Using industrial robots to beat inflation

The lack of workers and rising wages are stimulating the structural development of automation and robotics to increase efficiency. This is a key driver of high capital expenditures for companies, especially as it is now more difficult to move selected enterprise processes overseas - as companies struggle to defend high profit margins. For example, the number of industrial robot installations has tripled over the last decade. Last year it increased by 27 percent, and in the first quarter of this year in the USA - by 28 percent. The automation, robotics and artificial intelligence industries are other segments in which (despite the collapse of valuations in the technology industry), the positive effects of the current macroeconomic pressure can be seen, such as, for example, renewable energy sources or electric vehicles.

About the author

Ben Laidler - global markets strategist in eToro. Capital investment manager with 25 years of experience in the financial industry, incl. at JP Morgan, UBS and Rothschild, including over 10 years as the # 1 investment strategist in the Institutional Investor Survey. Ben was the CEO of the independent research firm Tower Hudson in London and previously Global Equity Strategist, Global Head of Sector Research and Head of Americas Research at HSBC in New York. He is a graduate of LSE and Cambridge University, and a member of the Institute of Investment Management & Research (AIIMR).

STRUCTURE

The decline in population growth in working age, especially in developed markets and China, has already caused a structural shift towards automation. The percentage of the population aged 15-64 reached its highest level (66%) nearly ten years ago. Research shows that in the long run, over 50 percent current employees in the food, brewing and retail sectors could be laid off. These sectors are characterized, first, by high employee-to-sales ratios, second by lower profit margins, and third by one of the highest wage increases today. Conversely, sectors such as technology and healthcare do the opposite and may therefore be less vulnerable.

INVESTMENT

A sudden urge to automate has many aspects to investing. It seems that the number of industrial robots will continue to grow rapidly (from 110 robots per 10 employees) and that it will no longer focus on the automotive industry. Japan (EWJ) and China (CQQQ) dominate the value chain in this area. 5G is an essential enabler of automation - the focus is on it @ 5GRevolution i Defiance Next Gen Connectivity (FIVG). ARK autonomous tech & robotics (ARKQ) has a holistic view and its largest shareholders are Tesla (TSLA) and Trimble (TRMB). Another aspect is companies dealing with the automation of robotic processes, such as UiPath (PATH).