How Much Does It Cost to Automate?

November 1st, 2022 10 min read

Automation is one viable solution to the severe labor shortage currently upending the manufacturing industry. But it’s an approach that isn’t always easily implemented, affordable, or guaranteed to provide results for small and medium-sized contract manufacturers. 

As a leader in your manufacturing company, maybe you’ve considered automation in the past but found that the cost and long deployment timelines made it unrealistic for your business model. Or maybe you did give automation a try, only to feel disappointed or underwhelmed with the results. 

If so, you’re not alone. In fact, a recent Rapid Robotics study found that two out of three manufacturers have tried deploying automation, yet only 13% of teams saw instant ROI, with most waiting months or years to see returns. But with the introduction of Robots as a Service (RaaS), it may be time to reconsider. RaaS providers lease robots, rather than sell them. This reduces up front costs, allows for faster deployment, provides instant ROI, and offers more flexible solutions for manufacturers who have shifting needs.

The truth is that automation will always come at a cost. But what does that cost cover? What does it leave out? And since there are so many variables to consider, how do you measure its value? Stay tuned as we navigate a RaaS pathway to automation in manufacturing and how it differs from other approaches you may have already tried or disregarded. 

A map of the process of automation.

The Perfect Storm on the Factory Floor

Nearly every corner of the manufacturing industry has been rocked by both a global pandemic and record-breaking inflation. Combined with fluctuating demand levels, supply chain interruptions, and ongoing labor shortages, it’s the perfect storm of hurdles and challenges.

According to the latest data from the Labor Department's JOLT database, there were 860,000 unfilled manufacturing jobs in March 2022. The average age for manufacturing workers is 44, and they’re retiring faster than they’re being replaced. The current labor shortage plaguing American manufacturers is a long term and permanent issue.

What’s behind the labor shortage? The COVID-19 pandemic impact on manufacturing left production lines lighter than normal. But what exacerbated the shortage was the “great retirement” of baby boomers. At the same time, younger workers are choosing industries like technology and healthcare over manufacturing. 

No matter the cause, a shortage of workers affects the entire labor market. With employees being tempted by hiring bonuses and perks from competitors, or exiting the manufacturing sector entirely for higher paying or more attractive jobs in other industries, it’s no wonder the 2021 manufacturing turnover rate was 39.9%.

Simultaneously, demand for many products rose during the pandemic, leaving manufacturers to navigate a laundry list of challenges to complete and ship orders on time. The 2021 State of Manufacturing report says that many manufacturers are seeing demand increase by up to 50%, yet more than half of manufacturers have only been able to increase capacity 6% to 10%. 

Unfortunately, economists aren’t forecasting a brighter future for the manufacturing industry. In fact, a study by Deloitte and The Manufacturing Institute found that the manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030.

If you’re a contract manufacturer who’s feeling these statistics on your own production floor, waiting for the economic climate to improve is like waving the white flag. The good news is that automation can alleviate the strains of the labor shortage without compromising company culture or values. 

Automation can not only help manufacturers meet current demand, but also help them grow their business by adding capacity while reducing labor costs. Yes, choosing to automate tackles the current issues in today’s manufacturing industry. But it also helps businesses develop future-proofing strategies for tomorrow’s challenges.

Common Automation Concerns

Automation has been changing the face of manufacturing for decades. But instead of being optimistic, many contract manufacturers are still understandably wary. For example, many small and medium-sized contract manufactures feel that they:

  • Aren’t experienced enough with robotics 

  • Don’t have the required in-house technical expertise 

  • Can’t wait for deployments that take months or years

  • Can’t afford the upfront expenses

  • Won’t see a fast enough return on investment

  • Will upset their current employees by adding cobots to the workforce

But the statistics show that automation is the solution manufacturers are looking for. The McKinsey Institute estimates that automation can raise productivity growth by 1.4% annually and that by automating 64% of manufacturing tasks, the world could save 749 billion working hours. And despite companies being nervous about upsetting their current workforce, 7 out of 10 workers actually believe automation creates better opportunities in higher-skilled jobs. 

But here’s where it gets tricky. Not all automation projects follow the same pattern.

For example, a traditional automation project with systems integration can be expensive, drawn out, and not beneficial for many contract manufacturers. This is largely because a traditional robot is trained for a single task, but there are other variables to keep in mind when it comes to the true cost of traditional automation. 

Let’s start with the average basic cost of a robot - $50,000. Systems integrations, necessary to get the robot up and running, can cost 5 or even 10 times more than a robot’s initial investment. Integration can take months or years. Before the robot even begins operation, the capital investment is astronomical. But we’re not done just yet. There’s also ongoing maintenance costs to consider and the addition of an automation specialist on staff to budget for. And should the original task for which the robot was purchased and programmed change, deploying it elsewhere in the factory can trigger the entire process to start again. The financial and time resources needed to purchase, maintain, and keep a robot useful just doesn’t make sense for contract manufacturers with shifting contracts and needs.

