As baby boomers retire, German businesses turn to robots
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[October 27, 2023] By
Maria Martinez
BERLIN (Reuters) - At machine parts producer S&D Blech, the head of the
grinding unit is retiring. With Germany's acute labor shortage leaving
few candidates to take on the skilled but dirty and hazardous manual
work, the company will replace him with a robot.
Other small and medium-sized companies are also turning to automation as
the gradual exit from the workplace of Germany's post-war "baby boom"
generation tightens the labor squeeze.
Some 1.7 million German jobs were unfilled in June, official data shows.
The German Chambers of Commerce and Industry (DIHK) says more than half
of companies are struggling to fill vacancies, at an estimated cost to
growth in Europe's largest economy of nearly 100 billion euros ($109
billion) per year.
Managing director Henning Schloeder cited that trend to explain S&D
Blech's push over several years towards automation and digitalization,
saying: "This will further aggravate the already difficult skilled
labour situation, particularly in production and crafts."
Finding a new head of the grinding unit was hard "not only because of
all the experience he has, but also because it's a back-breaking job
that no one wants to do any more", Schloeder told Reuters.
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Machine-grinding involves high heat and continuous noise, while the
sparks it throws out can be dangerous.
More women working and a surge in immigration have helped compensate for
demographic changes in recent years in Germany.
But with baby boomers retiring and a new cohort - much smaller, due to
low birth rates - joining the labor force, the Federal Employment
Agency expects the pool of workers to shrink by 7 million people by
2035.
With similar shifts affecting other developed economies, the impact of
advanced automation technologies from robotics to AI will be widely
felt, said Nela Richardson, chief economist at global payrolls and HR
services provider ADP.
"Long term, all those innovations are a game-changer for the world of
work. Everybody will do their job differently," she told Reuters.
Heavy investment in automation by car makers and other industrial giants
means Germany is already the world's fourth-biggest market for robots,
and the largest in Europe.
But as robots become cheaper and easier to operate, the often family-run
Mittelstand companies that are the country's economic backbone are also
using them, from manufacturers like S&D Blech to bakeries, laundries and
supermarkets.
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According to the International Federation of Robotics around 26,000
units were installed in Germany last year - a figure surpassed only in
2018, before the COVID-19 pandemic slowed what had been an average of 4%
annual growth.
"Robots enable the survival of companies that see their future at risk
due to staff shortages," said Ralf Winkelmann, managing director of
FANUC Germany, which sells about half its Japanese-made robots to small
and medium-sized enterprises.
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A man stands next to a robot machine at ROLEC Gehause-Systeme in
Rinteln, Germany on October 6, 2023. Courtesy of Matthias
Rose/Handout via REUTERS
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Ralf Hartdegen, whose consulting firm guides firms through this type
of transition, said companies keen to automate but reluctant to fire
people were increasingly basing their plans around the shedding of
workers through retirement.
Family-run ROLEC, which produces systems to protect industrial
electronics and control equipment, bought its first robot last year,
to allow production to continue at night. The company has already
acquired a second machine and plans to continue investing in
automation.
"It is great when you turn on the light in the morning and the parts
are in the storage container and have been processed," CEO Matthias
Rose told Reuters.
Increasing automation also reflects the fact that robots have become
easier to use, with no programming skills required. Most now come
with a Human Machine Interface, a touchscreen similar to a
smartphone, said Florian Andre, a co-founder of SHERPA Robotics, a
start-up that focuses on companies with between 20 and 100
employees.
Even workers and trade unions, once fearful of job losses, take an
increasingly positive view. A survey published by robots marketplace
automatica in June found nearly half of German employees see robots
as helping to address labor shortages.
ROLEC's Rose said its initial venture into automation in 2022 had
come as a big backlog of orders meant employees had to work overtime
and on Saturdays. "It was a good starting situation for our first
robot, as it was seen as a helper instead of as competition," he
added.
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A spokesperson for Germany's powerful IG Metall trade union said
robots adopted as part of a long-term corporate strategy, rather
than to cut costs quickly, can help make work "healthier, more
interesting and safer".
Lorry and bus manufacturer Daimler Truck makes extensive use of
robotics, particularly to help with heavy lifting and other
challenges to workers' physical health.
"But there is nothing more flexible than a human," said Matthias
Krust, head of the company's works council.
"The more complex the production, the more differentiated, the
harder it becomes to use robots."
(Reporting by Maria Martinez; Additional reporting by Victoria
Waldersee in Berlin and William Schomberg in London; Editing by
Matthias Williams and Catherine Evans)
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