Kiva
Assembly Line
Inside Amazon’s massive robot rollout: A grand labor experiment with so much at stake
The Mt. Juliet warehouse, the 11th generation of Amazon fulfillment centers, isn’t even the newest. Amazon’s first 12th generation facility, called SHV1 and located in Shreveport, Louisiana, debuted just this month. It features Amazon’s first implementation of eight different robot systems collaborating inside the same building.
One multilevel monstrosity in Shreveport, called Sequoia, can store 30 million products, and instantly retrieve items from this massive stockpile thanks to thousands of mobile robots within it. Sparrow, an AI-powered robotic arm also inside SHV1, can replace human hands just fine when it comes to grasping and manipulating a selection of 200 million different goods.
What began inside Amazon with the acquisition of the robotics startup Kiva in 2012, has already developed into the “the largest collaborative robotics deployment in the world,” Madan added. Today, more than 75% of all Amazon customer orders originate in a facility powered by its robots. Along the way, Amazon has quietly transformed itself into the “world’s largest manufacturer and operator of industrial robotics,” according to the executive.
While the business case for increased automation replacing some human labor is clear – expectations like 25% quicker order processing, a 25% reduction in “the cost to serve” customers, and of course no personal problems or bad days to contend with as an employer – Amazon is also promising that safer worker conditions are a goal and, they say, already happening. Amazon said injuries at its robotic warehouses were 8.5% lower in 2023 than at its non-automated facilities.
The Foundational Industries of our American economy have been neglected, sacrificed, and nearly forgotten for decades
Historically, casting and machining, trucking and shipping, and process and discrete assembly have been at the core of manufacturing, and the US has lagged behind our peers for over two decades. But now, a new wave of innovators is poised to revitalize the industrial sector. Tech entrepreneurs are turning their attention to these massive spaces and they are experts at applying automation, cloud hosted software, and advanced technologies. These founders have lived the disruptions in the IT space by leveraging cloud infrastructure, mobile platforms, machine learning, and process automation. The application of this knowledge to the industrial sector puts us in the unique position to not only catch up but to once again jump ahead of other countries in these industries and to do so faster than we have in other spaces. Companies like Copia, Telegraph, and H2Ok Innovation are already demonstrating how much progress can be made by applying cloud, developer workflows and automation — relatively ubiquitous technology within the IT world — to the industrial world.
The vast data collected in logistics and manufacturing systems create a fertile ground for new generative AI capabilities to co-pilot, design, or run new processes in the industrial world. This could no doubt be how we leapfrog other nations with huge productivity gains. We can now harness the vast amounts of data that has been sitting in disconnected, local machines and disperate spreadsheets and use the combined learnings to transform areas like supply chain, procurement, chip design: companies such as Advex, Didero, and Sphere are already doing this today. When you start using software systems and reinforcement learning instead of people to run factories and production, operational uptime and efficiency compound to quickly surpass the most productive and largest offshore factories, which simply have three people-driven shifts around the clock. Companies like Hadrian, Chef, and Atomic Machines are showing these automation capabilities and producing strong returns on investments in physical, onshore factories.
Even if you were to assume that the tech-first industrials companies’ growth slows to that of the larger tech indices (11-12%) through 2050, and the rest of the S&P continues to expand as it has historically, the market cap of the Industrials Sector could grow from a mere $3.7T today to $55T in 2050. Industrials would make up 29% of the S&P 500 (from 8% today). If we can continue this trend and support the best tech entrepreneurs as they turn their attention to the industrials space, we can completely reshape our public market by 2050 — and reach further into jobs growth, boost the GDP, and create outsized production in the U.S.