Robots, Cobots and Productivity

Wikipedia defines productivity as the efficiency of production of goods and services.  Productivity is not everything, but in the long run it is almost everything.  A nation’s ability to improve its standard of living, over time, depends almost entirely on its ability to raise its output per worker.  We have previously commented on the increasing use of cobots, see our blog posted October 14, 2020 “Cobots.”  Cobots can leverage the productivity of individual users, while robots, which to some extent, replace workers, contribute to overall productivity. 

The increasing use of cobots and robots has, in part, reflected significant advances in technology and, in part, a response to the cost and/or availability of employees.  However, productivity gains, which can increase standards of living for individuals, are no substitute for real growth in GDP.  Output per worker is clearly a good thing, but for an economy to grow, aggregate output has to increase.  Two problems, this requires population growth, which can only be achieved through the birth rate and/or immigration and cobots and, robots are not consumers. 

Investors should recognize that, while much political activity focuses on the promise of creating new jobs, attempts to increase employment, during a period of near record low unemployment, can complicate the outlook for individual companies and industries.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA