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What ‘Robot Hubs’ mean for the future of US manufacturing

New research by SIEPR Senior Fellow Erik Brynjolfsson provides a first look at robot adoption and concentration in US manufacturing.

It’s impossible to fully grasp how robotics is changing manufacturing in the United States without a complete understanding of where those robots are. Now, new research is providing a snapshot.

And here’s why that’s important: Robotics is what’s known as a general-purpose technology — just like computers, the internet, and electricity — that has the potential to make a fundamental difference in how entire economies operate. In short, robots present an opportunity to transform the manufacturing industry to reach new levels of productivity and growth.

But the first step in maximizing that potential is understanding how the technology is used. “We’re still in the early stages of understanding what’s driving robot adoption,” said Erik Brynjolfsson, director of the Stanford Digital Economy Lab, the Ralph Landau Senior Fellow in Economic Growth at the Stanford Institute for Economic Policy Research (SIEPR) and a senior fellow at the Stanford Institute for Human-Centered AI (HAI). “It’s important to have data about where they are and also where they aren’t, and what their other characteristics are.”

Finding the robot hubs

Brynjolfsson is the co-author of a new paper on robotics adoption, along with researchers J. Frank Li, Cathy Buffington, Nathan Goldschlag, Javier Miranda, and Robert Seamans. In the paper, “The Characteristics and Geographic Distribution of Robot Hubs in US Manufacturing Establishments,” the team sourced responses from the US Census Bureau’s Annual Survey of Manufacturers to examine which manufacturers use robotics, where the robots are, and how establishments are using them.

“Before we answer all those other questions about productivity and performance and wages, you need to know where the robots are first,” Brynjolfsson said. “For now, the striking finding was how concentrated the robots are.”

More than any other factor, the researchers found that a business is more likely to employ robotics if other establishments in its region report they also use them. In the paper, these concentrated regions of robotics use are called “robot hubs.”

The team ranked regions by the number of robots used in manufacturing, which revealed that robots are highly concentrated in the top 10 percent of robot-dense areas — and the bottom 50 percent of regions had almost none. Survey data showed that the top five states with the highest robot adoption share by establishments were Iowa, Michigan, Kansas, Wisconsin, and Minnesota.

The paper also identifies several trends associated with robot hubs, including the presence of “robot integrators,” which are businesses that assist in acquiring and installing robots. Another correlation was a higher share of union membership. Those patterns on their own, however, don’t fully illuminate why a robot hub develops.

“The concentration of robot hubs is a function of several different things, such as the type of manufacturing these firms do, the education of the workforce, the size of the establishments, but it’s also sort of an unexplained dark matter, and that seems important as well,” Brynjolfsson explained. “Something about these environments makes it so that companies are more likely to use robots. A big part of future research will be to find out why that is.”

The advantage of census data

Past attempts to generate insight into robot adoption faced challenges, such as selection bias, inherent to the research process. For example, if researchers mailed out surveys or called manufacturers directly, potential respondents might not have picked up the phone. Or a manufacturer might assume that the survey had nothing to do with them and not mail their response back.

Of course, that assumption would be wrong. To fully and accurately understand the spread of robotics throughout the manufacturing industry, it’s vital to get accurate input from a representative set of establishments.

“There’s never been any careful data gathering on where robots are in America,” said J. Frank Li, a postdoctoral fellow at the Stanford Digital Economy Lab and one of the study’s authors. “There have been plenty of different kinds of bits and pieces that people gathered, but now for the first time, we worked with the US Census to gather some really detailed data on where robots actually are.”

In addition to counting people, the US Census Bureau conducts regular studies into trends and demographics throughout the economy. The Annual Survey of Manufacturers (ASM) was one of these — a set of questions designed to understand the current state of the manufacturing industry across several dimensions.

Since responding to the ASM is a legal requirement, responses don’t suffer from the same selection bias as non-mandatory surveys do. This enabled the team to gain unprecedented insight into the use of robots, confident that responses accurately reflected the nature of the entire manufacturing industry. The researchers developed their questions in 2017, which were included in the surveys for 2018–2020. The findings in the paper are based on 2018 data.

Brynjolfsson noted that he was impressed by the bureau’s process in developing the survey. “When a survey is required by law, you don’t want it to be cluttered up with anything time-wasting, so they did over a year of testing,” he said. “That process was an eye-opener for me, and I think it led to a survey that’s far and away the most representative of the industry, thanks to the Census. Otherwise, the data would have been way too scattered.”

This story was originally published July 24 by the Stanford Digital Economy Lab.