Check out my final report on the topic of automation!
My last blog post focused on Amazon’s, now confirmed, entry into the Australian market and the potential impact that such a move might have on domestic consumers, retailers and workers. Many of the sources I came across while digging deeper concerned Amazon’s increasing use of automated systems. As such, I’ve decided to shift the focus of my project towards the broader implications of automation on the global workforce. This change means I don’t have to limit myself topically to either Amazon or, necessarily, Australia.
As early as 1967, figures like Marshall McLuhan were criticized (p.237) for believing that ‘total automation is upon us’. So to did William Gibson poignantly state time and again, that ‘the future is already here — it’s just not very evenly distributed’. So to that end, let us assess the current status of automation: What systems have been made obsolete by automation? What specific technologies are emerging today, and who is it displacing? Finally; what is on the horizon, and what professions, if any, will be safe from the process of automation creep? These will be the questions that my research report will engage with, and what I’ll be touching briefly upon in this post.
To talk about automation is to talk about what John Maynard Keynes coined (p.3) in 1930 as ‘technological unemployment’. He described this emerging phenomenon as the unfortunate ‘[availability] of labour outrunning the pace at which we can find new uses for labour’. Keynes added that this is only ‘temporary’, and standards of living will be multitudes better in one hundred years when there’s little work for anyone to do. But it was Keynes belief that ‘everybody will need to do some work if he is to be contented’ (p.6) as work provides meaning to one’s life, a topic for another time.
Since the process of industrial mechanisation saw a decline in production-line jobs that manufacturing industries provided, we haven’t yet seen any mass unemployment from the introduction of new technologies. Aside from the advent of electronic computing decreasing the need for human computers, and automatic exchanges largely making switchboard operators redundant, the workforce has survived. We’re only now seeing the beginnings of the technological unemployment Keynes imagined.
With the introduction of technologies such as the self-checkout machines at supermarkets, many commentators including Barack Obama himself, see automation as ‘relentless’ and ‘killing traditional retail’ jobs. With robots capable of sorting more than 200,000 packages a day in warehouses, and capable of working on cents worth of electricity instead of minimum wage, it’s hard not to be concerned. But importantly, it’s not just blue-collar industry workers who are at threat. White-collar professions relying on skills like decision making, paperwork, and writing are newly susceptible to automation via learning AI.
Platforms like Quill from Narrative Science can analyse large amounts of data and identify meaningful trends, then output a report reflecting these findings in ‘everyday language’, be it finance or sports results. While it’s been criticized for an inability to ‘discern the relative newsworthiness’ of stories, the unmatched speed and lack of bias that an AI system writes with is undeniable.
In addition to AI software, ‘general purpose’ robots are being developed with an ability to ‘learn’ new tasks. ‘Baxter’, from Rethink Robotics and Roomba creator Rodney Brooks, is being developed to fulfill ‘quality assurance or small assembly’ in factories, but still requires a human to initially ‘teach’ it these functions. This universal robot represents a leap in usefulness comparable to the first personal computers. Baxter is capable of fulfilling whatever task is ‘within his reach‘, but perhaps this is an agreeable compromise; there will still be work available for workers on an assembly line, but it will be less laborious and more about oversight and refinement of process.
Other systems are being designed to take over more skilled professions. IBM’s ‘Watson‘ for example is being touted as an AI doctor, networked to be constantly up to date with the newest research and possessing the ability to instantly access and share your medical records as required. Similarly, Enlitic has a program which can analyse medical imaging results and boasts a ‘false-negative rate of zero’.
The impact that automation makes on employment isn’t always clear until years later, however. The Economist reminds that although automated teller machines briefly reduced the number of human tellers in 1988, bank branches became cheaper to operate and so they grew by ‘43% over the same period’. So, will a technology like self-driving cars destroy the transport and hauling industry, or will new, unprecedented roles appear for the millions employed in those sectors?
While time will tell, I’ve plenty of sources to investigate for my final report in the meantime.
With months of speculation, Amazon finally seems poised to officially enter the Australian marketplace with a ‘Amazon insider’ telling The New Daily that they’ll have arrived ‘no later than 2017 to early 2018’. This aligns with other sources such as Business Insider noting on January 17th that Amazon had ‘more than 100 job vacancies listed for Australia’, one of these roles detailed hinted at ‘revolutionising… the grocery shopping experience’ to include fresh food delivery in the roll-out. Amazon also surprise launched their ‘Prime Video’ service in November 2016 to compete with the already cut-throat local competition.
