UK robotics - government forecasts small gains from massive inaction
The latest BEIS report outlines the UK robotics opportunity, but the government needs to do more.
By 2035, the uptake of robotics and autonomous systems (RAS) could mean a boost of £6.4 billion ($8.7 billion) in value added to the UK economy. That's according to the government's own estimates in a new, 110-page report from the department for Business, Energy and Industrial Strategy (BEIS).
Despite the modest economic promise, the document makes odd, disjointed, and depressing reading - for several reasons. Not least of these is the recent McKinsey forecast (quoted in the report) that the global annual gain from advanced robotics could be as high as $1.7 trillion to $4.5 trillion of added economic value by 2025.
That feels like an overestimate, but McKinsey's ‘hitting an elephant with a dart' forecast is endorsed by the government in this report. So, if the actual figure falls in the middle of McKinsey's range come 2025, robotics will be adding roughly the same amount to the world economy as current UK GDP ($2.83 trillion).
Whatever the accuracy of those figures may turn out to be, the BEIS report emphasises that the government is aware of robotics' huge global potential:
According to more recent estimates, boosting robot installations 30% above the baseline could add an extra $4.9 trillion per year to the global economy by 2030 (Oxford Economics, 2019).
In contrast to previous waves of robotics, which were mostly focused on industrial applications, RAS has the potential to impact a much wider range of sectors, with use-cases and opportunities emerging across the economy. These include, for instance, automated guided vehicles, mobile retail robots, and humanoid customer service robots.
That's true. But leaving aside the probability that humanoid service robots will remain a pointless damp squib for the foreseeable future, big questions arise from the government's report.
The biggest of these is obvious. Why is the UK only poised to gain a paltry 0.19% to 0.5% of the predicted added global value from robotics ($8.7 billion expressed as a percentage of McKinsey's $4.5 trillion and $1.7 trillion estimates)? And in a 14-year rather than four-year timescale? That's hardly the good news the government thinks it is, when the UK is, by 2021 nominal GDP estimates, still the world's fifth largest economy.
Common sense suggests that any modern, top-10 industrial economy ought to be seeing at least a single-digit economic boost from RAS, not a fractional one, as its percentage share of McKinsey's predicted global gains. But that isn't happening in the UK's case - and the report admits it.
The context couldn't be clearer in competitive terms: South Korea is the world's most automated country (it has the highest robot density), China is automating faster than any other nation, and the US, Japan, and many countries in Europe and Scandinavia are ahead of the UK in terms of adopting Industry 4.0 technologies - aside from AI, in which Britain has been making good progress.
The most recent data from the International Federation of Robotics (IFR.org) shows that industrial robot installations in the UK remain stubbornly low compared to its peers. Only around 2,500 industrial robots were installed in the UK in 2020 (0.5% of an estimated world total of 520,900). This compares to estimates of around 6,000 (1.2% of the world total) in France, 8,500 (1.6%) in Italy, 25,000 (4.8%) in Germany, 55,000 (10.6%) in the US, and 210,000 (40.3%) in China.
To BEIS' credit, the report acknowledges the UK's lamentable RAS gains to date, which are rooted in a widespread reluctance or inability to modernize across many industries. It states:
This [£6.4 billion/$8.7 billion] growth should be seen in light of a relatively low base, with robots in UK industry historically lagging behind other nations.
RAS offers a potential solution to key challenges to the UK's continued economic growth. In the UK, productivity is lower than in many peer economies such as the United States, France, and Germany. Moreover, productivity growth in the UK has been sluggish since the 2008/09 recession. [It has been flatlining - CM.]
However, unlocking the potential economic benefits of RAS is not straightforward. The UK failed to capitalise on the opportunities presented by the previous wave of industrial robotics, with the use of industrial robots in the UK lagging behind other nations.
Moreover, recent research by Boston Consulting Group (BCG) suggests that there is a significant gap between companies' ambitions to implement advanced robots and actual implementation.
