The issues analyzed in this paper are the extent to which unit costs and production labor requirements might be reduced in manufacturing industries if there is more widespread use of industrial robots and flexible systems. The analysis is reported in detail in Miller (1983). These issues are analyzed from two different perspectives. The technological focus of the first perspective is narrowly confined to the use of robotic manipulators. It is assumed that robotic manipulators will be “retrofitted” into existing production facilities without making major changes in the organization of production within the factory, other than modifying individual work stations so that robots can replace one (or perhaps several) operators. The critical variable in this perspective is an estimate of the percent of the production worker jobs that will be replaced by robots. Reductions in unit cost are calculated by assuming that a given percentage of labor costs is reduced. Cases are also considered where robot use results in a moderate increase in output as well as a decrease in production labor requirements. The question of whether decreases in production labor requirements could be offset by an increase in demand stimulated by a reduction in price is also analyzed.