Introducing the Zero Labor Factory (90% Free Actually); Robots at Chili's, Applebees, Panera

In the strive for zero labor factories we are nearly there. Is 90% good enough?

China Daily reports Manufacturing Hub Starts Work on First Zero-Labor Factory.

A manufacturing hub in South China's Guangdong province has begun constructing the city's first zero-labor factory, a signal that the local authorities are bringing into effect its "robot assembling line" strategy.

Dongguan-based private company Everwin Precision Technology Ltd is pushing toward putting 1,000 robots in use in its first phase of the zero-labor project, China National Radio reported. It said the company has already put first 100 robots on the assembly line.

"The 'zero-labor factory' does not mean we will not employ any humans, but what it means is that we will scale down the size of workers by up to 90 percent," said Chen Qixing, the company's board chairman.

After the work on smart factory started, Chen predicted that instead of 2,000 workers, the current strength of the workforce, the company will require only 200 to operate software system and backstage management.

"It is necessary to replace human workers with robots, given the severe labor shortage and mounting labor costs," said Di Suoling, head of Dongguan-based Taiwan Business Association.

Manufacturers in the PRD have been hit by a shortage of an estimated 600,000 to 800,000 workers, according to data released after the Spring Festival in February.

Tens of thousands of migrant workers had earlier gone back home to inlands for a family get-together and some of them decided to settle down in their hometown where the living costs are much less than the coastal cities.

Shortage of Labor?

There is no shortage of labor. There is no shortage of skills either. Rather, there is a shortage of people willing to work for what factory owners are willing to pay.

And with cheap money everywhere you look, there is plenty of money at low rates to buy robots.

Meanwhile, back in the US, McDonald's employees think they are worth $15 an hour for taking orders and handing people a sack of crap.

Robots at Chili's, Applebees, Panera

High wages means fewer jobs. CNN accurately reports Robots will Replace Fast-Food Workers.

Panera Bread (PNRA) is the latest chain to introduce automated service, announcing in April that it plans to bring self-service ordering kiosks as well as a mobile ordering option to all its locations within the next three years. The news follows moves from Chili's and Applebee's to place tablets on their tables, allowing diners to order and pay without interacting with human wait staff at all.

In a widely cited paper released last year, University of Oxford researchers estimated that there is a 92% chance that fast-food preparation and serving will be automated in the coming decades.

Delivery drivers could be replaced en masse by self-driving cars, which are likely to hit the market within a decade or two, or even drones. In food preparation, there are start-ups offering robots for bartending and gourmet hamburger preparation. A food processing company in Spain now uses robots to inspect heads of lettuce on a conveyor belt, throwing out those that don't meet company standards, the Oxford researchers report.

Darren Tristano, a food industry expert with the research firm Technomic, said digital technology will "slowly, over time, create efficiency and labor savings" for restaurants. He guessed that work forces would only drop as a result by 5% or 10% at a maximum in the decades to come, however, given the expectations that customers have for the dining experience.

"If you look at the thousands of years that consumers have been served alcohol and food by people, it's hard to imagine that things will change that quickly," he said.

I think Darren Tristano is in fantasyland. The higher the wage, the bigger the incentive to get rid of people.

Central banks have mush for brains in their attempts force wages and prices up in this type of environment.

Question of the Day

How much do you tip a human server server, when the server did not even take your order? The question will eventually be moot when robots bring food to the table.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.