The report says robots may have a seismic influence on the labour market, which will present investment opportunities, but could render some industries obsolete. Up to 35% of UK jobs could be lost to robots, while in other more industrial economies, the toll could be even greater.
This type of radical redistribution of labour is not unknown. Economies have long had to cope with the rise of technology, and – in aggregate – it has proved to be a force for greater productivity. Neptune’s CIO and chief economist James Dowey, says that as the pace of technological disruption could be compared to the industrial revolution. He says that all investment managers now need to be technology-aware, to identify those businesses that are likely to be hurt or helped by technological progress.
Robots are an increasingly significant manifestation of this: The global market for robots is now $32bn in size and the Merrill Lynch report predicts this might be as high as $153bn by 2020, with robots performing around 45% of manufacturing tasks by 2025.
The report says opportunities exist across the aerospace, transport, financials, healthcare, services, and mining industries. For the time being, the auto sector has been the largest user of robots. US electric car maker Tesla uses more than 160 specialist robots in the manufacturing process at its Fremont, California-based factory, including 10 of the largest robots in the world, named after X-Men characters. Toyota has just announced a $1bn investment in a Silicon Valley research company to develop artificial intelligence and robots.
Globally, Japan and Germany are currently the largest global users of robots. Japanese Prime Minister Shinzo Abe has made clear his ambition to stage a high-profile ‘Robot Olympics’ alongside its 2020 summer games in a bid to showcase Japanese expertise and treble the country’s robotics industry.
For investors, the best opportunities in robotics appear to lie in Japan. Merrill Lynch listed nine ‘pure play’ robotics companies as part of the report, of which five were Japanese – Fanuc FANUF, Mitsubishi Electric, Nabtesco. Omron and Yaskawa Electric. Robotics have been a key focus for Baillie Gifford’s Shin Nippon investment trust, though other Japan managers also have smaller holdings.
