Robotics and Automation: A Long-Term Investment Theme?
The global market for robotics technology is expected to grow by around 10% a year between now and 2025. Supported by this growth, the investment universe of robotics companies could generate higher returns in the long run than the broader equity market.1
There are good reasons for this expert opinion, with robotics becoming increasingly important in industrial applications and making ever further inroads into day-to-day life. Anyone who has seen a lawnmower robot in action or sat back while a robot vacuums the carpet will vouch for that. We are at the beginning of a far-reaching technological revolution, ushered in by groundbreaking advances in robotics, artificial intelligence and automation. This means that the theme of robotics offers long-term investment potential.
The facts: How widespread are robots?
- In global manufacturing industries today, there are just seven robots for every 1,000 workers.
- Inside that data, the automotive sector is one of the most advanced, with an average of 100 robots for every 1,000 workers.
- Robots, automation systems and artificial intelligence are also increasingly encountered away from the factory floor. Doctors, for instance, are using artificial intelligence in the diagnosis of complex conditions, and in surgery, robots allow greater precision, improving patient outcome and reducing recovery times.
Increasing automation is leading to additional productivity gains. In our view, this is one of the most important sources for the creation of prosperity.
Fund Manager Dr. Patrick Kolb
What was the effect of technological advances in the past?
There is no denying that technological advances have through history created disruptions in the labor market and led to periods of higher unemployment. However, the examples from the past suggest we should not panic:
- Cotton and wool industry: two hundred years ago, machines revolutionized production since they could be operated by less-skilled workers on lower wages.
- Threshing grain: horse-drawn mechanisms replaced almost a quarter of all agricultural labor in the nineteenth century.
- Steam engines, electricity, assembly lines – the list goes on. There have always been periods in which innovation temporarily costs more jobs than it creates.
Interestingly, however, since the days of the first steam engines humanity has not run out of work.
We expect that the negative effects of technology on the labor market may be widespread, but ultimately will be only temporary in nature and will be offset by positive effects in the longer term.
The positive effects of technological innovations are also clear. At the start of the twentieth century “only” 1.6 billion people populated the planet, while today it is about four and a half times as many – despite or even because of advances in technology. And how are people doing? Statistics show that quality of life has improved significantly globally, and life expectancy is rising steadily.
On balance, will robotics cost us jobs?
Robots and autonomous systems have to be designed, created and serviced by engineers and support staff. System and software developers are needed to develop the services and applications. Studies suggest that artificial intelligence and robotics should even create more new jobs than they replace. That could lead to an increase in productivity that improves people’s overall standard of living, as robotics enables higher levels of capital investment and leads to greater employment.