In the United States, manufacturing accounts for $2.3 trillion in GDP and employs 12 million people. It represents 11% of the US GDP and contributes disproportionately to the national economy: accounting for 20% of capital investment, 35% of productivity growth, 60% of exports, and 70% of business R&D spending.
However, there is an increasing shortage of labor across manufacturing sectors. For example, America is a world leader in cutting-edge chip design, but its share of global semiconductor manufacturing has declined from 37% in 1990 to about 12% in 2021. Given the importance of chips to the economy and to national security, the White House and Congress have made a big push for onshore high-end chip manufacturing. Yet producing chips in the US still takes 25% longer and costs nearly 50% more than in Asia. One study found that 300K more skilled laborers may be needed to complete US fab projects underway. Part of the reason for this shortage is that the number of US students pursuing advanced degrees in the field has been stagnant for the past 30 years. Many international students are enrolled in relevant programs at US schools, but current policy makes it difficult for them to stay and work in the US. As a result, new plants planned by Intel and TSMC need help finding qualified workers. What’s more, this skilled labor shortage isn’t limited to semiconductor manufacturing.
The construction industry has similar issues; it will need to attract an estimated 546K additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor. Elsewhere, there has long been a disconnect between the secular growth of online commerce and the infrastructure that supports it. As a result, labor shortages of warehouse staff have never been more extreme. The warehousing industry ranks among the lowest in terms of workers’ average hourly wage, and warehouse operators consistently cite hiring and attrition as the top challenge facing their business. As a result, many of the warehouses and third-party logistics providers responsible for receiving, shipping, and sorting items that customers order online need to implement more automation to keep pace with accelerating demand.
Automation may be the most promising solution to these labor shortage issues. Robotic systems can automate repetitive tasks typically done by humans, reducing recruitment and labor costs. Depending on the cost of labor, these systems generally pay for themselves quickly. Moreover, they can help reduce employee turnover and training costs while taking on repeated, laborious tasks with no breaks. Robots can also carry heavy loads and reduce issues related to lifting and repetitive motion injuries for manufacturing workers. In addition, robotic automation increases quality and repeatability and reduces waste. There are ample opportunities for startups like Locus Robotics to build robotic solutions to complement existing labor across manufacturing and other industries, and in doing so help shore up a major piece of the US economy.
