As Robots Replace Farm Workers, Why Payback Is A Bitch

Tyler Durden's picture

Soaring minimum wages in states like California have a disproportionate effect on businesses that employ low-skilled labor.  The farming industry is among the hardest hit with substantial labor inputs required to perform low-skilled tasks like harvesting, pruning and weeding.  The problem (or opportunity depending on your perspective), of course, is that higher labor costs make returns on capital projects that much more enticing.  

For our political friends that focus more on the narrative of providing a "fair wage" and not so much on the math, please see below for a very simplified example of why minimum wage hikes ultimately just lead to the permanent unemployment of the people you're trying to help.  In our simple example we assume that a $1mm capital investment, on the purchase of a couple of robots for example, can replace the work of 5 people.  Using California's 50% increase in minimum wage (the "Fair Wage Act of 2016"...don't you just love the branding) would drive the payback period of such an investment down from a "marginally attractive" 10 years to a "no-brainer" 6 years. 

And thus, 5 people find themselves out of a job.  But that's ok, just more people to be dependent on the Nanny State who can easily be brainwashed into believing their plight is the direct result of "rich people" not "paying their fair share" rather than the misinformed policies of our math-challenged political elite.

Payback Example

With that said, we thought we would share with you a couple of companies looking to take advantage of the soaring costs of labor in states like California.  Business Insider recently highlighted 7 robots that are replacing farm workers around the world and below are just a couple.

First there is Wall-Ye, a robot developed in France that helps growers prune and harvest grape vineyards.

winebot

 

Then there is the BoniRob that can destroy weeds faster than any human or herbicide.

Weeding Robot

Of course farm workers aren't the only ones being replaced by robots.  New technology is being developed to replace fast food workers (see "Robots Made Fast-Food Workers Obsolete: Now They Are Coming After These 791,200 Jobs"), construction workers (see "Is This How Trump Will Build The Wall Cost-Effectively?") and a number of other low-skilled positions in a variety of industries. 

The question isn't so much whether low-skilled positions will be replaced by new capital investment but rather how quickly the transition will occur.  Certainly, setting artificial floors on the cost of labor only serves to accelerate the technology development process.  Then the only remaining question is how societies around the world will cope with the mounting job losses.

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Rainman's picture

Dat right ... never send an illegal human to do a machine's job.

Chris Dakota's picture
Chris Dakota (not verified) Rainman Aug 13, 2016 5:00 PM

Who is going to pay the taxes to support the fat asses sitting in government offices?

jbvtme's picture

next you're going to tell me they're trading the markets???

beemasters's picture

When will robot politicians replace all current human ones? Or at least weed out the corrupt ones?

sushi's picture

Omitted from the analysis is the fact that a robot will happily work 24x7. There is no reason weeding cannot take place throughout the night. This implies that the farm with robots required to replace 5 workers can expand into adjacent farmland and service additional crops at no extra cost. 

 

It is therefore likely that the total displaced workforce will be between 10 and 15 persons rather than 5 and the payback period will also shorten.

 

 

RogerMud's picture

good luck with that. the guy you hire to fix the robots will be asking $100/hour. if he actually show up.

CNONC's picture

That guy would be me.  And I always show up.  The emergency service call on complex industrial machines is my bread and butter.  And I won't get out of bed for $100/hr.

mary mary's picture

I would charge at least $100/hour.  Unless the Chinese, Japanese, and Indian competition made that impossible.

bub's picture

The Chinese will write the software to run the device and the Indians will do the tech support, on-site maintenance and answer the phones.

 

The Indians are to the IT/tech world what the Mexicans are to the agricultural world (in the US, anyway).

 

There is a never-ending supply of Indian labor with computer science degrees who will happily work for half what US-born CS grads will accept.

 

I predict the stupid American land owner will sell his farmland to a Chinese buyer and we'll see the crops sent back to the mainland.

BarkingCat's picture

Can we just prune the politicians?

Null Protocol's picture

The guys making, selling, and servicing the robots.

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Rainman Aug 13, 2016 5:24 PM

How many construction workers have Power Drills put out of work?  The war has already begun and we didn't even realize it.  :O

WOAR's picture

There's more truth to that statement than you know.

Power tools = jobs take less time

Less time = lower wages/fewer man hours or people needed

That's the simple way of explaining it. As robots take over and jobs take less time (or as someone else mentioned, more hours can be worked), the need for human labor will be less.

