How Amazon (AMZN) is Investing in the Future of Robotics
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With ongoing advancements involving robotics, companies are beginning to dial back human-workforces as an increased focus is being placed on automation; one such company being Amazon.
Below we take a brief look at what this means, and when we can expect to see an inflection point in the hiring practices of one of the worlds largest companies.
Manufacturers and Innovators
Before taking a closer look at the ongoing transition to automated workforces, the following are a few public companies of note playing a role.
An industry giant, Amazon operates on a global scale and offers a range of services. In recent years, Amazon has been able to increase the efficiency of its operations through the introduction of new technologies, including warehouse robots. Notably, Amazon boasted a revenue of $513.98B in 2022, and was listed a ‘Buy' by all major investment firms at time of writing.
Amazon is headquartered in Washington, United States. Globally, the company employs ~1.5M.
Stratasys, Ltd (SSYS)
This company is a leader in the additive manufacturing sector. Through its line of 3D printers and services, the company boasts solutions targeted towards a variety of fields, including aerospace, dental, automotive, robotics, and more.
Stratasys is headquartered in Minnesota, United States. In 2021, the company boasted a revenue of $606.3M
Replaced by a Robot?
After closing out 2022 with layoffs approaching 18,000, Amazon has just recently announced that it is culling another 9,000 from its human workforce. While the latest employees to lose their positions are predominantly from advertising and Amazon Web Services, such announcements still raise fears that humans are being replaced by robots as industry giants aim to raise profits.
While this is a genuine concern, Amazon has insisted to date that this is not the case. Rather, robots are being used to assist humans in tasks that would typically prove dangerous, or otherwise unreasonably tedious.
This transition is most evident in distribution warehouses where increasingly intelligent robots are being used to transport and sort goods.
In defense of Amazon, while the expansion of its robot workforce may be concerning to some, their use doesn't just eliminate jobs – they also create skilled positions required for maintenance, programming, etc.
A Widespread Takeover
It should be noted that warehouse automation through use of robotics is not the only sector where human labour is waning. Agriculture is experiencing a very similar evolution that has allowed for huge leaps in farming efficiency.
With regards to farming, robots not only have the ability to be much more efficient than humans at a variety of tasks, but also stand to has less of a negative impact on the environment and crops. This is achieved through more efficient harvesting, laser-based weed control diminishing the need for herbicides, intelligent self-driving irrigation units, and more.
Robots found in warehouse settings like Amazon distribution centers do not get tired. They can work 24/7. They do not require vacation or sick time. Combined with increasingly intelligent software and increasingly capable hardware, robot solutions have skyrocketed past human performance standards on assembly lines.
With all the above perks and more, a widespread takeover is inevitable as our expectations of service as customers increases, and Amazons desire/need to increase profits grows. It is no wonder that Amazon is investing heavily in the future of robotics, producing more than 1,000 each day.
Robots made by Amazon are done so through a branch of the company called ‘Amazon Robotics'. This subsidiary operates near Boston, Massachusetts, which it describes as the ‘epicenter of robotics innovation'.
Since its purchase of warehouse automation specialist, Kiva Systems, in 2012 for $775, Amazon Robotics has gone on to develop a line-up comprised of various models. These include the Amazon Robotic Drive Unit (ARDU), Amazon Robotic Sortation System (ARSS), and the Amazon Pegasus Drive System – each built with a specific purpose in mind, and designed to work along side a human workforce for maximum efficiency.
The Inflection Point
With all that being said, there is a point in time – sooner than many may realize – in which human hires at Amazon are outnumbered by the amount of working robots. ARK Invest refers to this coming shift as the ‘inflection point', and forecasts that it may occur within the next few years.
As it stands, ARK Invest notes that the ‘robot density per 10,000 employees' comes in at 3200.
A major reason for this mass adoption and eventual inflection point, is due to the massive strides made over the past decade with regards to robot performance.
As proponents of Wright's Law would point out, the more we make of something, the better we become at doing so. This has allowed for production costs to decrease, lowering the barrier to adoption, which then facilitates more growth as AI and engineering learn.
Automation through use of robotics is an inevitable trend that has been occurring for decades. It is only within recent years though, that converging technologies including AI and additive manufacturing have allowed for the sector to take a huge leap forward. With development only ramping up, it will not be long before Amazon and other companies boasting large distribution and sorting facilities reach an inflection point in their human vs. robot workforce.