Are Robots Taking Over? | Preparing Industrial Spaces for Automation
When you look at any of the massive industrial spaces housing America’s warehousing and manufacturing hubs, not much has changed on the outside over the past few decades.
It’s a far different story on the inside, as these same industrial spaces now include far fewer workers - and far more robots - than their legacy counterparts.
This reality begs a couple questions. Are robots going to take our jobs? And, from an investor perspective, how should the commercial real estate industry prepare - and adapt - for this automated future?
In the following article, I’ll tackle these questions, diving into each of the below topics:
● An Overview of Industrial Automation
● The Future of Jobs in an Automated World
● The Skills Gap
● Adapting Commercial Real Estate to the Automated Path Ahead
An Overview of Industrial Automation
To properly analyze commercial real estate deals involving this space, investors first need a baseline understanding of where industrial automation currently stands.
While it may seem futuristic, robots already exist in the industrial real estate realm, particularly the warehousing and manufacturing spaces.
Emerging robotic technologies have allowed for the automation of tasks - and have proliferated greatly - throughout the United States. Manufacturing and warehousing fields now rely heavily upon complex data systems, algorithms, and robots that can pick, pack, compile, and inspect items.
And, despite this massive proliferation in robotic technology, we have not come close to hitting a ceiling in industrial automation. Enormous potential exists to increase automation in the warehousing and manufacturing spaces.
The Future of Jobs in an Automated World
Naturally, with this explosion in automation, people want to know: will robots replace all of our manufacturing and warehousing jobs?
This represents a reasonable fear, especially as many of the robotic tasks I listed above (e.g. picking, packing, etc) are traditionally human jobs. With that said, robots have not fully taken the place of humans yet, and it’s likely they will never replace the need for skilled labor.
On the contrary, technology analysts project that industrial automation has the potential to dramatically improve efficiency and profits for manufacturers, ultimately creating more jobs than it eliminates. However, this creation will inevitably alter the job landscape.
Of particular concern, in tight labor markets with low unemployment, automation can replace (and currently is replacing) the low-skill, manual jobs I previously outlined. Specifically, extremely repetitive tasks prove ripe for robotic replacement, as transferring these tasks both A) saves on labor costs, and B) increases efficiency and productivity.
However, analysts predict that automation will still create more jobs than it eliminates, and these jobs will likely be skilled, well-paying, career-length positions. As such, automation stands to improve the economic outlook of workers in depressed areas.
In theory, as some low-skilled jobs fall victim to robotic replacement, other positions working in conjunction with this automation will be rapidly created, with a large portion of future jobs in the warehousing and manufacturing fields not yet existing.
Furthermore, as the Bay Area tech hub has witnessed over the last few decades, every new technology-related job causes a multiplier effect in a local market, with each of these jobs creating several additional jobs in the local goods and services economies - at all income levels.
Local commercial real estate professionals can help you identify the jobs trends in a local market - need help finding reliable ones in your area? Drop us a note!
The Skills Gap
The successful transition from manual labor to skilled work complementary to automation rests on a huge assumption. Namely, labor markets need to ensure that training mechanisms exist to assist workers in the transition from manual labor to work that embraces and supports automation.
Currently, a massive gap exists between A) labor market skills, and B) the skills needed to support a heavily automated workplace. While no silver bullet exists to provide this training, local case studies suggest that successful retraining will involve public-private funding and cooperation centered on the following training options:
● Providing high school students access to two years of free community college
● Increased funding for high school and adult technical schools
● Private industry collaboration to support training-heavy paid internships
While this certainly does not constitute a comprehensive list, the ultimate goal is for private industry and government to ensure that options exist for A) the retraining of workers who’ve lost their jobs to automation, and B) young Americans who’ve yet to enter the workforce to gain the skills necessary for jobs in an automated economy.
Adapting Commercial Real Estate to the Automated Path Ahead
So, how will all of the above affect commercial real estate in the future?
Working closely with commercial real estate professionals, I’ve seen several technologies related to automation rapidly become integral to the industrial sector. Specifically, the following four technologies have made significant inroads in the warehousing and manufacturing spaces, a reality investors cannot ignore if they hope to remain relevant:
● Blockchain technology: Dramatically increases supply-chain transparency and efficiency.
● Artificial intelligence (AI): Allows for improved connectivity, which allows for greater decentralization of supply chains and delivery channels.
● Green technology: Continues to grow in industrial importance due to A) society-wide emphasis on environmental sustainability, and B) a bottom-line push to make packaging both returnable and recyclable.
● 5G networks: These networks are the cornerstone of automated delivery and will ultimately serve as the foundation for self-driving vehicles and drones to automate delivery channels.
For businesses and real estate investors alike, remaining relevant in this “new normal” of automated workplaces requires investment in the above technology, as a failure to do so will inevitably lead to irrelevance in the warehousing and manufacturing spaces.
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We recognize that, even after outlining the above information, tackling the challenges of automation in commercial real estate can seem daunting.
That’s why we’re here to help. The Pocket Broker team lives and breathes commercial real estate, so drop us a note to see how we can help you achieve your unique objectives!