PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

Robots cause company profits to fall – at least at first

2023-08-03
(Press-News.org) Researchers have found that robots can have a ‘U-shaped’ effect on profits: causing profit margins to fall at first, before eventually rising again.

The researchers, from the University of Cambridge, studied industry data from the UK and 24 other European countries between 1995 and 2017, and found that at low levels of adoption, robots have a negative effect on profit margins. But at higher levels of adoption, robots can help increase profits.

According to the researchers, this U-shaped phenomenon is due to the relationship between reducing costs, developing new processes and innovating new products. While many companies first adopt robotic technologies to decrease costs, this ‘process innovation’ can be easily copied by competitors, so at low levels of robot adoption, companies are focused on their competitors rather than on developing new products. However, as levels of adoption increase and robots are fully integrated into a company’s processes, the technologies can be used to increase revenue by innovating new products.

In other words, firms using robots are likely to focus initially on streamlining their processes before shifting their emphasis to product innovation, which gives them greater market power via the ability to differentiate from their competitors. The results are reported in the journal IEEE Transactions on Engineering Management.

Robots have been widely used in industry since the 1980s, especially in sectors where they can carry out physically demanding, repetitive tasks, such as automotive assembly. In the decades since, the rate of robot adoption has increased dramatically and consistently worldwide, and the development of precise, electrically controlled robots makes them particularly useful for high-value manufacturing applications requiring greater precision, such as electronics.

While robots have been shown to reliably raise labour productivity at an industry or country level, what has been less studied is how robots affect profit margins at a similar macro scale.

“If you look at how the introduction of computers affected productivity, you actually see a slowdown in productivity growth in the 1970s and early 1980s, before productivity starts to rise again, which it did until the financial crisis of 2008,” said co-author Professor Chander Velu from Cambridge’s Institute for Manufacturing. “It’s interesting that a tool meant to increase productivity had the opposite effect, at least at first. We wanted to know whether there is a similar pattern with robotics.”

“We wanted to know whether companies were using robots to improve processes within the firm, rather than improve the whole business model,” said co-author Dr Philip Chen. “Profit margin can be a useful way to analyse this.”

The researchers examined industry-level data for 25 EU countries (including the UK, which was a member at the time) between 1995 and 2017. While the data did not drill down to the level of individual companies, the researchers were able to look at whole sectors, primarily in manufacturing where robots are commonly used.

The researchers then obtained robotics data from the International Federation of Robotics (IFR) database. By comparing the two sets of data, they were able to analyse the effect of robotics on profit margins at a country level.

“Intuitively, we thought that more robotic technologies would lead to higher profit margins, but the fact that we see this U-shaped curve instead was surprising,” said Chen.

“Initially, firms are adopting robots to create a competitive advantage by lowering costs,” said Velu. “But process innovation is cheap to copy, and competitors will also adopt robots if it helps them make their products more cheaply. This then starts to squeeze margins and reduce profit margin.”

The researchers then carried out a series of interviews with an American medical equipment manufacturer to study their experiences with robot adoption.

“We found that it’s not easy to adopt robotics into a business – it costs a lot of money to streamline and automate processes,” said Chen.

“When you start bringing more and more robots into your process, eventually you reach a point where your whole process needs to be redesigned from the bottom up,” said Velu. “It’s important that companies develop new processes at the same time as they’re incorporating robots, otherwise they will reach this same pinch point.”

The researchers say that if companies want to reach the profitable side of the U-shaped curve more quickly, it’s important that the business model is adapted concurrently with robot adoption. Only after robots are fully integrated into the business model can companies fully use the power of robotics to develop new products, driving profits.

A related piece of work being led by the Institute for Manufacturing is a community programme to help small- and medium-sized enterprises (SMEEs) to adopt digital technologies including robotics in a low-cost, low-risk way. “Incremental and step changes in this area enable SMEs to get the benefits of cost reduction as well as margin improvements from new products,” said co-author Professor Duncan McFarlane.

The research was supported by the Engineering and Physical Sciences Research Council (EPSRC) and the Economic and Social Research Council (ESRC), which are both part of UK Research and Innovation (UKRI). Chander Velu is a Fellow of Selwyn College, Cambridge.

