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Rent-a-robot: A new answer to labor shortage

08/26/2021 | 11:07am EST

Silicon Valley has a new pitch to persuade small companies to automate: Rent-a-robot.

Robot sales are surging in big companies all across America, thanks to better technology and the need to pay higher wages to humans.

But few of these automations are making it into small and medium-sized factories, which are wary of big upfront costs and lacking engineering talent.

But what if you could rent a robot?

Enter Formic Technologies, which owns and leases robots, and helps other companies install and maintain them.

Misa Ilkhechi is the co-founder of Formic Technologies.

"What we do is we provide the automation and pay for all the upfront cost to the manufacturing. We take all the design engineering, we install the system at the manufacturing facilities, and then they pay us by the hour for the utilization only for the hours the robot is actually running."

Rapid Robotics is another startup which leases robots. Jordan Kretchmer is the co-founder and CEO.

"So, the business model innovation is you should be able to pay for a robot like you pay for a worker, instead of paying five hundred thousand dollars all up front and taking three or four years to recoup the cost of that one-time big investment. Our model allows you to pay on a monthly basis, $2100 a month, which is a fraction of the cost of a typical human worker."

Investors are betting this new approach will set the robots marching off into American factories.

Westec Plastics Corp, a family-owned plastic molding factory with 102 employees, got its first robot - Melvin - in January 2020.

The California-based company now has three.

President Tammy Barras says that even with one robot, she is saving about $60,000 in labor costs a year.

"That is definitely a challenge right now. We've had to increase our wages quite significantly this year because of what is going on in the world. And luckily, Melvin has not increased his pay rate. He doesn't ask for a raise. (flash) Melvin runs 24 hours a day, all three shifts, and that replaced three full operators."

Barras says robots cannot replace humans today as they can perform only repetitive, simple tasks.

Still, some high-profile investors are making moves in the rent-a-robot space.

Tiger Global, the biggest funder of tech startups so far in 2021, has backed three robot firms offering subscriptions in seven months.

Andra Keay, the managing director of industry group Silicon Valley Robotics, puts it this way:

"To avoid bankruptcy, to avoid going out of business, small, medium enterprises need to pay attention to robotics right now. Now is the time to get into robotics technologies. Otherwise, you kind of miss the boat. And it's very clear from the investment dollars that large companies are pouring into robotics and automation that the time is right for technology, for robotics technology today."

ę Reuters 2021
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