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Good morning! It's Thursday, January 4th. Today’s post looks at Formic, a leading robots-as-a-service company that recently hit a $100M valuation for revamping American manufacturing!

THE FEATURE

Transforming Manufacturing: Formic's Robots Hit $100M Valuation

Today, four out of every five American workers in the private sector are employed in the service economy. As a result of modernization and reliance on foreign producers, American manufacturing has been left in the dust. 

Robotics company Formic is looking to change that with its innovative Robots-as-a-Service (RaaS) model that's earned it a whopping $100M+ valuation!

The Problem to Solve

While many Americans view manufacturing companies as large operations with thousands of employees, the reality is far from it. In fact, 98.6% of all US manufacturing companies are small businesses, and the majority of them have fewer than 20 employees. 

As a result, nearly 99% of American manufacturing companies don't have the funds to invest in research and development for robotics that would speed up the production process. To make matters worse, the US manufacturing industry faces a historic labor shortage, with 693,000 jobs left unfilled, which is projected to increase to 2.1M by 2030. 

In summary, American manufacturing companies can't afford to develop robotic labor at a time when it's desperately needed. Luckily for US manufacturers, Formic is on a mission to address this crisis.

The Business

Traditional robotics suppliers generate revenue from selling their automated machines to manufacturers, but Formic is a new breed of robotics suppliers. The company doesn't charge customers a dime for engineering, assembling, programming, installing, and maintaining robots.

Instead of selling robots to small business manufacturers with little capital, Formic charges an hourly rate per robot ranging from $5 to $25 depending on the complexity of the task.

This model makes it excessively easy for small to mid-sized manufacturers to venture into automation without having to make huge upfront investments. And according to Formic clients, the robot workers more than pay for themselves. 

For example, injection molding company ICON saw a 40% decrease in operational expenditures, a 30% faster production cycle time, and reduced rates of worker injuries. 

The practical use of Formic robots has also disproved some of the fears surrounding the replacement of human workers. 

Metalworking company Polar Manufacturing pays $8 an hour for its formic robot, a fraction of what it costs for its human labor. However, Polar Manufacturing didn't lay off any workers. They instead moved their human workers to more important jobs while the Formic robot performed all simple tasks like taking metal slabs through a machine press.  

Key Observation

There's always been a dystopian fear that robots will take over manual labor jobs and lead to massive unemployment.

This is the incorrect fear to have.

People generally don't enjoy manual labor as it's monotonous, generally low pay, and strenuous on the body— which is why all first-world countries have serviced-based economies.

Rather than fearing a robotic takeover, we should be concerned about not deploying robots fast enough to keep the manufacturers that fuel our economy in business. Formic is one of the few companies to identify this absolutely massive problem, and it's likely to succeed as a result.

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