The rise of the machines in the workplace has U.S. and European experts predicting  massive unemployment and tumbling wages.

Not in Japan, where robots are welcomed by Prime Minister Shinzo Abe’s government as an elegant way to handle the country’s aging populace, shrinking workforce and public aversion to immigration.

Japan is already a robotics powerhouse. Abe wants more and has called for a “robotics revolution.” His government launched a five-year push to deepen the use of intelligent machines in manufacturing, supply chains, construction and health care, while expanding the robotics markets from 660 billion yen ($5.5 billion) to 2.4 trillion yen by 2020.

“The labor shortage is such an acute issue that companies have no choice but to boost efficiency,” says Hajime Shoji, the head of the Asia-Pacific technology practice at Boston Consulting Group Inc. “Growth potential is huge.” By 2025, robots could shave 25 percent off of factory labor costs in Japan, according to the consulting firm.

Worker Replacement

Automation also has huge potential for distribution. Toho Holdings Co.’s 10 billion yen distribution center, which became fully operational in January, employs about 130 workers, roughly half the number at another one of similar size. Productivity per worker is 77 percent higher with robots handling 65 percent of item-picking, the drug wholesaler says.

“We wanted to lower manpower requirements by using robots because we already found it hard to recruit people, including part-time workers,” says Mitsuo Morikubo, the company’s executive managing director.

Inside a three-story gray building in Saitama north of Tokyo, about 28,000 items such as vaccines, liquid food and suppositories are stored. On the spotless second floor, a handful of people open cardboard boxes and take out items for the machines to handle.

The dexterity of the 16 robots is in evidence when one of them lowers its arm, stopping just above a rectangular box. Eight suction pads stretch down, latch on and drop it on one of the three narrow conveyor belts. “Swish, swish, swish,” its sound blends in with the clacking belts.

Depending on the type, size and weight of an item, the machine alters which pads it uses, how fast it moves and where it puts the item. The robots can pick up to about 10,000 items per hour with almost perfect accuracy. By adjusting the timing of the conveyor belts, the whole system can mix different products and make orders for individual customers.

David Fuller's view

Japan was Asia’s first developed economy of the last century.  However, in the 1980s it created what was arguably the world’s biggest ever bubble, which burst in 1990 and undermined GDP growth for over a generation.

Recently, Japan has experienced a stock market correction in line with all other countries.  However, this is creating another buying opportunity in an economy which is well suited for this era of accelerated technological innovation.