Robots Trip up Elon Musk in Car Factory

Humans got a rare win last week. That’s because Elon Musk admitted that his state-of-the-art Tesla (TSLA) factory might have too many robots.

The revelation came during a televised interview with “CBS This Morning” co-host Gayle King. It’s a big change of heart for Musk, who in the past has talked about completely automated factories.

Investors should use the news to buy robotics stocks.

According to Musk, the Tesla factory in Fremont, Calif., should be making 5,000 cars per week. In March, the plant could muster no more than a paltry 2,070 Model 3s.

Blame the Robots

Musk says the robots are ridiculously complex. They have been over-engineered. They are too fussy, and prone to weird failures. In March, the entire line had to shut down because one of the conveyors that moved parts in a choreographed sequence was off by a beat.

That is a far cry from Alien Dreadnought, the mythical fully automated factory floor Musk promised in 2016 …

Eventually, raw materials were to enter one end of the massive plant, and finished cars were to exit the other side.

It was supposed to be “Westworld” — the TV series where robots become more human, and humans become supporting actors, in a sense — for cars.

Unfortunately, it hasn’t yet put a stern metallic face on the future of manufacturing.

In fact, now Musk says humans are very much underrated. And he wants to hire more to get production levels where they need to be.

Related story: Tesla Revolution is in the Factory, Not the Car

On the other side of the world, the Chinese are moving in the opposite direction.

This China Shipping Terminal
Doesn’t Need Humans at All

On the same day Musk was admitting defeat, the Chinese government declared the world’s largest fully automated port shipping terminal was opening for business.

The Daily Mail reported the Yangshan Deep Water Port in Shanghai will be able to move 6.3 million, 20-foot shipping containers every year … without any humans.

The entire port will handle 40 million containers annually — the most in the world.

A staggering 26 bridge cranes, 130 autonomous vehicles, and 120 rail-mounted gantry cranes will move 136 million tons of goods … with very little input from humans.

It’s an engineering marvel — all software, metal and robotics might.

It’s also the shape of things to come, despite Musk’s frustration.

I have been telling my members to focus on the robotics leaders. Very often, these businesses operate outside the limelight, dominating specific niche markets.

While Musk was dreaming about Dreadnaught, the managers at John Bean Technologies Corp. (JBT) were automating the food processing and packaging business.

They were working with clients to bring more sensors, artificially intelligent software and the Internet of Things to canning, vacuum sealing and film packaging.


The company also has a fast-growing aerospace ground support business, with impressive autonomous vehicles for loading and warehouses.

According to BI Intelligence, a market research firm, the number of installed Internet of Things devices to is expected to surge from 237 million in 2015 to 923 million by 2020. And global manufacturers are expected to spend $267 billion on new gear to make factories run smoothly.

JBT already works with Campbell Soup, Coca-Cola, Del Monte, Dole Foods, Florida Natural Growers, General Mills and others. It’s also rapidly building scale in Asia.

The company is the logical winner as food processing factories adopt smarter, connected systems to increase productivity.

The financials are beginning to reflect the potential. In 2017, sales advanced 21% to $1.63 billion. That came after growing 22% in 2016.

Meanwhile, the stock has been a model of consistency. The five-year average return is 43.9%. That means a modest investment of $10,000 over that time frame would be worth a cool $34,458 today.

Better still, shares have been consolidating for the past six months between $105 and $122.

JBT is set to release first-quarter financial results May 1. Unlike Elon Musk and Tesla, the corporate history at JBT is to underpromise, and overdeliver. Buy JBT stock into any weakness.

Best wishes,
Jon D. Markman

P.S. JBT is up 37.3% since I recommended it to my Tech Trend Trader members last year. All my research tells me it has plenty more upside from here. But that’s far from the biggest open gain we are sitting on right now. And there are many more ways to play the powerful wave in automation, artificial intelligence, the Internet of Things and more … with far-bigger profit potential. Click here to learn more.

