A quick look at robots and jobs

 

The robots are gathering to help beat Britain’s supply-chain shortages

Building automated warehouses

Some 3,000 boxy robots, each the size of a small refrigerator, are scurrying around a metallic chequerboard about seven times the size of a football pitch. Every second or so one halts as a crate of groceries rises up and is deposited inside it. The bot then conveys the crate to a picking station, where a human puts orders into bags. This is the “Hive” (pictured), a giant fulfilment centre in Erith, south-east London, operated by Ocado, an online grocer. An ai-driven computer system choreographs the bots’ movements. Each travels some 60km a day, helping to bag around 1m items.

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Brexit and a shortage of lorry drivers mean items are missing from supermarket shelves. But further up supply chains, the picture is cheerier, for a nation of shopkeepers has built some of the world’s most advanced retail logistics. With around £350,000 ($450,000) spent on automation per warehouse in 2020, Britain’s distribution and fulfilment centres are the world’s most robotised, according to Interact Analysis, a research group. In America, for comparison, the figure is $375,750.

Automation was first motivated by high wage costs, says Ash Sharma, Interact’s managing director. Britain spends $18 per square foot on warehouse labour, compared with $16 in America and $4 in China. But now the issue is labour shortages: “Firms just can’t find workers.”

Britain was also an early mover in e-commerce. Amazon set up its virtual British store in 1998, three years after the American original. Its British fulfilment centres use small, squat robots to slide under shelves and shuttle them to people who pick and pack the right goods

Online shopping has been the main source of demand. From barely 3% in 2006, the share of retail sales in Britain made online has risen to 26%. When Ocado began delivering groceries ordered online in 2002, there was little technology for automating the handling of goods that must be kept chilled or frozen. So it developed its own. Nowadays, Ocado Group provides robotics to other retailers. It is building 50 more Hive-like systems around the world.

On the shopping list

To keep up, firms need supply chains to become more efficient, not just for e-commerce but also for bricks-and-mortar stores, as the two have become entwined. Nowhere is this more apparent than in a giant warehouse beside the m1 motorway at Northampton. Cygnia, the logistics firm that owns it, handles warehousing and order fulfilment for some 30 retailers, selling goods ranging from beer to beauty products. Its employees pick and pack from tens of thousands of items, not just for online customers, but also for shops, beauty salons and other businesses.

Things get hectic at this time of year. A recent Black Friday offer by one client resulted in two days’ worth of off-peak order volume in an hour, says Scott Merrick, Cygnia’s chief information officer. The firm also has to cope with constant change, in the form of new products and customised packaging such as Christmas gift boxes. All this is a problem for robots, which, unlike humans, struggle with variety.

Nevertheless, they are coming. Cygnia was bought in September by Wincanton, a giant logistics firm that got its start almost a century ago delivering milk in the West Country. It will introduce robots similar to some it uses elsewhere that work like automated trolleys, fetching items to spare workers from pushing things around. Mr Merrick expects a 200% increase in productivity with two-thirds less labour.

Cygnia says workers displaced by robots will be redeployed, as the firm is expected to grow. Indeed, automation can create jobs, not just for technicians and programmers, but also because improved efficiency tends to generate additional business, says Rueben Scriven, a senior analyst with Interact. He already sees signs of a net increase in warehouse employment.

How long that continues will depend on how well engineers succeed in automating jobs that robots find tricky. It takes dexterity and knowledge not to drop a bag of potatoes on a box of eggs. With the help of sensors and ai, one-armed robots at Ocado’s warehouse in Erith are learning the ropes. They can already pick and pack about 10% of the 50,000 product lines stored in the Hive, says James Gralton, chief engineering officer for Ocado’s technology division. He thinks that could rise to 60-80% over time.

Vehicles such as forklift trucks and goods transporters will also start to be automated, says Ian Hunt, automation and engineering director for Wincanton. And companies are keen to automate the “last mile”—the bit of the supply chain that ends with the customer. Starship Technologies, an Estonian firm, already offers robotic delivery in Northampton and Milton Keynes. Its six-wheeled pods trundle along footpaths and cycleways to deliver groceries from Co-op stores, using sensors to avoid people and other vehicles. Operators monitor the pods’ progress through their cameras and can take control if necessary. When the pods arrive, they are unlocked by shoppers using a mobile app.

As technologies improve and regulators allow, bigger autonomous delivery vans using roads will arrive. Wayve, a London-based startup, is running trials, including some with Asda, a supermarket chain, and Ocado. For now vehicles have “safety drivers” on board as backup. Lorries will also gain automated-driving aids to help with lane-keeping and avoiding other vehicles. But the complexity of their operations—try reversing a big lorry through a busy, narrow high street to drop goods off at a convenience store—means hgv drivers will be in demand for years to come.

Interesting read on jobs market - and misinformation

 Don't forget you can login to look at the charts...

Britain’s ‘jobs miracle’ is not as perfect as Boris Johnson wants to believe

Our understanding of the labour market is already murky, so a misdiagnosis could have disastrous consequences for the economy

BEN WRIGHT21 January 2022 • 6:00am

I don’t know if there is anyone left in the country who will be shocked by this but it appears that Boris Johnson and his ministers have been guilty of a little “terminological inexactitude” in their claims about the state of the UK job market.

The Government regularly says that there are 420,000 more people in work now than at the start of the pandemic. That’s not true. In fact, there are about 600,000 fewer.

Here’s how the sleight of hand works. The figure the Prime Minister has quoted on numerous occasions is for the number of workers on employee payrolls, which has indeed gone up.

But, not for the first time, the Government is ignoring the self-employed. Look at the total number of people in employment produced by the Office for National Statistics and you’ll find it’s some way below where it was when the pandemic hit.

Cherry-picking economic statistics is never ideal, although I suppose it is par for the course these days.

Nevertheless it’s particularly important to call it out in this case because our understanding of what’s going on in the labour market is already pretty murky and a misdiagnosis could have disastrous consequences for the economy.

As everybody/most people/some of us (delete as appropriate) start returning to their offices following the end of the Government’s work-from-home guidance, the endless debates about the future of work can move beyond the realm of the purely theoretical.

The requirement for mandatory face coverings in public places and Covid passports will both be dropped from next Thursday. This will be a huge boost to some companies.

Life is returning to normal and restrictions will, fingers crossed, soon be just a bad memory. As confidence returns we will also start being able to unravel some of the mysteries of the job market.

At the moment it is sending highly confusing and conflicting signals. Data released earlier this week showed that employment fell to 4.1pc in December, which is roughly the same level as at the start of the pandemic.

The much feared wave of redundancies when furlough ended in September has thankfully not come to pass. However, the proportion of people of working age who are in employment has also fallen since the start of 2020.

What’s more, the figure for hours worked is still a full 3pc below where it was two years ago – does this mean that there now are more less-good jobs?

Finally, vacancies are at record highs and yet wage growth is, as we also saw this week, failing to keep pace with inflation.

Inflation outstripped slowing wage growth in November

Line chart with 2 lines.

It’s the third time households have seen pay packets shrink in real terms in a decade

The chart has 1 X axis displaying Time. Range: 2001-08-19 22:48:00 to 2022-01-13 01:12:00.

The chart has 1 Y axis displaying %. Range: -5 to 10.

CPI (% change over 12 months)YoY three-month average wage growth (%)20022004200620082010201220142016201820202022-50510SOURCE: ONS

Inflation outstripped slowing wage growth in NovemberIt’s the third time households have seen pay packets shrink in real terms in a decade

%

End of interactive chart.

This means that the average worker is suffering a real-terms pay squeeze. If the job market is so tight and companies are desperate for staff, why haven’t workers been able to demand bigger raises?

The Government deserves credit for policies like furlough that helped keep much of the economy in a form of cryogenic sleep during the lockdowns.

There were genuine concerns as Covid first spread around the world that a cessation of economic activity could lead to mass redundancies and a potential rerun of the Great Depression. This was avoided.

But the truth is that the jobs markets in most Western economies have remained similarly hardy throughout the pandemic regardless of the approaches adopted by various governments.

The question is what happens now. Central banks will be particularly alert as it will influence how robust they can be in trying to tame inflation. If the jobs market is solid, they can afford to be more strident; if there are still weaknesses, policymakers will have to tread more cautiously.

It’s clear the standard labour market definitions are becoming less useful as the nature of work changes. The unemployed are counted as those who are out of work, looking for a job and can start within the next two weeks. On the flipside, you only need to be working for a couple of hours a week to count as employed, even if that means you’re not earning enough to live on.

