[Robot Is Coming] ③ 97.5% of Robot Companies Are SMEs... Core Talent Only Knocks on Large Corporations

Securing Initial Investment Funds Is Difficult
Government Funding and Policy Support Must Be Strengthened

Although 97.5% of domestic robot companies are small and medium-sized enterprises, most of these companies face difficulties in securing initial investment funds and manpower.

[Asia Economy Reporter Kim Heeyoon] Robot manufacturing startup A, located in Daegu, has been experiencing a labor shortage since early this year. Although orders for manufacturing robots equipped with artificial intelligence (AI) solutions continue, the commercialization timeline is gradually being delayed due to several failed attempts to hire new personnel except for key engineers. The CEO of Company A said, “It seems that the low recognition and the fact that we are a company based in a provincial area discourage applicants,” adding, “New graduates cannot be immediately deployed on-site, but even they are scarce, so we are inquiring with recruitment-related organizations.”

As robots have entered daily life beyond industrial sites and are replacing humans in various fields, domestic robot companies are actually complaining about a shortage of specialized personnel. There are also concerns that the labor shortage is accelerating because the market growth, hastened by COVID-19, was not anticipated.

The Ministry of Trade, Industry and Energy projected last year that the demand for personnel in the intelligent robot sector would reach 46,567 by 2028. However, in a 2018 announcement, it forecasted a demand of 30,889 personnel by 2026, increasing the estimate by more than 1.5 times in two years. The industry estimates that, considering the rapid increase in robot adoption in industrial sites due to the prolonged COVID-19 pandemic, the demand for related personnel has likely far exceeded the government’s estimate of 20,000.

97.5% of Robot Companies Are SMEs... Labor Imbalance Deepens

More than nine out of ten domestic robot companies being small and medium-sized enterprises (SMEs) is also cited as a cause of the labor shortage. According to the 2020 Robot Industry Survey by the Korea Institute for Robot Industry Advancement, out of 2,235 robot companies, 2,179 are SMEs, accounting for 97.5% of the total. Mid-sized companies number 36, and large companies only 20.

On the other hand, in the 2018 Robot Workforce Utilization Survey conducted by the Korea Robot Industry Association, students majoring in robot-related fields cited avoidance of SMEs (39.9%) and a lack of specialized robot companies (17.8%) as employment difficulties. The biggest reasons for turnover among employees in robot companies were moving to large or mid-sized companies (33.9%) and dissatisfaction with pay (26.1%). The supply-demand imbalance in industrial manpower appears to be exacerbating difficulties for small robot companies.

Insufficient R&D investment due to lack of funds is also hampering robot companies’ ability to secure personnel. Hyundai Robotics, a leading domestic robot conglomerate, doubled its R&D investment from 6.1 billion KRW in 2017 to 12.5 billion KRW in 2019. Mid-sized company KoYoung Technology strengthened its growth engine by investing 31.4 billion KRW, 17.7% of its 2019 sales, in R&D. In contrast to these companies making aggressive investments to create a turning point, 31.6% of small robot companies feel burdened by initial investment costs, and 37.8% responded in the survey that research and development should be expanded even in government support.

On the 27th of last month, participants and visitors at '2021 RoboWorld' held at KINTEX in Goyang-si, Gyeonggi-do, are watching a quadruped robot. Photo by Yonhap News

Robot Technology Is a Secondary Industry... Public Demand Must Expand

The CEO of a collaborative robot manufacturing company said, “The initial costs involved in robot development are gradually increasing, so government financial policies supporting startups and SMEs need to be expanded,” emphasizing, “Since robots are ultimately produced according to customer demand, the government should also pay attention to the fact that global companies grew through initial public demand.”

Meanwhile, the government finalized the 2022 budget for the robot sector at 180.568 billion KRW, a 7.6% (14.81 billion KRW) decrease compared to this year. In particular, it was confirmed that the budget for robot industry technology development and next-generation robot convergence component advancement within the robot R&D budget was reduced.

Professor Kim Yongjae of the Department of Electrical, Electronics and Communication Engineering at Korea University of Science and Technology explained, “It appears to be a transitional phase where research personnel and corporate interests conflict as robot technology expands beyond the established limits of industrial robots into various new industries,” adding, “Given the highly integrated nature of the robot industry, government support should extend beyond technology development to industrial expansion as well.”