When discussing workforce trends related to manufacturing and distribution-oriented occupations, the topic of automation and its impact on American jobs usually seems to work its way into the conversation. In a previous article, Site Selection Group, a full-service location advisory, economic incentives and real estate services firm, examined the effects automation has on the distribution industry. Although many are under the impression that automation has significantly impacted the number of distribution center jobs, the data suggests that notion has yet to fully materialize but is likely headed in that direction.

To gain a clear understanding of the impact automation is having on the entire industrial sector, Site Selection Group researched the topic for production-oriented occupations.

Robot use is growing and prevalent in regions with significant automotive production
The Brookings Institute published an article on Aug. 14 that shared their research highlighting the markets with the highest concentration of robots relative to the workforce. The following table shows the result of Brooking’s research and includes the top metro areas that have the highest number of robots per worker, as well as those with the lowest concentration of robots.

Industrial Robot Exposure Ranking
Largest 100 Metropolitan Areas)

Rank Metro Area Total Industrial Robots, 2010 Total Industrial Robots, 2015 Annualized % changes (CAGR) in total robots,
2010-2015
Robots per thousand workers
  Top 10        
1 Toledo, OH 702 2,374 28% 9.0
2 Detroit-Warren-Dearborn, MI 5,753 15,115 21% 8.5
3 Grand Rapids-Wyoming, MI 1,091 3,102 23% 6.3
4 Louisville/Jefferson County, KY-IN 881 2,922 27% 5.1
5 Nashville-Davidson-Murfreesboro-Franklin, TN 1,371 3,922 23% 4.8
6 Youngstown-Warren-Boardman, OH-PA 423 894 16% 4.5
7 Jackson, MS 369 962 21% 4.3
8 Greenville-Anderson-Mauldin, SC 541 1,481 22% 4.2
9 Ogden-Clearfield, UT 397 834 16% 4.2
10 Knoxville, TN 550 1,224 17% 3.7
  Bottom 10        
91 Orlando-Kissimmee-Sanford, FL 218 504 18% 0.5
92 New Orleans-Metairie, LA 89 234 21% 0.5
93 New York-Newark-Jersey City, NY-NJ-PA 1,715 3,699 17% 0.5
94 Richmond, VA 93 230 20% 0.4
95 Jacksonville, FL 90 227 20% 0.0
96 Miami-Fort Lauderdale-West Palm Beach, FL 367 855 18% 0.4
97 Washington-Arlington-Alexandria, DC-VA-MD-WV 323 679 16% 0.3
98 Las Vegas-Henderson-Paradise, NV 69 192 23% 0.2
99 Cape Coral-Fort Myers, FL 17 47 23% 0.2
100 Urban Honolulu, HI 25 65 21% 0.2

Note: Robot incidence reflects private employment only.
Source: Brookings analysis of Mood's Analytics and International Federation of Robotics Data.

Not surprisingly, the top metro areas with a high concentration of robots are mostly those with an established automotive production industry. This includes markets in Midwestern states such as Michigan and Ohio, as well as Southeastern states such as Tennessee, South Carolina and Mississippi.

Interestingly, the compounded annual growth rate of total robots from 2010 to 2015 is relatively consistent across all metro areas, irrespective of their robot concentration per worker. This growth rate ranged from 16%-28%, indicating that robot use has been adopted at a fast rate across the entire United States.

Companies create jobs and invest in robots in the same markets
To get a better understanding of the impact robot growth has on production job growth in a market, Site Selection Group calculated two metrics, and then compared both to draw conclusions (data included in the chart below). The first metric measured robot growth relative to job growth from 2010-2015. For example, the number of robots grew 13.7 times faster than production jobs in Knoxville, Tennessee from 2010-2015.

The second metric Site Selection Group calculated was the change in production job growth from 2010-2015 to the projected production job growth in 2016-2020. For example, although production job growth is projected to be positive from 2016-2020 in Knoxville, growth is down an absolute 2.5% relative to the preceding five years (2010-2015).

Impact of Robot Growth on Production Job Growth

Bar-Graph.jpg

Source: Brookings and EMSI

After evaluating these 10 metro areas with the highest concentration of robots per worker, one trend is clear: Metro areas that have experienced the fastest growth in the number of robots are those metro areas that are experiencing a slower reduction in production job growth. Simply stated, companies are creating jobs and investing in robots in the same markets. 

Why automation in production matters in the industrial site selection process
The rate in which manufacturers are incorporating the use of robots into the manufacturing process is staggering, but what should companies consider when evaluating their corporate site selection decisions? Leveraging our extensive experience assisting production clients with plant expansions, relocation, and consolidations, Site Selection Group has identified the following three reasons companies should keep their eye on the topic of automation during the site selection process:

  1. Alters the workforce profile – The implementation of robots into the manufacturing process reduces the need for human touch, but does not eliminate the need for human oversight. It takes a highly skilled worker in a variety of disciplines to implement, operate, maintain and troubleshoot robotic equipment. If you are a company that plans to invest significantly in robotics, make sure you are evaluating the proper workforce profile. In addition, the level of robotics present in the market relative to critical occupations can be a proxy for the tightness of the labor market.
  1. Influences economic incentives policy – Although exceptions exist, those markets with a high presence of robotics are usually those that have economic incentive policies that reward capital investment. Over the past 10 years, Site Selection Group has observed many states and communities reform their philosophy on economic incentives to help companies that might be lighter on job creation, but heavier on machinery and equipment costs.
  1. Enhanced need for automation support services – Most companies that implement significant automation into the manufacturing process rely on outside vendors to help implement, maintain and repair the equipment. Given the time sensitive nature these services require, having the appropriate support services present in a market should be a critical criteria of your site selection exercise.

 

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