For the last few decades, the manufacturing sector has eagerly anticipated the arrival of fully automated factories. In these factories, production would be seamlessly orchestrated by a network of high-tech robots, intelligent machines, and sensors, tackling widespread labor shortages while significantly reducing operating costs. With minimal human intervention, they could theoretically operate in complete darkness, earning the moniker “lights-out factory.”

To date, the few prominent efforts to create such factories, such as Adidas’ U.S.- and Germany-based Speed Factories, Stanley Black & Decker’s Texas-based Craftsman tool factory, and Tesla, where CEO Elon Musk said, “excessive automation…was a mistake,” have cast doubt on its widespread viability. As a result, some industry experts are recommending abandoning the lights-out factory playbook entirely.

We argue that doing this would be a mistake. And the near-stagnant growth in manufacturing output per hour worked in mature economies like the U.S. (-0.4%) and Germany (1%) since 2018 underlines the need for automation to realize productivity gains.

The good news for manufacturers is that, based on our research and on-the-ground experience, we believe a significant shift is underway. The entry barriers for implementation that hindered earlier efforts are going to rapidly fall in the next few years. Robots are becoming more capable, flexible, and cost-effective, with embodied agents bringing the power of generative AI into the factory environment. Manufacturers must prepare for the inevitable disruption — or risk falling behind.