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Comments 4

  1. Gary Vinson April 18, 2018

    I am impressed, but I am already committed to too many subscription services.
    Surely a Blockchain subscription service can be invented. No start up cost. X% of the net profits to this service tracked on net gains on registered purchases quarterly. Minimum holding $25000, or pay $Y each quarter as the limited payment.

    Reply

  2. Bob Schubring April 18, 2018

    Musk’s announcement on CBS is well timed. Yesterday I read through the complaint, brought under Section 10 of the Securities Exchange Act, alleging fraud by Mr Musk and seeking money damages. According to the complaint before US District Court in San Francisco (https://www.scribd.com/document/376359070/Tesla-Lawsuit), Plaintiffs allege that Mr Musk was personally aware that he had no functioning robots on the production lines of TSLA’s auto assembly plant and battery Gigafactory during the year 2017, but recklessly and falsely stated that the missing and/or nonfunctional robots were present, functional, and within hours or days of being started up and run at high production rates. A second assertion, made by Musk in the context of expressing fears that artificial intelligence could take over the world, claimed that robots were assembling the robots for TSLA’s two factories. The reality was that a German company, Comau Productivity Systems, was building those robots for TSLA’s production line. Page 37-39 of the Complaint are particularly intriguing, as they indicate that a major difficulty experienced at the Gigafactory, was teaching robots how to pick up small batteries covered in wet glue, slip them into large modules that contained many small batteries, and get them all seated properly so that when the glue hardened, the batteries would remain in the proper place and electricity would flow in and out of them along bus rails built into the modules.

    Comau apparently is acquiring intellectual property of significant future value, by participating in TSLA’s experiment, as what they learn about teaching a robot to pick up slippery things, could translate into applications for robots in the food industry.

    TSLA, meanwhile, leveraged the lack of socialist limitations on temporary employment in Nevada, to put temporary workers to work replacing robots, and likely used motion-capture software to observe the finger motions needed to assemble the battery modules from slick, glue-covered batteries, then fed the data to Comau engineers in Germany who kept rewriting the program code for the robots, trying to get the handling down.

    The main financial concern with TSLA shares, is that TSLA is burning cash and will need to dilute shareholder value if it needs to raise more cash, to overcome it’s robotics challenges.

    Musk seems to have mimicked everything that went wrong with robotics tech in the US in the 1980s, and avoided everything that went right with robotics in Japan during the same time frame.

    Japanese manufacturers avoided making doctrinaire claims about whether robotizing a particular job represented “progress” toward some manifest destiny. Instead, they looked for repetitive motions that they could easily duplicate with a machine, and turned the engineers loose to build machines that could be built. So instead of setting specific goals of X% increase in factory automation and doing high-level theoretical studies, they stuck to practical experimentation and learned what worked, and what didn’t.

    I won’t be laughing if Honda or Toyota buys TSLA and takes over their assembly plant. Getting acquired by a company who actually know autos and robotics, may be the best way of getting shareholder value from what TSLA started.

    Reply

  3. Bruce Bussell April 18, 2018

    I worked at Ford as an engineer for 33+ years and was involved in launching 4 new engine facilities. Ford was very selective in robotic applications, focusing primarily on operations difficult for human ergonomics or requiring precision placement (pick & place). The latter was difficult with heavy objects like cylinder head assemblies. I can empathize with Elon Musk. One engine plant coined the term “drunken robot syndrome” for a cylinder head loading robot that would occasionally go anywhere but programmed. Lots of maintenance there.

    And another thing…you need to design the product for robotic assembly in some cases. Gripping curved surfaces with less than stellar profile control (like body panels) = not gripping the same location every time. Maybe that is where Musk screwed up.

    Reply

  4. T. R. Bell April 19, 2018

    Robots packaging “food” for humans who don’t care about their health. Ship all over the world, suck up fossil fuels.

    Food from your own local region – hey, where’s the money in that?

    Reply