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GLOBAL AUTOMATION– SECTOR NOTE

​Automated machines are increasingly a part of daily lives. We encounter driverless metros and trains, self-checkout machines and ATMs frequently in our day to day business. In the report we present an overview of the impact of automation on businesses and structure of labor market. We have also detailed the industry wise adoption of automation. Further, the report provides investment ideas to ride the crest of the coming automation revolution.

• ​Automation expected to revolutionize manufacturing: The impact of automation will be most significant in factories and production processes. Advancement in robotics has enhanced senses, dexterity and intelligence of robots. In future could make it practical to substitute robots for human in many manufacturing tasks. Key drivers of increased automation are: Improving performance and declining costs; Increased complexity and sophistication of automation machines has helped them to diversify into larger number of industries; Mass customization and shorter product life cycles necessitate automation.
• ​ Automation gathering pace worldwide: In 2015, led by Asia, global robot installations are estimated to have increased by 15% to 264,000 units and by 2018 would reach 400,000 units. In line with the increase in installations, the spending on robots worldwide is expected to jump from just under US$27 billion in 2015 to about US$67 billion by 2025.
• Low-skill and low-income jobs to be at risk: It is estimated that 45% of current work activities could eventually be automated using current technology. Service occupations are at the most risk from automation. In OECD countries alone, some 80m jobs (13% of the workforce) could be automated by 2025, another 80m could be redirected to higher-value-added work. Jobs which are intensive in social and creative skills are less automatable. Occupations which involve developing original ideas are also less likely to be automated.
• China drives growth in industrial robots: Five markets account for 70% of the total global sales volume (China, Japan, the United States, the Republic of Korea and Germany). China is the fastest growing market for industrial robots. By the end of 2016, it is expected to supersede Japan and become the world’s largest operator of industrial robots. The key drivers of industrial automation in China are:  Government incentivizing high-tech manufacturing industrieso; Rising workforce costs; Expected decline in China’s working age population
• Automotive industry leads in adoption: The automotive industry is the largest customer of industrial robots. In 2014, the industry installed about 98,900 new robots. This represents 43% of the total sales for the year. Along with computers and electronic products; electrical equipment, appliances, and components; and machinery it accounts for 75% of all global robot installations.
• Foreign companies dominate the lucrative Chinese robot market, but domestic players make inroads: China is the largest market for industrial robotics. It accounted for $8.5 billion of the global industrial robotics market of $32 billion. It is also the fastest growing major robot market. In 2015, it grew by 16% as compared North America in Europe which grew by 11% and 9%, respectively. Foreign companies account for approximately 74% of the total sales volume; of these, ABB, Fanuc, Yasukawa and KUKA accounted for approximately 65%. However, domestic players are fast catching up and have expanded their market share to 31% in 2014, from 26% in 2013