In 2017, the European Central Bank created a third term. “Labour underutilisation” encompasses those who were unemployed and weren’t for whatever reason searching for a job. The ECB found that labour underutilisation in the eurozone was twice as high as unemployment.

British statisticians class people as “economically inactive”.

Sure enough, this has risen sharply over the past two years and economists are still arguing over why.

It could be that some people reassessed their life choices during the pandemic. That appears to be what’s happened in the US where unemployment is also low but roughly four million workers have dropped out of the economy.

Economic inactivity in the UK has increased most among those aged 50 to 64.

Some older workers have chosen to sit out the pandemic rather than work in jobs that would require them to work in close proximity with people and increase their risk of catching Covid. Some of these people may now return to the workforce but others appear to have retired early, possibly for health reasons.

The idea that the pandemic would, as the Black Death had, result in a shift in the balance of power from capital to labour appears to be incorrect.

Yes, there have been severe labour shortages in some specific areas, such as truck driving, farm work and hospitality, however, the fact that average wage growth is currently failing to keep pace with inflation suggests that workers in most jobs do not have the whip hand when it comes to pay negotiations.

It remains to be seen whether a prolonged period without Covid restrictions will result in a further tightening of the jobs market.

Central banks tasked with helping to put a lid on inflation will be hoping not. The worst case scenario for them is a wage-price spiral – where workers demand higher pay in the expectation of future rises in the cost of living, resulting in companies having to put up their prices.

We may be arriving at the new normal but we still can’t be sure what it looks like.

Coal in Cumbria vs long term goals

 Log in to the paper and read the comments section; consider how hard it can be to have effective strategies when resistance is strong:

The Cumbrian coal mine is careless diplomacy and economic idiocy

Whitehaven Colliery plan is a dark stain on the UK’s green ambitions and it will soon be obsolete

AMBROSE EVANS-PRITCHARD9 September 2021 • 5:00am

As long as it entertains creating a brand new coal mine at Whitehaven Colliery, the Government is undermining its position on decarbonisation CREDIT: PA

Britain has sold its climate credibility for a mess of brown pottage. The proposed Whitehaven coal mine in Cumbria has no commercial rationale and will be obsolescent before it ever opens.

One can only sympathise with Alok Sharma. The president of Glasgow’s Cop26 “summit to save the world” is entering the last critical phase of talks with China, India and Russia, only to be undercut at home by well-meaning Tory colleagues living in an economic time-warp, and deaf to the higher notes of global statecraft.

Over coming weeks, Mr Sharma will strive to conjure some sort of G20 consensus on the hardest of the hard issues: a timetable for the total phase-out of “unabated coal power”, the bedrock requirement for a 1.5-degree world.

While he does so, his own country will be debating a brand new mine at Whitehaven Colliery, intended to produce coking coal until the middle of the 21st century. The public inquiry began this week and will run for four weeks, a ghastly torment for Mr Sharma’s negotiating team.

The G20 resisters might note wryly that if an affluent post-industrial UK cannot muster the political courage to forgo a pork-barrel scheme for jobs in Cumbria – where pre-pandemic unemployment was just 2.8pc – why should they give ground on a coal-based infrastructure of systemic economic importance.

The Whitehaven saga should have been shut down long ago. Cumbria County Council has withdrawn its support, switching to strict “neutrality”.

It was claimed at first that Whitehaven coking coal would supply Britain’s steel industry and displace imported variants with a higher CO2 footprint. But Tata Steel has since said the high sulphur content makes it mostly unsuitable for milling at Port Talbot.

Coking coal in British steel “could be displaced completely by 2035” CREDIT: PA

Documents submitted by owners West Cumbria Mining now suggest that 83pc of the 2.8m-ton production will be exported to Europe, some of it to Turkey. Europe? Really?

Presumably the Australian private equity group backing the mine – EMR Capital – is aware of the near unstoppable political moves in Brussels to extend the EU’s carbon trading scheme to steel producers, which account for 6pc of the EU’s total CO2 emissions.

Carbon futures prices in Europe have tripled in a year to €63 (£54) a ton. They will hit €100 a ton by the mid-to-late 2020s almost automatically because the European Commission is dialling down the permits. By that point coking coal will be caught in a hostile scissor-action of moving variables, ever less able to compete with exempted “green” steel made from hydrogen via electrolysis.

