Specializing in Asia by Covering the Globe Boston | Bangkok | Beijing | Bombay
Plan for the worst, hope for the best?
Japan’s position, as the Financial Times recently put it, is not rosy: “Japan suffers from an ageing population, persistent deflation and knotty structural problems in its labor market and energy supply. Its fiscal position is awe-inspiringly bad. Any country in this state would normally be advised to plan for the worst, and merely hope for the best.
“Abe’s program of monetary, fiscal and structural reforms,” concludes the Financial Times, “is still the medicine needed for jolting the economy out of its torpor.”
Heartening to the cause of robots in Japan is an estimate from the Boston Consulting Group: “Japan’s robots could help cut 25 percent from its factory labor costs by 2025. Further, Japan’s foray into service robots could make the industry pervasive—extending to the medical care, infrastructure, and retail sectors.”
The two-fold challenge is still doable if there’s a plan that’s executed swiftly and thoroughly.
Japan still possess the financial cloutto take on the robot challenge. “Japan’s decades of exporting prowess have bequeathed it foreign reserves larger than those of Germany, the US and UK combined…Abenomics is only a risk if it fails. Planning for its success is still the right approach.”
Abe and the Robot Revolution Initiative Council have developed a five-year plan to boost traction for Japan with intelligent machines in manufacturing, supply chains, construction, and health care. Backed by 200 companies and universities, the plan will try to retain market share for industrial robotics while expanding robotics sales from $4.9 billion annually to $19.8 billion by 2020.
For the time being, “Japan has a built-in edge over its rivals, starting with a deep and sophisticated domestic robotics industry," says Hal Sirkin, a senior partner and managing director at Boston Consulting. In factory robotics, "they can pretty much easily produce what they need.”
But the reality of Japan’s future is clear: Yoshiko Yurugi, a robotics expert at the New Energy and Industrial Technology Development Organization: "We are entering an era when we will definitely have to rely on the help of robots."
Domo Arigato, Joe Engelberger
Of all the people in Asia, nearly 3 billion and counting, none approach technology in quite the same way as the 128 million of them who inhabit the island of Japan.
The Japanese may not be the originators or inventors of the technology that they zero in on, but they are without peer at acquiring technology and then making it far superior than the original invention.
The most notable example is the automobile assembly line, introduced to Japan in the 1950s as a way for the U.S. to manufacture military equipment for the Korean War.
In the hands of Kiichiro Toyoda in 1956, the imported technology underwent a dramatic improvement when Toyoda introduced lean manufacturing, just-in-time (JIT) manufacturing, and kaizen.
The same is true for electronic computers. The Japanese historian Yoneyuki Sugita, Pitfall or Panacea: Japan 1945-1956, shows the very same scenario playing out in 1955 when an unknown Tokyo company named Tsushin Kogyo took a chance and bought Bell Lab’s patent for a strange machine called a transistorized computer. Bell Labs had built the world’s first. Two years later Tsushin Kogyo rolled out the world’s second transistorized computer, the ETL Mark 3. Shortly thereafter, the company changed its name to SONY.
By 1967, tech-savvy Japan was ready to hear from Joe Engelberger, the “father of robotics,” about his world’s-first industrial robot, the Unimate, and about the company that built them, Unimation.
Engelberger spoke to a massive crowd of engineers and endured a five-hour Q&A session immediately following the lecture. Kawasaki Heavy Industries quickly licensed the technology to manufacture and sell Kawasaki-built Unimate robots for the Asian market, especially their own.
Two years later, Kawasaki sold its first Unimate and by 1983 had produced 250,000 more, which at the time represented half the world’s supply.
From energetic tyro to world leadership
Nearly fifty years on, Japan has become the center of the universe for robot production, with more robot companies producing and deploying more robots than any country in the world.
Manufacturers like Denso, Epson, FANUC, Honda, Hitachi, Kawasaki Heavy Industries, Mitsubishi Electric, Nachi Fujikoshi, Nissan, Panasonic, SONY, Toshiba, Toyota, Yamaha Motor Company, and Yaskawa Electric have captured nearly fifty percent of world production.
GDP $4,616 B (December 2015)
GDP Growth: -0.1%
GDP per Capita: $37,500
Trade Balance/GDP: 0.5%
Public Debt/GDP: 232%
Forbes reports that Japan enjoyed a sharp uptick in growth in 2013 on the basis of Prime Minister Shinzo Abe’s “Three Arrows” economic revitalization agenda - dubbed “Abenomics” - of monetary easing, “flexible” fiscal policy, and structural reform.
Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2014 stood as the fourth-largest economy in the world after first-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012.
While seeking to stimulate and reform the economy, the government must also devise a strategy for reining in Japan's huge government debt, which amounts to more than 230% of GDP. To help raise government revenue, Japan adopted legislation in 2012 to gradually raise the consumption tax rate to 10% by 2015, beginning with a hike from 5% to 8% implemented in April 2014. That increase had a contractionary effect on GDP, however, so PM Abe in late 2014 decided to postpone the final phase of the increase until April 2017 to give the economy more time to recover.
