Reference no: EM131039134

Closing Case Baxter: Coming to Work Right Next to You

Manufacturing constitutes a $2 trillion sector of the U.S. economy. For the past 60 years, worker productivity in the manufacturing sector has increased by about 3.7 percent per year. In the past, the United States has retained higher-value added manufacturing jobs while allowing lower-value-added jobs go elsewhere. Interestingly, the definition of "elsewhere" has changed over time. The manufacture of simple goods (e.g., toys) is constantly moving to the location with the lowest wages. After the end of World War II, there was an abundance of low-cost labor in Japan, so manufacturing moved there.

As the Japanese economy recovered, however, the standard of living rose, and with it the costs of producing goods. As a result, low-cost manufacturing moved to South Korea, where a scenario similar to Japan took place. Manufacturing simple goods then moved to Taiwan, to mainland China, and, most recently, to Vietnam. From the perspective of a manufacturing company, a more highly educated and skilled workforce typically has less interest in low-skilled jobs designed to manufacture simple goods. As a result, the world will eventually run out of places where low-cost labor is available.

Therefore, the question is: What will it take to break out of the cycle of making inexpensive goods by hand with unskilled, inexpensive labor? Perhaps robots are the answer. The Initial Solution: Industrial Robots The first industrial robot developed in the United State was put to work in 1961 in the Unimate, a General Motors factory located in Ewing, New Jersey. The Unimate placed hot, forged car parts into a liquid bath to cool them. At the time, companies could not place a computer on an industrial robot, because computers cost millions of dollars and were roomsized. Sensors were also extremely expensive. As a result, early industrial robots were effectively blind and very dumb, and they performed repeated actions only by following a closely defined physical path dictated by a computer program. Today's industrial robots still perform well on very narrowly defined, repeatable tasks. However, they are not adaptable, flexible, or easy to use. In addition, most industrial robots are not safe for people to be around. Moreover, it typically takes 18 months to integrate an industrial robot into a factory operation.

As of mid-2013, 70 percent of all industrial robots were being utilized in automobile factories. These machines are often thought of as money savers for companies. However, the cost to integrate one of today's industrial robots into a factory operation is often 3 to 5 times the cost of the robot itself. Such integration requires the services of computer programmers and machine specialists. In addition, companies must place safety cages around the robots so that they do not strike people while they are operating. Further, most industrial robots have no sensors or means to detect what is happening in their environment. There are some 300,000 small manufacturing companies in the United States that have fewer than 500 employees. Almost none of these firms have an industrial robot, for the reasons we have just discussed. In addition, almost all of these firms have relatively small production runs, meaning that they are constantly changing the design and manufacturing procedures for what they produce. Some of these companies, called job shops, produce a wide variety of goods for other companies. They specialize in manufacturing a type of product that can be highly customized to an individual client's needs. In a typical factory that uses an industrial robot, a production run is rarely less than four months long. For a job shop, a production run can be as short as one hour. Clearly, then, small manufacturing firms need a different kind of robot. A Next-Generation Solution: Baxter Rethink Robotics (www.rethinkrobotics.com) may have an answer with Baxter, a new kind of industrial robot that sells for $22,000. Baxter is very different from existing industrial robots. It does not need an expensive or elaborate safety cage, and factory operators do not need to segregate it from human workers. In fact, humans can actually share a workspace with Baxter. Unlike other industrial robots, Baxter works right out of the box. It can be integrated into a factory's work flow in about an hour. Baxter also requires no special programming. In addition, engineers can go deeper into Baxter's menu system to adjust and optimize settings for different tasks. Interacting with Baxter is more like working with a person than operating a traditional industrial robot. If Baxter picks up something it shouldn't on the assembly line, for instance, workers can take its arm and move the robot to put the object down. Baxter also contains a variety of sensors, including depth sensors as well as cameras in its wrists, so it "sees" with its hands. It is constantly building and adjusting a mathematical model of the world in front of it, enabling it to recognize different objects. Another benefit of Baxter is that other factory workers can train it. In fact, a factory worker who has never seen a robot before can learn to train Baxter to do simple tasks in fi veminutes. For example, a worker can show Baxter a part of the task she is asking the robot to perform, and Baxter can infer the rest of the task. Also, if a human is interacting with Baxter or doing part of the task, the robot can figure out how to perform the rest of the task.

The Results Rethink Robotics launched Baxter on September 18, 2012. It is therefore too early to evaluate this technology. It is worth noting, however, that by mid-2013 Baxter had been "hired" by one company and was being tested by several others. Specifically, Baxter was working at a K'Nex (www.knex .com) plant outside Philadelphia, helping to stack Super Mario toys and ship them to China. Later in 2013, Baxter is scheduled to begin working at three plastics companies: Rodon (www.rodongroup.com), Nypro (www.nypro.com), and Vanguard Plastics Corporation (www.vanguardplastics.com). Let's take a closer look at Vanguard Plastics, a small company with $6 million in annual revenue. Vanguard operates state-of-the-art automated electric presses that crush plastic pellets into different shapes under 1,000 atmospheres of pressure. Custom-built industrial robots-running on overhead tracks-swing down to collect the finished parts and place them on a conveyor. Vanguard's key statistic is sales divided by man-hours. Vanguard executives claim that for the company to stay in business, this statistic must improve by 1 percent or more every year. The only way to accomplish this goal is to increase productivity. One routine job that is still performed by hand is packing parts. Coming off one of the presses are small, textured, plastic cups, which Vanguard sells for 2 cents each to a medical company that uses them to package liquid medicines. A worker from a temporary agency, earning $9 per hour, stacks the cups and then flicks a plastic bag over the stacks.

This is the job for which Vanguard is testing Baxter. Vanguard claims that if Baxter can eliminate one temporary worker-a move that would earn back the company's investment in a single year-then the company will buy Baxter. However, for the cup-stacking job, Baxter will need a specially designed gripper, which Rethink Robotics is developing. The company is also developing software that will enable Baxter to communicate with other machines. For example, Baxter would be able to tell the conveyor when to move forward or stop. Sources: Compiled from R. Brooks, "Robots at Work: Toward a Smarter Factory," The Futurist, May-June, 2013; G. Anderson, "Help Wanted: Robots to Fill Service Jobs," Retail Wire, April 10, 2013; J. Young, "The New Industrial Revolution," The Chronicle of Higher Education, March 25, 2013; L. Kratochwill, "Rethink's Baxter Robot Got a Job Packaging Toys and Sending Them to China," Fast Company, February 26, 2013; A. Regalado, "Small Factories Give Baxter the Robot a Cautious Once-Over," MIT Technology Review, January 16, 2013; T. Geron, "The Robots Are Coming," Forbes, November 12, 2012; W. Knight, "This Robot Could Transform Manufacturing," MIT Technology Review, September 18, 2012; F. Harrop, "Buckle Up for the Robot Revolution," Rasmussen Reports, September 18, 2012; K. Alspach, "Rethink Robotics Unveils ‘Human-Like' Robot," Boston Business Journal, September 18, 2012; J. Markoff, "Skilled Work, Without the Worker," The New York Times, August 19, 2012; J. Leber, "The Next Wave of Factory Robots," MIT Technology Review, July 23, 2012; www.rethinkrobotics.com, accessed April 4, 2013

Questions

1. Rethink Robotics claims that Baxter will not necessarily replace workers; rather, it will enable workers to transition into higher-paying jobs. Will Baxter replace workers in small manufacturing companies? Why or why not? Support your answer.

2. Discuss the possible reactions of labor unions to Baxter.

3. Discuss additional potential applications for Baxter.