Why Robots Are Getting Less Work at U.S. Factories

[00:00:00] [SPEAKER_00]: Exchanges. The Goldman Sachs podcast featuring exchanges on the forces driving the markets and the economy. Exchanges between the leading minds at Goldman Sachs. New episodes every week. Listen now.

[00:00:18] [SPEAKER_03]: Welcome to Tech News Briefing. It's Wednesday, October 9th. I'm Zoe Thomas for The Wall Street Journal.

[00:00:24] [SPEAKER_03]: Today, we're talking about robots. Machines that automate tasks that humans don't always want to do. Tasks like keeping your smile bright.

[00:00:34] [SPEAKER_03]: In the future, micro-robots could brush your teeth, and dental implants could come with built-in technology to help your oral health.

[00:00:43] [SPEAKER_03]: But while researchers work on these high-tech tools, purchases of factory robots, like ones that help assemble goods, are down.

[00:00:51] [SPEAKER_03]: We'll explain why companies are buying less of these robots, and what that could mean for the future of manufacturing.

[00:01:04] [SPEAKER_03]: But first, how well do you floss? How long do you brush your teeth for? How good is your oral health overall?

[00:01:11] [SPEAKER_03]: Researchers are working on ways to help improve the state of your smile, without all that brushing and flossing.

[00:01:18] [SPEAKER_03]: Kayla Yupp, who reported on this for the WSJ, is here to help us brush up on some of the latest discoveries that could transform oral health.

[00:01:27] [SPEAKER_03]: So Kayla, let's start with some basics. Cleaning your teeth.

[00:01:31] [SPEAKER_03]: You reported that researchers at the University of Pennsylvania are looking into micro-robots to help.

[00:01:37] [SPEAKER_03]: Those are small devices made up of nanoparticles. How would that work?

[00:01:41] [SPEAKER_02]: So there's this automated device being tested, where at the push of a button, a swarm of micro-robots could clean your teeth for you, acting as a toothbrush, flosser, and mouthwash all in one.

[00:01:51] [SPEAKER_02]: And the idea is you put this device into your mouth and then inject a solution containing the micro-robots and hydrogen peroxide, which is a common cleaning agent.

[00:01:59] [SPEAKER_02]: The micro-robots act like a disinfecting mouthwash when combined with hydrogen peroxide.

[00:02:04] [SPEAKER_02]: And then you turn on the magnets in the device, which guide the micro-robots to form different shapes from bristles that mimic a toothbrush to an elongated thread, which mimics floss.

[00:02:12] [SPEAKER_02]: Then the micro-robots go around your mouth, brushing and flossing.

[00:02:15] [SPEAKER_02]: And the system was actually shown to be able to remove 100% of plaque on a 3D-printed model of human teeth and gums and 80% in animal testing.

[00:02:22] [SPEAKER_03]: Let's talk about tooth implants for a moment, because they can actually carry a risk of peri-implantitis, a bacteria-driven disease that destroys gum and bone tissue around the implant.

[00:02:35] [SPEAKER_03]: What kind of tech could help fight this?

[00:02:37] [SPEAKER_02]: This team at the University of Pennsylvania, they're working on a high-tech dental implant that can essentially fight off bacteria through red light therapy.

[00:02:45] [SPEAKER_02]: The implant has built-in near-infrared light, which is invisible, that can stimulate gum tissue to release these antimicrobial peptides, which are proteins of the immune system that kill bacteria.

[00:02:56] [SPEAKER_02]: And this light targets the gum around the implant to help it fight off bacteria that would normally breed the infection that leads to peri-implantitis.

[00:03:03] [SPEAKER_02]: And the light is powered by the motions of the mouth, so you don't need a battery in it.

[00:03:07] [SPEAKER_02]: And that's thanks to the artificial tooth being made of barium titanate, which generates electricity in response to physical stimulation.

[00:03:16] [SPEAKER_02]: So that includes motions such as chewing.

[00:03:18] [SPEAKER_02]: The barium titanate material also naturally wards off bacteria.

[00:03:23] [SPEAKER_02]: So it has this kind of two-fold mechanism to how it fights off bacteria.

[00:03:27] [SPEAKER_02]: In the lab, they tested their light therapy on gum tissue cells surrounded by disease-causing bacteria

[00:03:32] [SPEAKER_02]: and found that 90 minutes of daily light was sufficient to minimize inflammation.

[00:03:38] [SPEAKER_02]: So they imagined that this implant, in practice, would only need to be emitting light for 90 minutes a day.

[00:03:44] [SPEAKER_02]: And it will be tested in pigs this year.

[00:03:47] [SPEAKER_03]: What techniques are scientists using to build stronger and less sensitive teeth?

[00:03:51] [SPEAKER_03]: Because this is a problem for a lot of people.

[00:03:53] [SPEAKER_02]: Enammo, the hard outer layer of a tooth, normally protects teeth from damage.

[00:03:57] [SPEAKER_02]: But the body can't regenerate it once it's eroded, and it can't be replaced either.

[00:04:02] [SPEAKER_02]: So this team of scientists at the University of Southern California are working on a gel that can rebuild enamel by copying Mother Nature.

[00:04:10] [SPEAKER_02]: This gel works by mimicking a protein called amylogenin that our body uses early on in our teeth development to organize calcium and phosphate,

[00:04:18] [SPEAKER_02]: which are two minerals that constitute the bulk of enamel, into layers.

[00:04:20] [SPEAKER_02]: And this process is similar to laying bricks, where this protein arranges calcium and phosphate into an organized repeating pattern.

[00:04:29] [SPEAKER_02]: So the team designed a peptide, put it in a gel, and painted it on the surface of extracted rhizum teeth.

[00:04:34] [SPEAKER_02]: And what they found was a new enamel-like layer formed.

[00:04:36] [SPEAKER_02]: Now they're working on making the layers thicker and stronger.

[00:04:39] [SPEAKER_03]: All right, that was Kayla Yupp who reported on this for The Wall Street Journal.

[00:04:43] [SPEAKER_03]: Coming up, as production volumes slide at many U.S. factories,

[00:04:47] [SPEAKER_03]: even the robots are getting less work.

[00:04:50] [SPEAKER_03]: We'll have that story after the break.

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[00:05:23] [SPEAKER_03]: When it comes to boring, repetitive, physically taxing jobs, robots are seemingly perfect.

[00:05:38] [SPEAKER_03]: No breaks are needed, and there's no risk robots will get sick or suddenly quit.

[00:05:43] [SPEAKER_03]: And American factories have invested in a lot of them over the last few years.

[00:05:48] [SPEAKER_03]: Now, though, manufacturers are buying fewer robots to automate tasks.

[00:05:53] [SPEAKER_03]: Here to tell us more is our reporter Bob Tita.

[00:05:56] [SPEAKER_03]: So, Bob, what was behind the demand for factory robots over the past few years?

[00:06:01] [SPEAKER_00]: Well, coming out of the COVID-19 pandemic, a lot of factories, a lot of employers were short on people

[00:06:08] [SPEAKER_00]: because obviously some people were sick, other people quit during the pandemic.

[00:06:14] [SPEAKER_00]: And so there was a shortage of employees and factories.

[00:06:20] [SPEAKER_00]: Manufacturers needed people for production jobs.

[00:06:23] [SPEAKER_03]: We're talking about factory robots.

[00:06:26] [SPEAKER_03]: What is the state of U.S. industrial production right now?

[00:06:29] [SPEAKER_00]: Well, industrial production has been stagnant in the past year or so.

[00:06:33] [SPEAKER_00]: The industrial sector overall has been weakening in recent months.

[00:06:38] [SPEAKER_00]: And so there has been a drop-off from what we saw in the previous two or three years

[00:06:44] [SPEAKER_00]: because a lot of industrial activity, again, was being driven by COVID

[00:06:48] [SPEAKER_00]: because we had a lot of demand for consumer goods, a lot of demand for raw materials.

[00:06:56] [SPEAKER_00]: And so there was a big surge in growth during that period.

[00:06:59] [SPEAKER_00]: And now it's starting to come down the other side of the mountain a little bit.

[00:07:04] [SPEAKER_03]: So how big is the dip in orders for robots across North America?

[00:07:08] [SPEAKER_00]: Last year, 2023, robot orders dropped about 30 percent through the first six months of this year.

[00:07:17] [SPEAKER_00]: January through June, the reduction was just under 8 percent.

[00:07:21] [SPEAKER_00]: That's according to the Association for Advancing Automation, the industry's trade group.

[00:07:28] [SPEAKER_00]: Some of that is largely driven, as I said, by just less manufacturing, less industrial activity,

[00:07:34] [SPEAKER_00]: but also higher interest rates.

[00:07:36] [SPEAKER_00]: So it costs companies more.

[00:07:38] [SPEAKER_00]: When they buy robots and finance them, they have to pay higher interest rates.

[00:07:43] [SPEAKER_00]: So that's been a factor, too.

[00:07:45] [SPEAKER_03]: What are the costs associated with putting in a factory robot?

[00:07:49] [SPEAKER_00]: It's the purchase of the robot itself.

[00:07:51] [SPEAKER_00]: And you have to figure out how quickly am I going to get a return on that investment?

[00:07:55] [SPEAKER_00]: And also, the factory robots have to be deployed, programmed.

[00:08:00] [SPEAKER_00]: So that takes a little bit of work also.

[00:08:04] [SPEAKER_03]: We tend to think of robots as being cheaper than human labor, but is that not necessarily the case?

[00:08:09] [SPEAKER_00]: It is over time, certainly.

[00:08:12] [SPEAKER_00]: If you have two shifts at your plant and you have two sets of people come in,

[00:08:17] [SPEAKER_00]: if you're using a robot or robots, that's the same robot that works the first and second shift.

[00:08:24] [SPEAKER_00]: Although your upfront costs are more.

[00:08:27] [SPEAKER_00]: And so that's been the limiting factor in recent months for a lot of manufacturers that

[00:08:34] [SPEAKER_00]: haven't wanted to spend the money because they don't have the business.

[00:08:38] [SPEAKER_03]: Let's talk about some of the other things that are causing this dip.

[00:08:41] [SPEAKER_03]: How have labor market changes affected demand for robots?

[00:08:45] [SPEAKER_00]: There's more human workers available than there were, say, three years ago.

[00:08:50] [SPEAKER_00]: So the labor market has settled down.

[00:08:52] [SPEAKER_00]: There are more people willing to do the sort of factory work again.

[00:08:57] [SPEAKER_00]: The labor market has tilted a little bit more in favor of manufacturing companies at the moment.

[00:09:03] [SPEAKER_03]: Bob, in North America, the car industry is the largest user of industrial robots.

[00:09:08] [SPEAKER_03]: How have conditions in the auto industry impacted demand there?

[00:09:11] [SPEAKER_00]: Well, there was a big surge in robot orders because a lot of car manufacturers anticipated

[00:09:19] [SPEAKER_00]: that there would be a big migration to electric vehicles.

[00:09:23] [SPEAKER_00]: So they were all retooling factories for more production of electric vehicles.

[00:09:31] [SPEAKER_00]: Demand for electric vehicles hasn't been as great as anticipated a couple years ago.

[00:09:36] [SPEAKER_00]: Auto companies have delayed the start of some models and pulled back on some of their investments

[00:09:43] [SPEAKER_00]: in electric vehicles just because the demand isn't there.

[00:09:47] [SPEAKER_03]: You spoke with an executive at an automotive supplier who stuck with human labor,

[00:09:52] [SPEAKER_03]: even though just a couple years ago they thought they'd be bringing in a robot to do some of those tasks.

[00:09:57] [SPEAKER_03]: Why did they make that decision?

[00:10:00] [SPEAKER_00]: It's largely an economic one.

[00:10:02] [SPEAKER_00]: If you're thinking that I'm going to have a lot of work and that my production volume is going to be very high,

[00:10:10] [SPEAKER_00]: then I might buy a robot because I'll get a lot of work out of that robot.

[00:10:15] [SPEAKER_00]: If my orders are fairly low, I can sort of redeploy people in my shop to do that work and save myself some money.

[00:10:24] [SPEAKER_03]: Bob, is it fair to think of this situation as kind of a robot layoff or is it just a slowdown in robot hiring?

[00:10:31] [SPEAKER_00]: It's just a slowdown in robot hiring.

[00:10:34] [SPEAKER_00]: In manufacturing, demand rises and falls.

[00:10:39] [SPEAKER_00]: And so at the moment, demand isn't there.

[00:10:42] [SPEAKER_00]: Demand for robots will come back when demand for higher production is there.

[00:10:48] [SPEAKER_00]: And probably lower interest rates as well.

[00:10:51] [SPEAKER_00]: That makes them easier to finance.

[00:10:53] [SPEAKER_00]: Automation is here to stay.

[00:10:55] [SPEAKER_00]: It's just slowing down a little bit.

[00:10:58] [SPEAKER_03]: All right.

[00:10:58] [SPEAKER_03]: That was our reporter, Bob Tita.

[00:11:00] [SPEAKER_03]: And that's it for Tech News Briefing.

[00:11:03] [SPEAKER_03]: Today's show was produced by Julie Chang with Deputy Editor Scott Salloway.

[00:11:07] [SPEAKER_03]: I'm Zoe Thomas for The Wall Street Journal.

[00:11:09] [SPEAKER_03]: We'll be back this afternoon with TNB Tech Minute.

[00:11:12] [SPEAKER_03]: Thanks for listening.

[00:11:13] [SPEAKER_03]: Thanks for listening.