But a funny thing happened on the way to future: the robots weren’t quite up to the task. While Musk had promised production of 20,000 Model 3s per month by December, a mere 2,425 rolled off the line for all of the last three months of 2017, leading up to a record loss in Q1 2018 of $785 million. Ultimately, Musk had to reverse course, pulling his new robots off the lines and hiring hundreds of employees a week to rescue the Model 3 targets.
As Tesla continues to burn through its cash, the missed production targets have resulted in order cancelations, a falling share price and downgrades on both stock and debt. In July, Tesla claimed it had hit the 5,000-per-week production target, but a nervous Street seems not at all confident that the rate is sustainable.
Musk offered his mea culpa in a tweet: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”
That’s hardly a surprise for most manufacturing CEOs. For all their promise, two decades of overblown hype and expensive false starts have clearly demonstrated that robots will not replace humans any time soon. In fact, a study of plant performance by the consulting firm Oliver Wyman actually found that the most automated factories ranked not at the top for productivity—but at the bottom.
“People are the most flexible form of automation you can have,” says Ron Harbour, a Wyman partner who has studied industrial automation for decades.
Tom Shoupe, COO of Honda of America Manufacturing, agrees. “It is our fundamental belief that humans are the most important element of our operation,” says Shoupe. While Honda uses advanced manufacturing technology, including sophisticated robotics, “we’ve taken the approach that we automate only where it’s appropriate, where there’s an efficiency issue, and then we allocate our people to something that requires more human touch. The touch, the feel, the senses of human beings can’t be replaced by machines.”
A Robot’s Role
It isn’t all hype, of course. Rapid advances in technology offer increasingly tantalizing opportunities. Robots and automation already play a prominent role in all parts of Industry 4.0, coming together with learning algorithms that allow both bots and humans to optimize production and improve quality. Increasingly sophisticated systems will be critical to addressing important elements of the skills gap, which, according to the most recent study by Deloitte and the Manufacturing Institute, will result in 2 million unfilled jobs by 2025. The hardest to fill will be those jobs that are dangerous, involve tedious repetition or are simply unpleasant. In other words, jobs that are perfect for robots.
“If we don’t automate, who is going to fill those positions? I’ll tell you—China will,” says Anthony Nighswander, CEO of Hicksville, Ohio-based APT Manufacturing Solutions, which helps other manufacturers automate their assembly lines. “Offshoring happened because there were jobs nobody wanted to do here, so China said, ‘We’ll take them.’ Why would we not want to take those back with robots?”
Many U.S. manufacturers likely would agree with that, having by now accepted that robots will play a prominent role in Industry 4.0. In this latest industrial revolution, and the era of the “smart factory” well under way, computers and automation are coming together in a new way: robotics are connected to computer systems that are equipped with artificial intelligence and learning algorithms that can allow both robots and humans to make fast decisions to optimize production and improve quality, all to the exacting specifications of a knowledgeable and demanding end user.
At the same time, CEOs who have been down this road will tell you that too much automation too soon can be the death knell of an otherwise successful manufacturer. As with the three industrial revolutions that came before this new digital age, change can’t happen overnight. “The context I like to keep in mind is when companies went from steam to electric, they tended to electrify the production line exactly as it had been set up in its steam configuration,” says Siemens U.S. CEO Barbara Humpton. “Then the groundbreakers said, ‘Wait, I can put equipment in any configuration I want because I don’thave to power it down a steam production line.’ But the thing we’re talking about a lot here at Siemens is, with each one of these changes, we’ve elevated the role of the human in the process.”