Japan’s Robot Revolution

Robots are serving customers in Japanese department stores and banks, as well as building advanced machines for the nation’s manufacturers. Has the future already arrived in Japan, or is the “robot revolution” sought by Prime Minister Shinzo Abe an impossible dream?

Opening Japan’s official Robot Revolution Initiative Council on May 15, Abe called on the nation’s corporate sector to “spread the use of robotics from large-scale factories to every corner of our economy and society.”

Backed by 200 companies and universities and chaired by Mitsubishi Electric’s Tamotsu Nomakuchi, the council aims to expand robotics throughout Japanese industry, with a goal of growing sales from 600 billion yen ($4.9 billion) a year to 2.4 trillion yen by 2020.

According to the council, robot technologies “possess the potential for solving social challenges, such as resolving labor shortages, releasing people from overwork, and improving productivity in a variety of sectors, ranging from production in the manufacturing industry, to medical services and nursing care, and to agriculture, construction and infrastructure maintenance.”

Japan’s robot revolution is evident at such places as Mitsukoshi department store in central Tokyo, where a kimono-clad greeter, “Aiko Chihira” made by Toshiba welcomes visitors. Also in Tokyo, Mitsubishi Tokyo UFJ recently unveiled a robot assistant to provide basic customer service, while the PARO baby seal robot has been deployed in nursing homes overseas to support dementia patients.

But beyond the cute and fluffy, Japanese companies have long been world leaders in factory robots, led by such businesses as Fanuc, Kawasaki Heavy Industries and Yaskawa Electric. According to Japan’s Ministry of Economy, Trade and Industry (METI), the nation is the world’s top supplier of industrial robots, earning sales of 340 billion yen in 2012 and accounting for around half the market, as well as having a 90 percent market share in key robotics elements such as precision reduction gears and force sensors.

Yet despite its market-leading position, METI has highlighted the risk that Japan’s robotics industry, like other domestic industries, becomes another “Galapagos” where “craftsmanship enjoys a victory but business suffers a defeat.”

METI notes a growing international challenge, including the U.S. government’s multi-million dollar “National Robotics Initiative” and moves by companies such as Google to investing in driverless cars and other technologies. Europe is also seeking to catch up, launching last year its “EU SPARC Project” aimed at fostering private-public collaboration.

Yet the bigger competitive threat may come from China, which according to METI is already employing more robots than Japan, with some 37,000 in operation as of 2013. Beijing is targeting domestic sales of industrial robots of 3 trillion yuan ($500 billion) by 2020, a tenfold rise on the current level.

Elsewhere in Asia, South Korea has doubled robot sales since 2009 to reach 2.1 trillion won ($1.8 billion) in 2012, with the government targeting 7 trillion won worth by 2018. “Robot Land,” a $660 million government-subsidized theme park, is due to open next year, while Seoul is also investing 1.1 trillion won to help promote its robotics industry, currently ranked fourth worldwide in deployment of industrial robots.

Jobs Fix or Threat?

Japan sees robots as a potential solution to its rapidly aging society, with the number of citizens aged 65 and above hitting a record-high 32 million in October 2013, a quarter of the population, with social security costs also reaching a record high of 108 trillion yen in fiscal year 2012.

With Japan’s workforce now below 80 million and forecast to decline further, robots are seen as a potential solution along with increased female workforce participation, with mass immigration viewed as politically unfeasible. Unemployment is currently at an 18-year low of 3.3 percent, and with unfilled jobs at a two-decade high, manufacturers like food maker Ajinomoto are reportedly increasingly mechanizing production due to their inability to find staff.

“Shortage of labor is a structural problem Japan faces in the long run, given the aging society,” Kyuuichiro Sano, director of a METI division in charge of state-of-the-art technology, told Reuters.

“They could be the answer,” he said.

Japan’s confidence in robots contrasts with alarmist reports in Western media about the potential threat to jobs. According to Australian research, nearly half of all current jobs could be automated by 2020, with even traditional white-collar jobs such as accountants, bank tellers and secretaries reportedly at risk of elimination.

However, the Australian Industry Report 2014 also pointed to the benefit of increased productivity, with eventually cheaper goods and increased disposable incomes.

The effect is akin to the Industrial Revolution, “when the invention of the loom led to waves of unemployed weavers, but cheaper clothing for the masses,” Australian government economist Mark Cully told BRW.

Tokyo-based management consultant Lem Fugitt, publisher of website “Robots Dreams,” says Japan’s robot revolution will happen, although not perhaps in the form envisaged by the government.

“The government can be a cheerleader, but it doesn’t have a lot of direct control over the robotics industry and its investments. There’s been a lot of academic investments like Cyberdyne’s exo-skeletons to help the elderly, and PARO the robot seal, but while they get great publicity, they haven’t even come close to developing a sustainable business model,” he told Pacific Money.

“On the other hand, you have companies driving their own initiatives like Toyota and Honda, and these are sustainable… the government 2020 initiatives are based around the Olympics, and I’m skeptical about how committed Japanese companies are to achieving them.”

Asked about the main threat to Japan’s leadership in robotics, Fugitt said: “China far and away; they have a big enough internal market that they don’t need to export… South Korea could be a threat if the chaebol opened up [and shared technologies] but I don’t see it happening. The U.S. will come in and disrupt things, they’ll cause chaos in a particular market and then run away.”

Fugitt said Japan’s weakness was in application and deployment of its advanced technologies. “The Japanese expect other countries and people to appreciate their technology, but they’re inwardly focused. If it doesn’t make sense to them, they typically don’t do it,” he said, citing the example of Japanese advanced wheelchairs having 100 kilogram weight limits.

Yet the future lies in more automation as opposed to more robots, according to Fugitt:

I don’t think we’ll see more robots in department stores replacing customer service – it’s more about self-checkout counters, and this kind of automation is already transforming the way things are done here.

Robots are a red herring in this debate – people are not threatened by robots, but by society and management decisions. For example, we already have the technology for driverless cars, which have had very few accidents, and when they have it’s been the fault of the human driver. But the biggest resistance is that people want control – we could have a totally automated transportation system tomorrow, if it wasn’t for social pushback.

We don’t need to fear the technology – we need to fear our own ability to grapple with the problem. I’m from the U.S. with a Protestant, Methodist background, so my gut feeling is if you’re not working hard, you’re not contributing to society. But if there’s nothing for you to do, if the best you can do in terms of useful work that hasn’t been replaced by some automated system is drawing pictures or painting, is that worth supporting? These are critical issues which we haven’t started to grapple with, but over the next 10 years will have a dramatic impact on society.

For Japan, deploying intelligent machines and increasing automation could deliver an enormous economic boost. According to Boston Consulting Group, Japan’s robots could help slash 25 percent off factory labor costs by 2025, while big gains could result from improving productivity in the service sector, estimated at only 60 percent as productive as the U.S. level.

“Robotics, process change and automation will be of tremendous benefit to Japan. Whether it ‘saves’ it or not, I don’t know if it needs saving, but it certainly needs to be re-engineered,” Fugitt said.