 

CNONC's picture

Less time = fewer man hours/HIGHER wages (generally)  Imagine the carpenter before the circular saw.  He was not paid for his ability to use and maintain crosscut and rip saws.  He was paid for his knowledge of how toassemble a structure from lumber.  He employed a number of less skilled men to use the saws.  The circular saw allowed him to apply his knowledge more efficiently and retain the wages of the other men. His wages effectively went up.  The value of the construction is not set by the costs.  It is set by the utility provided to the buyer.  As the labor input falls, over time, the cost falls.  The utility to the user remains the same.  Lower cost with same utility means greater demand, and eventually the laid off men are reemployed.  If their skills remain static, they will be employed to pick up trash and sweep up the construction site at a lower wage.  If they learn how to use a square and plumb, their wages may rise.

The Luddites have always been wrong, and will remain wrong this time too.  I have watched industry change over the years, and participated in the transition form electromechanical controls to PLC operated industrial processes.  The men who knew how to learn new things thrived.  The men who wanted things to stay the same got left behind.  Technological change increases wages, but only if you are willing to learn to use it.

fattail's picture

Not just farm workers.  Fast food, taxi drivers, truck drivers, uber drivers.  Teachers, college professors,journalists, preachers retail cashier, bank teller, and loan officer, mutual fund manager, all are being replaced.    In the same vein, CRE is going to be plentiful as all the retailers, strip malls, and suburban malls sit empty.  Add on the abundant empty churches that will suddenly appear in the next 20 years as all the fearful old ladies die off and bank collateral is going  to take a huge haircut.  Entry level wages will be under constant pressure but so will the next level.   Training and innovation will pay.  

Which makes it doubly important to control the supply of labor.

ParticularlyStupidHumanoid's picture

Stupid title for the article. Cool machines, though.

 

Fact: ROBOTS ARE GETTING CHEAPER AND PEOPLE AREN'T GETTING CHEAPER

 

It's nothing to do with vengeance. It's just business.

Here2Go's picture
Here2Go (not verified) Aug 13, 2016 4:56 PM

Come to think of it... I've never seen hedgeless_horseman's wife & one of those robots in the same room together...

 

Hmmm...

monad's picture

Wait don't go! Stick around for the philanthropist's gassed worker program!

gmak's picture

Silly wabbit. Even Henry Ford knew "I pay my workers enough to buy my cars".  Robots don't buy hamburgers, clothes, houses and so forth. Wait until the great unwashed (us) have gone hungry. There won't be many 1%-ers left around to enjoy their robot-fueled existence.

BlindMonkey's picture

Does a factory owner in Vietnam share the same feelings as Henry Ford?  Here is your answer: Huynh Kim Bau and the globalists don't care if some worker in Vietnam can afford anything.  

elegance's picture

lol. you better hurry the fuck up then. or do you think robot soldier preatorian guards for the 0.1% are far behind? 

U4 eee aaa's picture

There is a way that seems right unto man, but in the end leads only to death

....and hell

Miffed Microbiologist's picture

I made a glorious pitch to Mr about the efficiency and labor saving quality a weeding robot would add to our lives. Unmoved, he just handed me a hoe and pointed outside. I guess the out of work illegal workers need not apply here.

Miffed

Flankspeed60's picture

I upvoted because Mr has done an excellent job of establishing proper order in his household. If he decides to write a how-to book on the subject, I'll be happy to purchase an autographed copy.

U4 eee aaa's picture

careful, she's holding a hoe in hand.

Hulk's picture

Dear Miffed,

Whats a hoe to do ???

signed -Hulk

besnook's picture

you should tell him you are tired of being his ho and maybe he will relent on the robot.

sorry. couldn't resist.

BarkingCat's picture

I too wanted to run with some ho jokes but out of respect for our resident lady biologist I decided to remain dignified...and you guys beat me to it.

:)

Miffed Microbiologist's picture

Well damn I got something out of it. Mr saw this thread and laughed so hard he took to my favorite restaurant and let me order whatever I wanted. Perhaps there is an advantage being a good hoe in and outside of the bedroom. Thanks all. ;-)

Miffed

mary mary's picture

Tell Mr he can cook his own dinner.

crazzziecanuck's picture

A great many things such as these are still pie-in-the-sky (and I'm speaking as a mechanical engineer with a focus on automation).  If they were as robust and as inevitable as they say, the 1% wouldn't be fighting tooth-and-nail to stop any minimum wage increase.  This is just the modern form of having managers leaving out filled applications out in the open to basically get employees to think they are readily replaceable.  It's all implied threats and I would argue that the target of these threats isn't just the workers, but the legislative class.  This class is so fully paranoid they will be blamed for any and all job losses and all the monied classes have to do is rattle their cage and legislators fall into line.

Just because the MSM and media says something is true doesn't automatically make it so.  Nor is a staged demonstration necessarily reflective of capability so watch videos with suspect because everyone is out to make a quick buck.

U4 eee aaa's picture

I've discovered, after having been on this planet for too many decades, that 90% of the devil's work is bluff. That is not the real problem though. They real problem is that we humans take what we hear and run like mad with it.

Just telling yourself that the chance that the fear porn you are hearing is 90% bluff gives you a huge advantage in the world.

and yes, when I say 90% I am underestimating. Bank on that

ThanksChump's picture

As someone who designs/programs systems to replace workers for over 20 years, I'd recommend ignoring the naysayers in this thread.

 

The only thing that's not accelerating logarithmically in the robotics field is cost of parts, which is declining almost as rapidly. Within five years, there will be less than half as many people employed to produce as much as is done today, and things will only get worse.

 

It's a good time to discuss how that can work, economically. There will be 8 billion people by then. (Hint: that is the root cause of every problem in the world, everyone knows it, no one talks about it)

northern vigor's picture

That was a little disingenuous of old Henry saying that. He actually had to increase wages to keep workers. Ford had a large turnover of employees at the time, so they increased wages to try to hold them. But Henry being smart, knew he was better off saying he paid them more so employees could buy his cars. A hundred years later people still quote it, so he was right.

gonetogalt's picture

Didn't down you, but there's more. Remember Ford didn't go union until ol' Henry was in his grave. H F hated bolscheviks, hated the juice and did all he could including buying a newspaper to combat juice-communist-banker influence, etc. Paying over union wages was part of that.

P.S. Read 'The International Jew' by Henry Ford, as true now as then.

izzee's picture

See why there needs to be a war among the little people.  There are too many, and not needed anymore. 

Robots-R-US.  Plus they don't eat, drink, shit or piss.

Experience the adreneiline high of combat...go out like a warrior...that's the current offer.  If not the robots can be programmed to harvest you.

Niall Of The Nine Hostages's picture

Now explain again why our masters continue to import Third Worlders in the millions, because it clearly isn't to do work machines can't do.

artichoke's picture

And this is why the minimum wage thing is great.  Let it pass!  Businesses will have to adjust and then these people won't have jobs.  They may even self-deport.

True Blue's picture

Only if they are cut off from the government teat; the jobs are incidental when it is so easy to join the FSA.

spooz's picture

Global wage arbitrage gives the economic royalists global power and domination.

VWAndy's picture

 Take away the fiat magic and this crap goes away with it. The values of everything are screwed up. Yep I saw this comin 2.

Consuelo's picture

 

 

"Then the only remaining question is how societies around the world will cope with the mounting job losses."

 

There's really no 'question' there...

- War

- Eugenics 

 

And the 3rd (Hilliary) way:

- Outlaw implementation of robotics to replace human workers.   This will be the most likely outcome anyway.

 

 

 

artichoke's picture

That won't work and it shouldn't.  If I have a bunch of demanding no-skill minimum wage workers thinking of settling in at the higher wage and forcing me to pay it because of such a law, I just close that corporation, sell the fixed assets to a new corp., install the robots and reopen.

Boris Badenov's picture

Who will we know to pay NOT to plant the crops?

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Aug 13, 2016 5:18 PM

What is the life of the $1 million asset (when will you be purchasing another $1 million asset to replace it)?  How often does it break down and need to be repaired (how long is the repair time, this is lost hours when productivity will be 0)?  How often does it damage the product (create waste)?  

 

This is one of the reasons simplified calculations don't exactly work out to what you will do in reality.  This is also why instead of hiring robots a lot of businesses just shut the fuck down...

VWAndy's picture

 It works if you think in fiats terms. Bankers walk away with all the proffits.