ROBOCIP 2024
Japan Set to Aid Nation’s SMEs in Robotics
ROBOCIP: New public-private group “to facilitate the introduction of robots and cobots to nation’s 3.5 million SMEs”
Suddenly SMEs are important
Worldwide, small-to-medium enterprises (SMEs), overlooked for what seems like forever by their governments, as well as robot and cobot vendors, are finally getting substantive assistance in robotics and automation, but only in one country: Japan.
Other nations do SME outreach, but not as significantly as that planned by Japan’s Robot Industrial Basic Technology Collaborative Innovation Partnership or ROBOCIP for 2024, which would “let small and midsize enterprises introduce robots up to 60% more cheaply.”
The importance of the 400 million SMEs worldwide to their economies can’t be overstated. SMEs in Japan are companies with 300 or fewer employees (in the US it’s 500 or less), but these 3.5 million SMEs make up 99.7% of the nation’s companies. The downside is that their low productivity hampers economic growth.
That’s the assessment according to Japan’s Ministry of Economy, Trade and Industry or METI that produced a 2023 white paper detailing the plight of the country’s SMEs and the remedies necessary to reverse the losses.
The METI paper found the value added per worker for SMEs in manufacturing is $36,200, significantly less than the $100,000 produced per worker at big businesses. Big manufacturers are then nearly 66 2/3 more productive. With SMEs representing over 90% of all industries in Japan, the poor value added per worker represents a significant loss to the overall economy.
Time for change?
Japan’s robot and cobot vendors, as in most every other country, disregarded SMEs until the roof started to crack: the country’s fertility rate is plummeting, lack of workers has seen some businesses struggle just to stay open, while industry, commerce, and agriculture are going gray in a hurry with retirees. Robots, cobots, and automation, in general, could greatly benefit the pain points in Japan’s economy.
The identical conditions are motivating all of East Asia (China, Korea, and Japan) to take extraordinary measures to fend off drastic economic decline and social unrest (see our coverage of Korea and China on these issues).
In addition to an aging workforce, lack of new workers, and remarkably low birth rates, Japan was stung by a slowing economy in China that saw sales of robots and cobots to China tumble precipitously. In fact, Nikkei Asian Review reports that Japan needs new business in a hurry! Japanese robot makers are feeling competitive heat from across the Sea of Japan. Overall, the share of sales by Japanese robot manufacturers has declined from 70 percent at its peak to about 40 percent due to the rise of Chinese competitors. Among 17 Japanese companies with significant sales in China, 12 saw net profit decline in the July to September quarter.
Is ROBOCIP’s plan enough?
A group of Japanese industrial robot makers made up of Fanuc, Denso, Panasonic Holdings, Yaskawa Electric, Nachi-Fujikoshi, Kawasaki Heavy Industries, Epson, Daihen and Mitsubishi Electric will create “a database for sharing information that would let small and midsize enterprises introduce robots up to 60% more cheaply, helping these companies boost productivity.”
“Given the financial risk, it’s difficult to introduce robots that cost tens of millions of yen each,” said Tetsuji Ohari, president of Tokyo-based metal processing company Muso Technologies.
“When a smaller company introduces a robot, it incurs costs not only for the robot itself but also sensors and other peripheral equipment and systems. Total investment for a standard robot arm is about 50 million yen, or $334,000.
“Of this, system development — including the staffing and time involved in considering robot specifications as well as operational training — is said to account for nearly half.”
The planned database will share basic information on robot specifications, operations, and software, free for smaller companies to access.
The glaring question is will sharing “basic information on robot specifications, operations, and software” be enough?
It’s easy to see, given the scenario from Ohari, president of Tokyo-based metal processing company Muso Technologies, why Japan’s SMEs have been bypassed by robot and cobot vendors in the past. Generally, SMEs don’t have the investment funds for a purchase, even given a reduction in the cost of sales via ROBOCIP’s database. Big automakers, big electronics firms, and big biotech do. Realistically then, vendors will gravitate to where the money is, multiple sales, and easier pickings.
For Japan’s vendors, and all of East Asia in general, lack of workers, the graying of industry, a crashing birthrate, plus a poor selling season with profits tumbling, have forced its hand to desperately look for alternative resources.
ROBOCIP helping SMEs into the 4th Industrial Revolution is a great step forward. Should more be done?
Korea and China are physically underwriting some or all of the purchase costs of robots and cobots by the billions of dollars. Does Japan need to follow suit? The prevailing sentiment in Korea and China seems to be risk now and hope for the best; to wait will surely court disaster.
Japan is to be lauded for making the first step in its outreach to SMEs where so many others have not. But truly, is it enough? ROBOCIP may need to evolve itself to an expanded role in automating Japan’s SMEs.
Japan’s next step will be a telling one.
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