The report adds:
More than 90% of the companies surveyed by BCG reported that at least one of three key enablers - including a complete vision of their future operations, sufficient knowledge of and training with RAS and related issues, and the development of a system architecture to support future operations - was not fully present in their company.
Remember: this is an 11-year-old government observing the nation as though these issues are nothing to do with its own management. Similar problems can be seen in other technology sectors, including AI and cybersecurity, where lack of skills and tens of thousands of unfilled vacancies reveal that the UK workforce is poorly placed to capitalise on the economic potential created by its own innovators. Digital skills gaps have been observed since the 1990s.
These are alarming findings after more than a decade of the same government (albeit one with a constantly changing face). The Industrial Strategy's aims were first aired in 2016 and published in 2017, while RAS was identified as far back as 2013 as one of the ‘Eight Great Technologies' that were key to the UK's future prosperity.
Getting in its own way
Britain had the right idea eight years ago. So, what has happened since? Can you guess?
The government talked the talk, but it didn't walk the walk; it failed to persuade British industry to modernize and invest in new technology. Arguably, this was partly due to every Whitehall department being "impaled on Brexit" (to quote a Conservative peer at a recent Westminster eForum).
Put another way, leaving the EU has not only taken up much of the government's time for the past six years, but it has also produced almost no practical action or help for British industry. With one exception: publication of a new Industrial Strategy. A cynic might ask what the hell the Cabinet has been doing in all that time.
But wait, there's more. To compound the problems arising from Brexit and the COVID-19 pandemic, in March this year the Prime Minister (unbelievably) scrapped the Industrial Strategy. This was the document that had at least underpinned government support of, and investment in, new technologies since 2016. The move was in support of launching a new ‘Plan for Growth' (which in July 2021 was measured at 0.1%).
It's hard to avoid the suspicion that it was really an expression of Boris Johnson's animosity towards his two Conservative predecessors, Theresa May and David Cameron. Why else pile unnecessary problems onto the UK economy by undoing a strategy that, if nothing else, had identified the right technologies and galvanised some investment in them? It was a dumb, knee-jerk decision, even considering Covid's unplanned-for impact on the economy.
To deepen innovators' frustrations, this new report's predictions of modest UK gains from robotics are based on uptake of RAS continuing at its current slow rate - for the next 14 years. These are hardly the bold, sunlit uplands of bluster that we have come to expect from this administration, making this report a rare dose of honesty and realpolitik. It says progress has been poor and, in most cases, will remain so until 2035.
Gaps in thinking
But will it? The problem is the document remains bafflingly odd. For one thing, BEIS' national forecasts come from an analysis of just seven sectors, which the government has chosen from a shortlist of 14.
The chosen seven are: agriculture, construction, energy, food & drink, health & social care, infrastructure, and logistics. All promising areas with real robotics applications, but why not look at all 14 - or the whole economy - and thus present a more comprehensive picture of the technology's potential? What purpose is served by drawing holistic conclusions from just seven markets?
Aside from food & drink, the shortlist leaves out manufacturing as a core focus of the report, in areas such as automotive, electronics, and pharmaceuticals, for example. That's a bizarre omission. It also largely ignores the boost from emergent sectors, such as space technology, deep-sea engineering, nuclear decommissioning (principally of weapons rather than spent fuel), and others.
Many of these are so-called ‘extreme environments', alongside the likes of deep mining and defence. Any sector where humans fear to tread (because of hazardous or lethal conditions) represents a huge opportunity for robotics, and yet these issues are largely (but not completely) omitted from the BEIS report.
The omission of most extreme-environment robotics from detailed discussion is both odd and unhelpful, as there is enormous potential there, according to a 2019 Innovate UK report produced for the government. And I should know: I wrote it.
