cobots) To Combat Rising Labor Costs

Labor costs are on ever increasing scale across the world. The minimum wage has never been higher, and experts predict that the trend will continue.

Last year, 2017, the hourly pay of part-time workers rose 3.1 in Japan. A trend expected to continue. It is estimated that at the moment, labor costs account for roughly 60% of corporate expenses. Companies are continually trying to reduce labor costs and maximize profitability.

For most companies, the solution is often laying off workers and increasing the scope of work of remaining workers, a solution that reduces efficiency and productivity.

Some Companies Opt to Send Jobs Overseas

IBM, for instance, according to the Trade Adjustment Assistance database has consistently been shifting jobs overseas to countries like Egypt, Costa Rica and Argentina over the past few years. All these countries have one thing in common, the low labor costs.

IBM is a huge company. One can only imagine that if IBM is feeling the pressure of mounting labor costs, then SMEs (Small and Medium-sized Enterprises) are feeling double the pressure.

Where Collaborative Robots Come In

Co-bots are still relatively new, and they are yet to take root in industrial environments as solutions fully. However, cobots are on an ever increasing usage rate, and experts estimate that by 2018, co-bot sales will reach 11,000 units in the United States alone.


The estimate is more for China at 20,000 units.

As the usage grows, it is critical to explore the value co-bots can bring to companies—both large companies and SMEs—as the premier solution to the rising labor cost.

Co-bots Will Help Maximize Efficiency

Human error is an accepted fact across the world. For a company whose production is contingent on repetitive tasks with perfect accuracy, human errors result in a lot of time wasted and low production rates.

For example, a manufacturing company might have a product that requires placing a bolt at the same exact position for all the products. A co-bot correctly programmed will guarantee this while a human being might consistently miss the spot by a quarter centimeter hence a lot of rejects.

Also, Industry estimates state that a repetitive that takes a human being 3 days will probably take a co-bot 1 day.

It follows that if incorporating co-bots will help increase production and quality, then sales and consequently profitability increases. This will significantly help offset the labor costs.

Co-bots Can Take Over Hazardous Tasks.

Companies whose employees perform hazardous duties spend thousands of dollars in the mandated extra compensation known as hazard pay.

A co-bot, on the other hand, requires no hazard pay, and therefore if a co-bot takes over these hazardous duties, then the company can save a lot of money previously set aside for hazard compensation.

Automatically, this brings labor costs down by a considerable percentage.

Co-bots Significantly Reduce the Needed Workforce.

Repetitive and mundane tasks require a large workforce for maximum productivity. When co-bots take over the repetitive tasks, then maximum productivity is maintained while the workforce needed reduces.

Note that because collaborative robots are designed to work hand in hand with humans, the co-bots do not take over but instead help streamline the process. Temp workers, for instance, hired to assist in mundane tasks are no longer needed, and employees are free to perform more meaningful tasks.

A reduced workforce translates to significantly low labor costs, and the best part of it all is that quality of the product is not comprised.

Co-bots are now feasible and affordable for SMEs

Gone are the days when space was an issue because robots required specialized cages. Cobots offered by Universal Robots, for instance, can be mounted on the roofs and walls at no extra cost if the company concerned has a space problem.

At this rate, SMEs are now in a position to embrace collaborative robots at no additional cost. The initial low cost of investment, ease of use and the slow integration time will play a significant role in increasing production and offsetting labor costs.

Final Word

Jeff Bezos has often said that the best decision he ever made was leveraging the internet for profit at the right time. We are on the verge of Industry 5.0; our very own E. Ostergaard says people working alongside factory systems will mark Industry 5.0.

The timing is perfect to start leveraging collaborative robots as a solution to the labor cost problem plaguing most companies.

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