Chris Goodall, from Carbon Commentary, has crunched the figures: a ton of coal-based steel typically is responsible for 1.9 tons of CO2. Ergo, a carbon fee of €100 will add nearly €200 a ton to the final cost. That would raise the price of European steel by a third.

Turkey will have to shadow the EU carbon price, and so will others such as Ukraine. If they resist, they will be shut out of Europe’s market or forced to pay a “level playing field” charge. We are moving to a new world trading system of carbon border tariffs.

ArcelorMittal, the world’s biggest steel producer outside China, can see the writing on the wall. It is building a commercial-scale plant at Gijon in Spain, aiming for 2.6 tons a year of green steel from 2025 onwards. It will use hydrogen in a “direct reduction” process, drawing on the solar parks of the Spanish meseta where costs are near £25 MWh – getting close to free energy.

There will be costs replacing old steel with green steel infrastructure but governments are stepping in with blanket subsidies because none wish to miss the hydrogen boat. Berlin has promised to spend whatever it takes to help ThyssenKrupp and other German steelmakers to make the switch. Mirabile dictu, Big Steel is switching.

Lord Deben, chairman of the Climate Change Committee, says the coking coal in British steel “could be displaced completely by 2035”, the date set for net-zero steel emissions in this country. The Cumbrian coal would be obsolete, sellable only to a diminishing group of climate pariah states.

The CCC is being cautious. It will happen sooner than that. One thing we have learnt in the lightning-fast field of renewable energy is that the advances keep coming earlier than almost anybody expected, making a mockery of forecasts by status quo bureaucracies such as the UK Treasury or the International Energy Agency.

Michael Liebreich, founder of Bloomberg New Energy Finance, says green steel will have reached sufficient global scale by 2030 to undermine the market for coking coal. The game will be over by 2040.

He thinks the UK authorities should set three conditions for Whitehaven: no subsidy, no bailout; and a bond for decommissioning. “If they can still raise money under those terms, it is hard to see why they should not be allowed to lose it,” he said.

The Cumbrian colliery is supposed to create 500 jobs, but if employment is the objective it might better be met by creating engineering and technical support jobs for the offshore wind farms in the Irish Sea CREDIT: Getty

The mystery is why mining veteran Owen Hegarty, from EMR Capital, is bothering with such a nonsensical venture. “There are technical challenges digging under the sea off Cumbria. 

It is far less expensive to mine coking coal in other parts of the world,” said Dave Jones from Ember. Mr Hegarty’s swashbuckling fellow Australian, Andrew “Twiggy” Forrest, is making the opposite bet after his Damascene conversion. The ex-Fortescue tycoon and epic carbon emitter aims to produce gargantuan quantities of green hydrogen from arrays of wind and solar across the outback of north-west Australia.

Twiggy calls it a “clear cut economic choice” regardless of climate science. There is nowhere cheaper on the planet to make power and therefore to make clean steel in situ. He thinks Australia can corner a large chunk of the $12 trillion (£8.7 trillion) hydrogen market worldwide, rendering the country’s current coal industry trivial to the point of irrelevance.

For starters, he plans an annual output of 15m tons of green hydrogen by 2030, with 50m later. Green steel, here we come.

The Cumbrian colliery is supposed to create 500 jobs, if workers can be found for underground toil in a region facing a labour shortage. If employment is the objective it might better be met by engineering and technical support jobs for the offshore wind farms in the Irish Sea. Each new gigawatt requires 1,500 workers.

The service hub for BP’s three gigawatt joint venture off Anglesey will probably go to Wales but there will be plenty more coastal jobs as the UK leads the world with 40 gigawatts of offshore wind by 2030.

While this wind power will never be as cheap as Spanish or Australian solar, it will be very cheap and effectively free for large chunks of each 24-hour cycle, nicely adapted for green hydrogen production at prices that will outcompete Cumbrian coking coal.

The Whitehaven Colliery is never going to happen. But the fiasco has dragged on long enough to leave Britain with an excruciating diplomatic embarrassment. Worse yet – unless you are a climate denialist – it has intruded on the delicate chemistry of Cop26. One weeps at the ineptitude.