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102 ‚óŹ Exploratory Workshop on the Social Impacts of Robotics

12

In short, the increasing diffusion of robots is likely to make only a

modest, though still significant,

contribution to improving the cost effectiveness

of most manufacturing firms.

One of the basic factors limiting

benefits of total

is that direct wage costs seldom account for more than costs and any savings through reducing direct man-hour

such potential 15-25 per cent requirements tend

to be partly offset by increases in capital charges and in indirect wage and salary costs, and further offsets would be generated if wage rates are increased

to help gain acceptance of potential benefits ‘arises

such

innovations.

from

the fact that

An additional limitation on only a narrow array of tasks

such can be

performed more economically by the robotizable capabilities.

robots than by labor Indeed, even some of

or by machines which the manual functions

include which

can be economically

redesigned

machines,

transferred to robots now as was noted earlier.

may

in

time

be

transferred

into

From the standpoint of longer term planning perspectives, consideration

should also be given to a plant’s cost proportions and to the prospective effects of increasing the ratio of “fixed” to “variable” costs. Cost proportions differ very widely, of course, among industries as well as among plants within industries. The long term average proportion of total costs accounted for by actual wages in U.S. manufacturing has been well under 20 per cent, ranging between less than 10 per cent in ore smelting, petroleum refining and other industries which represent the first stage of processing natural resources to more than 40 per cent in in-

dustries

involving

the

fabrication

of

complex

machinery.

(4)

Thus,

the

prospective

effects of robotization on total unit costs through reductions in unit wage costs

would tend to be far greater at the latter only to the magnitude of cost proportions, which a given category of unit costs could innovations. Thus, any resulting increases

extreme.

Attention must

be given not

however,

but also to the

extent to

be in

reduced output

through robots or other per man-hour which are largely

or wholly offset by attendant increases in hourly wage rates would yield little or .

no cost advantage, however large the wage cost ratio -- especially if account is

(4)

For a comparison of cost proportions in 20 manufacturing industries, see B. Gold,

Explorations in Managerial Economics:

Productivity,

Costs, Technology and

Growth

(London:

Macmillan, 1971; New York:

Basic Books, 1971), p. 137.

Japanese portions

translation - Tokyo:

among

plants

in

the

Chikura Shobo, 1977.

Differences in cost

same

industry

are

attributable

primarily

to

pro-

differences in their “make VS. and facilities, in their scale

of b u y r a t i o s , o p e r a t i o n s

in the modernity of their technologies

and

in

their

product-mix.

For

further discussion, see B. Gold,

Returns:

An

Interpretive

Survey”,

“changing Journal

Perspectives on Size, Scale and of Economic Literature March 1981,

especially pp. 21 et.seq.

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