END


ELSE PRESS RELEASES FROM THIS DATE:

Researchers are using monkey poop to learn how an endangered species chooses its mates

Researchers are using monkey poop to learn how an endangered species chooses its mates
2023-08-03
Northern muriquis, which live in the Atlantic forest of Brazil, are one of the most endangered species of monkey in the world. Choosing good mates and rearing thriving offspring are key to the species’ long-term survival. To better understand what goes on in the mating lives of muriquis, researchers at the University of Texas at Austin and the University of Wisconsin–Madison turned to the monkeys’ poop to help gain insight into how the primates choose their mates. In a paper published on Aug. 2 in the journal Proceedings of the Royal Society B, the scientists combined genetic analysis with long-term behavioral observations to better understand the ...

Study shows care hotel model can successfully shorten hospital stays and reduce costs for non-emergency procedures

2023-08-03
CONTACT: Camille Jewell cjewell@vancomm.com or 202-248-5460   SAN DIEGO—Using a “care hotel” model, which discharges patients to a specialty hospital hotel after smaller surgeries, can lower costs and shorten patients’ time in the hospital, according to a study presented today at the Society of NeuroInterventional Surgery’s (SNIS) 20th Annual Meeting.   Rising health care costs pose a significant financial burden across the U.S., especially since the start of the COVID-19 pandemic. Researchers at the Mayo Clinic Florida ...

Procedure for treating adults with severe stroke is also safe and effective for treating children, research shows

2023-08-03
CONTACT: Camille Jewell cjewell@vancomm.com or 202-248-5460   SAN DIEGO—A study presented today at the Society of NeuroInterventional Surgery’s (SNIS) 20th Annual Meeting noted that mechanical thrombectomy, a standard treatment for adults with a large vessel occlusion, a type of severe ischemic stroke, is also safe and effective for treating children.   A large vessel occlusion is caused by a blood clot that blocks a large vessel, cutting off significant blood flow to the brain. The faster that patients with this kind of stroke receive mechanical thrombectomy, a minimally invasive procedure ...

Researchers find drugs that reduce infant death may lead to long-term health issues

Researchers find drugs that reduce infant death may lead to long-term health issues
2023-08-03
HAMILTON, ON (August 2, 2023) – Steroids commonly offered to pregnant people with increased risk of preterm birth may be unnecessary and may leadto long-term health issues for the infants, according to new research led by McMaster University.    The research, published in The BMJ on Aug. 2, analyzed data from 1.6 million infants and found approximately 40 per cent of infants with early exposure to corticosteroids – defined as exposure at 34 weeks gestation or earlier – were born at term. The full-term infants had an increased risk of both short and long-term health issues, including neonatal intensive care admission, ...

New studies shed more light on potential risks of antenatal steroids

2023-08-03
Two new studies published by The BMJ today examine the potential health risks for infants of giving steroid drugs to women who are at risk of giving birth early.  Taken together, the results highlight the need for doctors to be aware of the potential risks and to exercise caution when considering antenatal steroid treatment. Babies born early (preterm) carry a greater risk of death and serious complications such as breathing difficulties, bleeding into the brain, and infection than babies born at term. These problems tend to be more severe the earlier the baby is born. Corticosteroids are known to help increase the ...

People with a hepatitis C cure still face substantial risk of death

2023-08-03
Individuals who have been cured of hepatitis C infection still face a substantially greater risk of death compared with the general population - between 3 and 14 times higher depending on liver disease stage, finds the largest study of its kind published by The BMJ today. Based on data from more than 20,000 patients with a hepatitis C cure, the results show that drug and liver-related causes of death were the main drivers of excess deaths - and highlight the importance of continued support to fully realise the benefits of a hepatitis C cure. Hepatitis C is a virus that can infect the liver which, if left untreated, can cause ...

New HIV drug formulation could improve treatment outcomes for children worldwide

2023-08-03
Researchers at the University of Colorado Anschutz Medical Campus have helped confirm the dosing, safety and effectiveness of a drug formulation designed for treating children with human immunodeficiency virus (HIV). The study was published today in The Lancet HIV and reveals a new dispersible formulation and an immediate-release tablet containing three medications - dolutegravir, abacavir and lamivudine - in a single fixed dose combination (FDC) formulation is safe, well tolerated, and effective for treating children with HIV. The dosing based on the concentrations of each medication in the blood was also appropriate. “This is the first FDC containing dolutegravir ...