So it seems Amazon’s arrival is near, but what does this mean for retailers? Watermark Funds Investment chief investment officer Justin Braitling was quoted stating their plan is to undercut the market by ‘around 30%’, with their intentions to effectively ‘destroy’ the status quo. Looking at a report by Credit Suisse reflects these concerns, envisaging JB HIFI could see up to a 33% decline in profits, with Myer topping even that at 55%.
Despite these concerns, others such as Danny Ing, the founder of inventory management software ‘Cin7’, see Amazon’s marketplace as a miraculous opportunity for small businesses in particular who can now ‘open up a massive new market’ and become part of a ‘globalised cottage industry’. This means that Amazon’s global 300 million users will now be accessible and will facilitate rapid growth for choice Australian sellers.
With promise of creating jobs and expanding the marketplace for consumers, it’s important to remember that ‘the workers they are hiring aren’t the same ones being laid off’, so says Harvard economics professor Lawrence Katz. In the US we can see that department stores have felt the impact of online retailers, letting go ‘thousands of staff in recent months’. While businesses and employees around Australia haven’t been similarly affected yet, this will surely change soon with the ‘incredible efficiency of Amazon’s distribution system’ which is unparalleled locally.
Gerry Harvey, bless the man, boldly states that ‘If they’ve [Amazon] got a cheaper price we will match that price, and we’ll give them the service, delivery and after sales service and they will be a lot happier than if they dealt with Amazon.’ Professor Mark Ritson rebukes those claims however, noting that regardless of what Gerry says ‘in front of the cameras’, it will be different behind closed doors. ‘He wants to communicate that Harvey Norman will match Amazon penny for penny for the consumers, but the reality is you can’t do that, and he knows it.’
Woolworths, taking a more pragmatic approach, has moved its in-house technology infrastructure over to Microsoft’s Azure network to ensure scalability and reliability for particularly busy periods. Understandably, they didn’t opt for Amazon’s own cloud service, Amazon Web Services.
In my preliminary research, I’ve seen two common concerns with Amazon’s entrance according to internet commentators. Firstly, that Amazon must have a solution to Australia Post’s woeful delivery times. A commenter using the handle ‘NegativeZero’ attributes the success of the free ‘Prime’ delivery system to the ‘godawful minimum wage… (so they can have more drivers doing deliveries)’ combined with the postal services in the US being ‘miles ahead of Australia Post in both cost and service quality’. Having both a comparably high minimum wage, and a lacking postal service, presents a barrier for Amazon.
Secondly, and the issue I’ll be most focusing on for my research report, is concern for the jobs of those affected by the automation of process like warehouse logistics, order fulfillment and distribution.
With unimaginable working conditions, and the cost to solve them, we can see why Amazon would be happy moving towards automation. The NY Times cites of Amazon’s efficiency; ‘they don’t use as much labor’. The profit of these ‘superstar firms’ is therefor ‘split among fewer workers.’
In Creating the Global Shopping Mall: The Case of Amazon, Voigt notes Amazon’s acquisition of Kiva Systems (now Amazon Robotics) which manufactured storage robot to improve the fulfillment process (p. 73, 2016). And, while Amazon’s warehouses aren’t devoid of human workers yet, ‘Amazon continues its work on removing the human element from this too’, according to David D’Souza of CIPD London.
Co-Founder of Kiva Systems, Raffaeollo D’Andrea, wrote in A Revolution in the Warehouse: A Retrospective on Kiva Systems and the Grand Challenges Ahead that the ‘average mean time between failure of mobile robots at the time was 8 hours’. With a 1000 strong robotic workforce, there would be 3000 incidents every day. Using innovative but cheap sensors, GPS systems, and clever algorithms vastly increased productivity (p. 638, 2012). D’Andrea believes that ‘robotics and automation cannot only create new markets, but also revolutionize established ones’ as evidenced by Amazon’s domination ‘stateside’, and possibly soon in Australia.
This was a quick, preliminary look at sources of interest for my research project into the automation of the work-force, using Amazon’s Australian debut in particular as a case study. In the coming weeks I’ll be refining my inquiry, and definitely utilising more academic and industry sources.