Put simply, conventional cobots are too expensive. Integration and training make them even more so. For most facilities, the return just isn’t there.

If automation is the answer, there must be a better way. 

RaaS Delivers Instant Value in Automation

What makes RaaS different from traditional automation processes? Plenty, but the main difference is their structure. By leasing their robotic devices, RaaS saves manufacturers the hassle of purchasing expensive equipment and dealing with drawn out delivery dates.

Choosing RaaS means manufacturers don’t have to worry about an expensive piece of machinery losing value, becoming dispensable, or creating maintenance issues they have to handle on their own.

But where does the value lie in RaaS compared to a traditional automation process? Here’s the breakdown. 

The Real Value of the Rapid Solution

Here’s what you are (and aren’t) paying for in a setup fee when you choose a RaaS automation solution, specifically through Rapid Robotics.

With RaaS, you ARE paying for:

  • Fast Deployment: Getting a cobot designed, built, tested, trained, delivered, and installed can take months, even years, in a traditional automation process. A Rapid Robotics delivery averages just a few weeks. We’ve even had robots on the floor and working in as little as one week (and in one case, a single day!).

  • Virtual & Physical Testing: We handle task design in a virtual environment using our Rapid Home software. Our solutions engineers can quickly build a virtual version of a customer's work area and task, speeding up the solution design process immensely. We can then virtually test each task before shipping and installation. These virtual spaces are stored so when a new task is needed, the solution design process can start immediately.

  • Customization: Most manufacturing tasks require customization of an out of the box gripper. We design and fabricate custom end of arm tooling for every job. When it comes to our pre-fabbed work cells, we’re happy to customize them to meet the needs of each unique client as well.

  • Pre-Trained AI: Our robot AI can be pre-trained with hundreds of tasks specific to a company’s unique needs. This means it can be moved and redeployed throughout an entire factory in record time. Redeploying a traditional robot means building an entirely new work cell and starting the solution design operation from scratch. With Rapid Robitic’s Smart Setup, redeploying a robot is as simple as turning it off, rolling it to its new station, and turning it back on. Output doesn’t have to suffer when demands shift.    

  • Tech Support & Hardware: One common concern about automation is tech. When a company doesn’t have a large tech team, any technical  issue can cause a costly shutdown that will last until a 3rd party systems integrator support team can arrive on site. That’s what makes our 24/7 support team so valuable, and it’s included from the start (along with any necessary hardware).

  • Shipping & Installation: Our setup fee includes shipping all required devices to your location(s) and installing them. Where this can be an additional cost in traditional automation, we consider it part of the setup process and fee.

  • A Long-Term Partner: Traditional automation is a one and done relationship, where success is measured in sales. With Rapid Robotics, you’re entering into a respectful partnership. Rather than focusing on the sale or rushing through an install, a true RaaS provider is invested in the long term success of their customers. Your wins are measures of our success, which is why we’ll always perform with your best interests in mind.

With RaaS, you are NOT paying for:

  • System Integrators: With RaaS, system integrators aren’t necessary. Instead, clients can come straight to us with any questions, concerns, or issues. Communication is fast and efficient.

  • Inconvenient Liability: When you don’t own equipment outright, you’re not responsible for malfunctions. You don’t need to coordinate repairs or pour resources into solving an issue. It’s all handled for you by our 24/7 tech support. 

  • Limited Capabilities: Because our cobots are pre-trained with your tasks upon installation, and easy to train with new ones, you can move your cobot to a new task in record time, with zero robotics or programming expertise. With traditional automation processes, adjusting a cobot for a new task is limited (or at least requires additional time at the drawing board).

For some, owning cobots and taking on all the responsibilities they come with may be a smart investment. But for others, leasing through a RaaS company makes more financial, operational, and technological sense.

Don't Wait to Automate

Challenges in the manufacturing industry are here to stay. Manufacturers who wait too long to automate will find it harder and harder to compete with those in lower cost labor markets. The competitors that find ways to operate more efficiently are sure to emerge victorious in the battle for top employees and profitable contracts. For those struggling to stay afloat in today’s hectic manufacturing industry, finding a tailored solution that delivers value on multiple levels should be done sooner than later.

If you’re trying to figure out how to improve productivity or reduce risk but have always thought robots were out of your price range, RaaS might be the answer for you. 

At Rapid Robotics, we deliver surprisingly affordable out of the box automation for manufacturers. As a true RaaS company, we act as a long time partner for our clients by offering support and expertise around the clock. Reach out today to learn more about the RaaS difference.


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