Study reveals unexpected importance of the thymus in adults 


2023-08-03
BOSTON – The thymus gland—which produces immune T cells before birth and during childhood— is often regarded as nonfunctional in adults, and it’s sometimes removed during cardiac surgery for easier access to the heart and major blood vessels. New research led by investigators at Massachusetts General Hospital (MGH) and published in the New England Journal of Medicine has uncovered evidence that the thymus is in fact critical for adult health generally and for preventing cancer and perhaps autoimmune disease. To determine whether the thymus provides health benefits to adults, the team evaluated the risk of death, cancer, ...

Workers are less productive and make more typos in the afternoon — especially on Fridays

2023-08-03
If there’s one thing most office workers can agree on, it’s that they tend to feel less productive toward the end of the day and the end of each work week. Now, a team of researchers at Texas A&M University has found objective evidence of this phenomenon in action. A recent interdisciplinary study at the Texas A&M School of Public Health used a novel method of data collection to show that employees really are less active and more prone to mistakes on afternoons and Fridays, with Friday afternoon representing the lowest point of worker productivity. The ...

ORNL researcher, team received honors for advanced alloy development with industry

ORNL researcher, team received honors for advanced alloy development with industry
2023-08-02
Dean Pierce of the Department of Energy’s Oak Ridge National Laboratory and a research team led by ORNL’s Alex Plotkowski were honored by DOE’s Vehicle Technologies Office for development of novel high-performance alloys that can withstand extreme environments.  At this year’s Vehicle Technologies Annual Merit Review, held virtually on June 12, VTO recognized Pierce, an R&D staff scientist in the Physical Sciences Directorate, and the DuAlumin-3D research team under Plotkowski. VTO honored Pierce, a member of ORNL’s Alloy Behavior and Design group, ...

LAST 30 PRESS RELEASES:

What’s behind the enormous increase in early-onset gastrointestinal cancers?

Pharmacogenomics expert advances precision medicine for bipolar disorder

Brazilian researcher explores centenarian stem cells for aging insights

Dr. Xuyu Qian's breakthrough analysis of 18 million brain cells advances understanding of human brain development

Gene networks decode human brain architecture from health to glioma

How artificial light at night damages brain health and metabolism

For ultrasound, ultra-strength not always a good thing

Matching your workouts to your personality could make exercising more enjoyable and give you better results

Study shows people perceive biodiversity

Personality type can predict which forms of exercise people enjoy

People can accurately judge biodiversity through sight and sound

People diagnosed with dementia are living longer, global study shows

When domesticated rabbits go feral, new morphologies emerge

Rain events could cause major failure of Waikīkī storm drainage by 2050

Breakthrough in upconversion luminescence research: Uncovering the energy back transfer mechanism

Hidden role of 'cell protector' opens cancer treatment possibilities

How plants build the microbiome they need to survive in a tough environment

Depression due to politics and its quiet danger to democracy addressed in new book 'The Sad Citizen'

International experts and patients unite to help ensure all patients are fully informed before consenting to new surgical procedures

Melting glaciers could trigger more explosive eruptions globally, finds research

Nearly half of U.S. grandchildren live within 10 miles of a grandparent

Study demonstrates low-cost method to remove CO₂ from air using cold temperatures, common materials

Masonic Medical Research Institute (MMRI) welcomes 13 students to prestigious Summer Fellowship program

Mass timber could elevate hospital construction

A nuanced model of soil moisture illuminates plant behavior and climate patterns

$2.6 million NIH grant backs search for genetic cure in deadly heart disease

Pennsylvania’s medical cannabis program changed drastically when anxiety was added as a qualifying condition

1 in 5 overweight adults could be reclassified with obesity according to new framework

Findings of study on how illegally manufactured fentanyl enters U.S. contradict common assumptions, undermining efforts to control supply

Satellite observations provide insight into post-wildfire forest recovery

[Press-News.org] Robots cause company profits to fall – at least at first