Led by the Bank of Japan’s aggressive monetary easing, Japan is making progress in ending deflation, but demographics - low birthrate and an aging, shrinking population - pose major long-term challenges for the economy.
What’s at stake?
“Based on the preliminary results of the global statistics on industrial robots, the International Federation of Robotics (IFR), estimates that about 225,000 units were sold worldwide in 2014 [140,000 in Asia], 27 percent more than in 2013."
China, the number one buyer, purchased 56,000 of those robots [40,000 from foreign-owned companies; 16,000 from indigenous Chinese manufacturers, up from 3,000 in 2013].
China’s near-term goal is to realize 50 percent sales originating from indigenous Chinese manufacturers. With China’s new Five-Year Plan (2016-2020) calling for vast increases in robot-driven automation and with 250,000 state-owned firms (SOF) as potential customers, a 50 percent saturation from Chinese robots is a very doable goal.
Wang Tianran, a robotics specialist with the Chinese Academy of Sciences, agrees that "China is catching up fast," though quality remains an issue. “He thinks China will close the quality gap with Japan and South Korea by specializing in simple, smart, and flexible factory robots similar to Boston-based Rethink Robotics' Sawyer, a small, mobile factory model.”
Although China may speed up production of these “flexible, factory robots” the overwhelming majority of product exiting Chinese factories is still the venerable industrial robot.
Unlike factory robots, "where Japan, Germany, and the US are dominant players, the intelligent service robot industry is still at a nascent state," says Jeong Man Tae, a senior researcher at the Korea Institute for Industrial Economics & Trade.
Thus, Abe has a two-fold fear: 1. Loss of market share in industrial robots to China; 2. loss of the nascent smart, co-robot market to anyone.
Japan’s Ministry of Economy, Trade and Industry (METI), reported in Japan’s Robot Strategy that in addition to the country’s annual $6.9 billion in industrial robot sales, Japan enjoys a 90 percent market share in key robotics parts such as precision reduction gears, servo motors, and specialized sensor technology.
Japan also has an unrivaled advantage when it comes to intellectual property (IP) for industrial robotic technologies, an edge that will keep it far ahead of its Asian and world competition for years to come.
The World Intellectual Property Report 2015: Breakthrough Innovation and Economic Growth shows that Japanese companies are indeed ahead of the pack with “eight out of the top ten patent applicants in the area of robotics from Japan – namely, Toyota, Honda, Nissan, Denso, Hitachi, Panasonic, Yaskawa, and SONY.”
Growing beyond industrial robotics
Since the days of Joe Engelberger’s marathon five-hour Q&A in Tokyo, Japan has very successfully branched out from the more traditional industrial robotics technologies and into those of medical-assistive robotics (exoskeletons), humanoid, marine, and autonomous automobiles and trucks.
However, with all of its prowess in building and deploying industrial robotics so dominant, Japan also shows some major lapses in robot preparedness and lack of foresight.
For a country that sits directly on one of the world’s greatest and most dangerous earthquake farms, Japan has never exhibited any propensity for building disaster or rescue robots.
The most glaring example of that was the Fukushima Daiichi tsunami and nuclear plant disaster (2011) when Japan provided zero robot assistance. Robots capable of offering some assistance, even to just ascertain the extent of the reactor damage, had to be imported to a country that “produces more robots than any country in the world.”
Other overlooked areas needing re-examination are in mobile robotics for logistics as in automated guided vehicles AGVs/UGVs unmanned ground vehicles; surgical robotics; and also with collaborative or co-robots (capable of working in close proximity with humans).
“Abenomics” and the Robot Revolution
Prime Minister Shinzo Abe, fearing Japan’s robotics domination might be hotly challenged by China or Korea and also fearing as well for the productivity and social needs of his country, minced no words when calling for a “robot revolution.”
Last May, at the opening of Japan’s Robot Revolution Initiative Council, Abe urged companies to speed the development of advanced robotics that “could help the country overcome the handicap of a fast-aging populace and a declining workforce and to help the country to use of robotics from large-scale factories to every corner of our economy and society.”
Abe fears that Japan’s advantage in robotics is eroding. “China has 530 robot companies, and its market share on the mainland grew from 4 per cent in 2012 to 13 per cent last year , a worrisome trend for Japanese companies that have enjoyed solid profits there.” The Nikkei Asian Review predicts China’s share of robot sales will be 45 percent by 2020. A mere five years off!
That China has as many as 530-odd robot manufacturers is up for debate, says Shanghai-based Georg Stieler in his annual roundup Industrial Automation in China. Stieler’s research suggests that the real number for China’s robot manufacturers at about two dozen; the majority of companies mistakenly grouped as manufacturers are actually better termed as “integrators” of existing robot technology.
Saving Japan from itself with robotics: competition and productivity for a shrinking workforce
Emperor of All Robots Put to the Test
See related: Who's Buying What and Why: Industrial Robots