Compete with Offshore Low Labor Costs: Employ Highly
Skilled Labor at 30 Cents per Hour
By Ron Potter, Director of Robotic Technologies, Factory
Automation Systems, Inc.
(as presented at the Robots 2004 Conference, June 9
and 10, 2004)
How would you like to hire an extremely skilled laborer
for 30 cents per hour? A laborer that works 24 hours
a day, 7 days a week, 52 weeks a year? Good news—you
can! It’s called an industrial robot and it’s
been around for decades working in a vast number of
industries and applications. But one thing that’s
often overlooked is the real cost of employing a robot
versus using manual labor. This is in lieu of the fact
that we know robots work faster, longer, produce higher
quality and productivity, and don’t mind working
in harsh environments.
So, let’s look at the operating costs for industrial
robots. According to the latest information from the
US Department of Energy, the national average cost per
kWh for industrial usage is 4.99 cents per kilowatt-hour,
or about 5 cents per kilowatt-hour.
The average power consumption per robot varies from
1 kilovolt-amp (KVA) for a small industrial robot to
5 KVA for a medium size robot (100 kg payload) to 10
KVA for some of the largest size robots (500 plus kg
payload). Note: The power consumption for robots can
be obtained from product literature. These numbers come
from typical FANUC and Motoman models.
So, for example, the power consumption for an ‘‘average’‘
robot is about 5 KVA. Applying a power factor of 85%
to convert KVA to KW results in approximately 6 KW as
an average robot’s power usage. At 5 cents cost
per KWh and 6 KW usage, the cost per hour for electrical
energy to operate an average robot is 30 cents.
A robot must have a ‘‘hand’‘
or gripper added to it to be comparable to a human laborer.
This gripper allows it to pick up parts or tools to
do work. These grippers are normally pneumatically operated
and require very little air consumption. According to
the US Department of Energy, the national average cost
for compressed air is 2 cents per hour for 1 CFM of
compressed air. So, the result is the cost of compressed
air to operate a robot’s gripper is negligible.
For example, a 2-inch bore by 2-inch stroke gripper
cylinder cycling 4 times per minute uses 25 cubic inches
of compressed air per minute, or about 0.014 CFM. At
2 cents per hour per CFM, this is less than a penny
per hour cost.
So, the total direct operating cost of an average robot
is 30 cents per hour!
For a one shift day, this cost is $2.40
For a two shift day, this cost is $4.80
For a three shift day, this cost is $7.20
The total operating cost per year working one shift,
5 days per week, 52 weeks per year is $624.00
The total operating cost per year working two shifts,
5 days per week, 52 weeks per year is $1,248.00
The total operating cost per year working three shifts,
5 days per week, 52 weeks per year is $1,872.00
In the past decade, great strides have been made by
robot manufacturers to improve the reliability and uptime
of today’s industrial robots. Now the average
mean-time-between-failure (MTBF) for an industrial robot
is 60,000 plus hours! This means that, as a user, you
need not plan on hidden costs for robot repair or downtime.
Another important factor to consider is that the average
cost of maintenance per year on a robot is less than
$500. This is mainly a scheduled periodic check of lubrication
points on the robot manipulator.
So, the result is you have an extremely skilled and
highly productive worker who costs you 30 cents per
hour, who works 24 hours per day, 7 days per week, 365
days per year with a normal useful life of 10-15 years.
Most robot automation projects have a payback of 2
years or less. After that initial investment, you gain
all of the benefits of a 30-cent per hour worker.
Let’s compare these costs to the costs associated
with an ‘‘average’‘ manual laborer.
Only as an example, let’s use a cost of $15 per
hour for a burdened rate for a human laborer. In many
cases, this is a very low rate. Even at this rate, a
robot at 30 cents per hour costs 50 TIMES LESS than
a manual laborer!
This does not even take into account the cost of ‘‘maintenance’‘
of manual workers. Just a few of these manual maintenance
items include lost production due to lunch and breaks,
the cost of lunch room and supplies, protective clothing
and safety devices, parking lots, insurance, workers
compensation, retirement and 401K contributions, lost
time due to injuries, vacations, training and retraining,
and the cost of Inconsistent and unpredictable production.
All of these items have a direct cost in maintaining
a manual labor force.
There are also many risks and obstacles to consider
in offshore manufacturing. These include transportation
costs, transportation problems, delivery time and schedules,
quality problems, International concerns, especially
terrorism, losing real-time control of manufacturing
and the ability to make quick changes to product or
process, and, most important, losing the closeness to
the market and end-users. Try to put a value on these
items and look at risk reduction as a part of your overall
In summary, a manufacturing strategy using highly skilled
laborers at a cost of 30 cents per hour can be a strong
competitive advantage to offshore manufacturing of products.
Take advantage of this competitive edge and utilize
this reliable and flexible technology that costs about
the same as offshore labor rates without all of the
disadvantages and 50 times less than traditional US
labor rates. Help keep your homegrown manufacturing
as the national treasure that it is.