For example, the UK's two academic nuclear hubs, RAIN and the National Centre for Nuclear Robotics, have estimated that the cost of decommissioning nuclear materials by hand - via workers in hazmat suits wielding power tools - is likely to be $2 billion a year for 100 years. On the face of it, that one sector alone could be a £200 billion robotics opportunity for the UK, and the technologies to capitalize on it are in active development.
Elephant(s) in the room
So, Brexit aside, why else has the UK been sinking in a sea of global opportunity? One reason is that the nation has long been hindered by ill-informed news media that persist in equating robotics with job losses and existential terror, rather than employment gains, increased productivity, and economic growth. Pre-Covid, human unemployment was low in most highly automated economies.
In 2018, for example, the World Economic Forum predicted there would be a net gain of 58 million jobs worldwide from adopting Industry 4.0 technologies, but that was pre-pandemic. Even so, that message never reached the ears of the British public or most businesses. As such, it represents a failure of local leadership to counter dystopian narratives about job-killing robots.
Which brings us to another elephant in the room - and there's a herd of them. Whatever your political beliefs and party allegiances may be, it must be obvious - even to his most ardent supporters - that Boris Johnson has the wrong mindset and personality to inspire the nation with technology-infused visions of the future. Yet that's precisely what the UK needs.
This is the man who joked about Kermit the Frog, Alexa "stamping her foot", cheese, "limbless chickens" and "pink-eyed Terminators" when addressing the United Nations about new technologies - speeches that were met with embarrassed silence by the UK's peers and allies.
But politics aside, how is the UK doing across the sectors BEIS has chosen for its analysis of this critical technology?
Based on estimates of unit shipments, the total UK market for robotics and autonomous systems will grow at a compound annual growth rate of more than 40% between 2020 and 2030, says the report. Good news, but it will reach a value of just £3.5 billion in that timescale, given the current low installed base. And as we've seen, the total value added to the economy five years after that will be modest.
A significant proportion of this growth is expected to come from a rise in demand for mobile robots, says the report. If UK shipments follow a similar trend to the wider European market (local data is missing), mobile robots will grow from an estimated 1,500 shipments in 2020 to over 90,000 shipments a year by 2030.
The report adds:
Estimates of current robot density (robots per million hours worked) for the sectors selected highlight significantly stronger uptake in the warehouse logistics and food & drink manufacturing sectors compared to other industries. Estimates of future uptake also suggest that this concentration is expected to continue over the period being assessed.
That's fine, but the statement is not without its own frustrations: the IFR defines robot density as the number of robots per 10,000 human workers, not per million hours worked (does each of 10,000 workers work 100 hours?). The government seems determined to use different measures to the ones that other organisations use, typifying its "doing things differently just because we can" attitude. None of this helps the UK, as it makes like-for-like comparisons impossible; perhaps that's the point.
That aside, the figures are interesting: the warehouse logistics sector - companies like Ocado automating their operations to compete with Amazon - is expected to see the biggest gains, with robotics adding 14% (£4.4 billion/$5.98 billion) to the sector's baseline value by 2035. Meanwhile, the impact of RAS in food & drink manufacturing is predicted to add 3% (£0.9 billion/$1.22 billion) of baseline added value by 2035. More good news.
However, the other five chosen sectors remain almost flat in terms of modernisation and automation, despite the many opportunities for RAS that are set out in the report. Their robot density is low and is likely to remain so, says the government, though agriculture is forecast to see a slight uptick in adoption, partly in response to seasonal labour shortages.
A very British document: a government observing how badly the UK is doing, while ignoring its own role in that failure for more than a decade. The result? No sunlit uplands, but isolated bright spells in the rain - thanks to the UK's technology innovators, rather than to the government itself.
BEIS has identified the UK's deep-seated industrial problems. So, where's the vision and investment to solve them - and soon? What's urgently needed is modern, competent, forward-looking leadership that can inspire both industry and the public about new technology's potential.
Meanwhile, ‘government by jolly japes' is nothing more than an embarrassing distraction from the serious challenges ahead.