• Tuesday, Oct 26, 2021
  • Last Update : 01:41 am

Rent-a-robot: Silicon Valley’s new answer to the labor shortage in smaller US factories

  • Published at 08:12 pm August 26th, 2021
robot-US
A Rapid Robotics robot is seen from above as it moves a product in a Westec Plastics Corp warehouse in Livermore, California, US on August 19, 2021. Picture taken August 19, 2021 Reuters

Better technology and the need to pay higher wages to humans have produced a surge in sales of robots to big companies all across America

Silicon Valley has a new pitch to persuade small companies to automate: rent-a-robot.

Better technology and the need to pay higher wages to humans have produced a surge in sales of robots to big companies all across America. But few of these automatons are making it into smaller factories, which are wary of big upfront costs and lacking robot engineering talent.

So venture capitalists are backing a new financial model: lease robots, install and maintain them, charge factories by the hour or month, cut the risk and initial costs.

Saman Farid, a former venture capitalist who invested in robots for over a decade and saw the challenges of getting robots into factories, set up rent-a-robot Formic Technologies with backing from Lux Capital and Initialized Capital, an early investor in self-driving tech startup Cruise.

Initialized Capital partner Garry Tan sees a confluence of cheaper and better robot computer vision and artificial intelligence technology, low interest rates, and the threat of US-China tensions on supply chains stoking interest in robot subscriptions.

“It's at the center of three of the largest mega trends that are driving all of society now,” said Tan.

Techies and small business owners do not always understand each other, a dilemma that led an industry group, the Association for Manufacturing Technology, to set up a San Francisco office a couple of years ago, to bring the two together.

The lease model puts much of the financial burden on robot startups which carry the risk of a manufacturer losing a contract or changing a product. Smaller factories often have small runs of more tailored products that are not worth a robot. And Silicon Valley Robotics, an industry group supporting robot startups, says that in the past, funding has been a challenge.

Still, some high-profile investors are on board.

Tiger Global, the biggest funder of tech startups this year, has backed three robot firms offering subscription in seven months.

Melvin the Robot

Bob Albert, whose family owns Polar Hardware Manufacturing, a 105-year-old metal stamping factory in Chicago, bought Formic’s pitch to pay less than $10 an hour for a robot, compared with over $20 an hour for his average human worker. He watched this month as a robot arm picked up a metal bar from a bin, spun around, and placed it in an older machine that bent it into a 42-inch (107 cm) door handle.

“If the robot works really well, we’ll use it a lot,” said Albert, who was pleased with the initial results. “And if it doesn't work out, neither one of us comes out very well. We have less skin in the game and they have some skin in the game.”

Westec Plastics Corp, a family-owned plastic molding factory in Livermore, California, got its first robot in January 2020 and now has three - named Melvin, Nancy and Kim - from Rapid Robotics which charges $3,750 a month per robot in the first year and $2,100 from year two.

“Melvin runs 24 hours a day, all three shifts, and that replaced three full operators,” said President Tammy Barras, adding that she is saving about $60,000 in labor costs a year with the one robot alone. “We've had to increase our wages quite significantly this year because of what is going on in the world. And luckily, Melvin has not increased his pay rate. He doesn't ask for a raise.”

Barras, who has 102 employees, says robots cannot replace humans today as they can perform only repetitive, simple tasks like picking up a round plastic cylinder and stamping a company logo on the correct side.

Jordan Kretchmer, cofounder and CEO of Rapid Robotics, said he encounters some skepticism. “A lot of times we've walked in and there's a graveyard of robots that they bought in the past,” he said. But he added, "robots can be easy and they do work when they're in the hands of the right people."

56
Facebook 55
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail