What is the outlook for robots and automation now that we are almost half-way through the calendar year? Excellent, if you ask Paul Kellett, Director – Market Analysis for Automated Technologies Council. He’ll also tell you why the situation looks so good for robotics; how the world economy works and more. He makes no guarantees, but conditions look especially good for the robotics market this year.
A glance at the big picture for robotics reveals the world market has returned to growth after steep declines in 2009. Worldwide robot sales are not quite back to levels seen in the heydays of 2008, but according to the International Federation of Robotics the gap is closing and they predict around a 10% growth rate in 2011 (but they expect a more modest 5% growth rate over the next three years combined).
According to RIA’s most recent statistics,
- 4,000+ robots were ordered in North America for a 31% increase in units.
- 27% increase in dollars through the first quarter of 2011.
- Unit growth jumped 64% in the automotive sector where pent-up demand was years in the making.
“Manufacturing is leading the recovery, and that sort of creates schizophrenia in a market that usually leads with consumer demand. Now we have the ‘opposite’ where the smaller part of the equation (the business sector) is driving most of the growth. Until consumer demand returns to ‘normal’ levels the recovery won’t be typical.”
In the U.S., consumer spending accounts for nearly two-thirds of GDP with the remainder consisting of business expenditures. With much of the turmoil behind us, a stronger recovery led by consumer spending would have normally occurred by now, explains Kellett. Of the two main components of GDP, manufacturing is the smaller one and even at full throttle it cannot contribute as much to overall economic growth as the consumer sector.
Kellett adds another observation:
“Consumers have reduced their spending behavior. They are making fewer purchases because of low confidence about the economy as a consequence of high unemployment, job uncertainty and historically low home values. People are spending less and saving more instead of charging up a storm on their credit cards, which had the economy roaring in 2008.”
By contrast, the business sector, and in particular manufacturing, has increased spending. Flush with cash on their balance sheets, larger manufacturers have been spending money on capital equipment, especially the kind that increases productivity and quality. Since productivity and product value enhancements require automation technology, robotics companies have been major beneficiaries. A resurgent automobile industry has especially been a boon to these companies.
Risk still casts long shadows on the economy as Kellett will tell you. Rising costs for oil and commodities is a concern; however, at this point not enough to forestall the current recovery. Uncertainty in the Middle East is a major part of the problem, but he says as long as a barrel of oil stays in the low $100’s the market should be able to cope. A depressed housing market might also eventually take its toll within the U.S.
Economies are recovering at different rates, notes Kellett, and some have large obstacles to overcome.
“Japan just fell back into recession, because of the terrible earthquake, tsunami, and nuclear reactor crisis, Japan is experiencing its most challenging period since World War II.”
Adding to Japan’s economic woes has been deflation, which occurs when consumers stay on the sidelines and defer spending in hopes of more price drops. That unavoidably depresses corporate income.”
Despite the seriousness of the Japanese crisis, world markets should be able to withstand the resultant supply side disruptions from Japan thinks Kellett. He also is optimistic that the sovereign debt problem in Japan, the U.S., Portugal, Ireland, Italy, Greece and Spain can be overcome, saving financial markets from chaos. In the meantime, sovereign debt will play havoc with currency exchange rates, which will aid the exports of some countries, like the U.S. at present, while making the exports of other countries less competitive in the world market.
Regardless of economic headwinds around the world, manufacturing and production are on the upswing in all major economies. Business sectors are healthy with high business confidence and levels of investment. Businesses today are investing more in productivity enhancements such as automation equipment like robotics.
“Current economic conditions are generally very favorable to robot sales. In addition, the value propositions of robotics (increased productivity, efficiency, product quality and safety) make robotics indispensible, and in the long term ensure an upward trend for robotics despite the vagaries of the business cycle.”
An important driver of this long-term trend is also an abundance of new market opportunities. What are some of the more remarkable opportunities for robotics and machine vision now? Kellett says growing demand for solar cells increases the need for robots and automation. Another emerging opportunity in the energy sector is the manufacture of fuel cells which need robots to achieve affordable, high-volume production.
Continued growth in the wind turbine industry offers good market opportunities for robotics in areas of core competence for this technology such as welding and material handling. A push for electric vehicles means advanced battery manufacturers need to reduce production costs and ensure product quality for their complicated and delicate manufacturing processes. Once again – robots are the automation of choice.
New market opportunities are not just technology-based but also geographic in nature. China, for example, has enthusiastically embraced automation in response to labor pressures and the need for improved product quality.
“Demand for robots is certain to grow in China,”
North America is another region where huge demand will continue to drive robot sales, especially as the automotive sector rebounds. Although demand for robots is very good in certain North American segments such as life sciences / pharmaceutical / biomedical (where demand is up 61% according to RIA statistics) a good half the market remains in automotive.
Will the robotics industry continue to gain back ground? Yes, according to Paul Kellett.
“In North America and other important regions robot sales should benefit from resurgent manufacturing sectors.”
COMMENTARY: According to Global Industry Analysts, robotic technology has witnessed a sea change over the years, with the need to automate the workforce resulting in numerous incremental technology advancements in industrial robotics. Market maturity in industrial robotics, however, is helping re-direct development interest in service robotics, such as:
- Field robots.
- Logistic system robots.
- Medical robots.
- Home security and surveillance robots.
- Handicap assistance robots.
- Underwater robots.
- Entertainment robots.
- Construction and demolition robots.
- Inspection and maintenance robots.
- defense, security and surveillance robots.
- Domestic robots, among others.
Service robots have therefore finally started to move from shop floors to homes, offices, hospitals, museums, and other public places in many forms. Over the last decade, there has been an impressive growth in the use of service robots in professional as well as private and personal applications. Particularly the private use of robots in homes for domestic applications has witnessed significant growth.
The world market for service robotics has witnessed deceleration in growth in 2009 and 2010 and the euphoric projections over the number of robots expected to proliferate human homes, offices and factories, are now being downgraded to much sober levels, thanks to the impact of the prolonged economic slowdown. Reduction in investments as a fallout of the economic crisis has severely dented the demand for robots in both commercial and mass markets. The deep reductions in disposable spends has impacted demand for entertainment robots like robot toys, and pets. However, a quick recovery and robust future potential is definitely on the cards for service robotics market, as service robots stand positioned to gain stellar prominence as a potential productivity tool in an era where most of the first-world nations transition towards a global service industry.
Expanding application possibilities continue to broaden the market for service robotics, as aging population and increasing need for assisted living creates special market opportunities for personal service robots. The transition of the world’s developed economies towards being a service economy offers ample opportunities for growth in service robots market. Given their ability to offer a technological platform for supporting the growing needs of the professional services industry and thus triggering strong economic growth in the process, service robotics is slated to witness considerable opportunities in the years to come.
According to the International Federation of Robotics, provided the following information regarding the service and industrial robotic sectors:
• Service robots for professional use: 76,600 units sold up to the end of 2009 - With 23,200 units the service robots in defense applications, accounted for 30% of the total number of service robots for professional use sold up to the end of 2009. Thereafter follow field robots (mainlymilking robots) with 25%, cleaning robots and medical robots with 8% each and underwater systems with 7%. Construction and demolition robots and mobile robot platforms for general use (6%, each) logistic systems (5%) and rescue and security applications (4%) come in the next ranges. Minor installation numbers were counted for inspection systems and public relation robots. The total value of professional service robots sold up to the end of 2009 was $13.2 billion.
• Service robots for personal and private use: about 5.6 million units for domestic use and about 3.1 million units for entertainment and leisure sold up to end of 2009:
Service robots for personal and domestic use are recorded separately, as their unit value generally is only a fraction of that of many types of service robots for professional use. They are also produced for a mass market with completely different pricing and marketing channels.
So far, service robots for personal and domestic use are mainly in the areas of domestic (household) robots, which include vacuum cleaning and lawn-mowing robots, and entertainment and leisure robots, including toy robots, hobby systems and education and training robots.
The market for robots for handicap assistance is still small, but is expected to increase substantially in the next 10 years. Robots for personal transportation and home security and surveillance robots will also increase in importance in the future.
In 2009, about one million vacuum cleaning robots were sold, 7% fewer than in 2008. More than 26,000 lawn mowing robots were sold in 2009.
• Projections for the period 2010-2013: 80,000 new service robots for professional use to be installed:
Turning to the projections for the period 2010-2013, the stock of service robots for professional use is forecast to increase to some 80,000 units. Application areas with strong growth are defence, rescue and security applications, field robots, logistic systems, inspection robots, medical robots andmobile robot platforms for multiple use.
• Projections for the period 2010-2013: about 11.4 million units of service robots for personal use to be sold
It is projected that sales of all types of domestic robots (vacuum cleaning, lawn-mowing, window cleaning and other types) in the period 2010-2013 could reach some 6.7 million units.
The market for entertainment and leisure robots, which includes toy robots, is forecast at about 4.6 million units, most of which, of course, are very low cost.
In 2009, the worldwide economic and financial crisis caused a significant slump in the sales of industrial robots. Compared to 2008, considered one of the most successful years, 2009 had a decline of 47% (60,000 units). This is the lowest level reported since 1994. Robot installations had never decreased so heavily.
In recent years, various regions have concluded different outcomes. In 2009, all regions saw a significant decline of robot installations. About 30,100 industrial robots (50% less than in 2008) were supplied toAsian countries, Australia and New Zealand. The main market, Japan, nosedived by almost 62%.Japan has seen a continuing decline in robot investments since 2006. After strong investments of about 44,000 units in 2005, and a cyclical decline in 2006 and 2007, a substantial cut in robot investments in 2008 and in 2009 to about 12,800 units followed. Almost all industries cut investments in robot installations widely. The total supply in 2009 was the lowest since the early eighties.
The second largest robot market in Asia, the Republic of Korea, saw a substantial decrease of robot supplies after considerable growth in 2008, from 11,600 units to 7,800 units. Even China, the most rapidly growing robot market in the world in the past few years felt the effects of the crisis as well as India. Robot sales in China fell by 30% to 5,500 units. India, still a rather small but promising robot market saw a decline of almost 60% to 360 units. Robot supply to all other Asian markets also fell significantly, except for Singapore where more units were installed than in India in 2009. Robot sales to Australia also fell while an increase in the small robot market of New Zealand has been registered.
In 2009, robot shipments to the Americas dropped by 48% from 17,200 units to 9,000 units. Already in 2008, robot sales to the United States - by far the largest robot market in the Americas - and Canadadecreased. Both countries were strongly affected by the cyclical recession which began at the end of 2007 and the collapse of the financial markets which followed in the autumn of 2008. Almost all industries were affected by the economic crisis, but the automotive industry was hit the hardest. Overcapacities, shrinking demand, the wrong model policy and the financial crisis affected the automotive industry substantially in North America. Production capacities have been cut or relocated. Investments in new industrial robots were completely down in the first half of 2009. The robot shipments to the United States and Canada slowly started to increase as of the 3rd quarter in 2009. But the number of units was still far away from that of the most successful years, 2005 to 2007. In the United States, robot shipments slumped by 49% to about 6,800 units in 2009 compared to 2008. In Canada, the shipments fell by 72% to about 500 units.
Robot shipments to Mexico slightly increased in 2009 to 1,100 units. European and Asian motor vehicle suppliers ordered industrial robots to increase their capacities. Mexico started to gain importance as a production site for the automotive industry for financial reasons. Robot supplies toArgentina and Brazil also fell substantially.
Sales of industrial robots in Europe dropped by 41% to 20,500 units, the lowest number of robots since 1997. Between 2005 and 2008, a strong trend towards automation boosted robot sales. This trend has been stopped due to the economical downturn in 2008/2009. Almost all industries significantly reduced robot investments, predominantly the automotive industry which has been concentrating on restructuring.
After the three years of continued growth and a peak of 15,100 units in 2008, the robot supplies nosedived in Germany by 44% to 8,507 units in 2009. Particularly, the main customers - automotive, metal and rubber and plastic - cut their investments heavily. However, there was an increase or only a moderate decrease of robot supplies to industries which still buy considerably low quantities: the food and beverage industry, the glass, ceramics and stone industry, the semiconductor industry, and the medical devices industry.
In 2009, total sales in Italy - the second largest robot market in Europe - were down by 40%, to about 2,900 units following a decreasing trend since 2007. Its economy was feeling the pinch due to the declining export markets and a decreasing domestic demand. Therefore, investments were down and all the main industries significantly reduced production in 2008 and again in 2009. In 2009, 1,450 industrial robots were sold in France, 44% fewer than in 2008. This was the lowest number of installations since 1995. Sales to Spain were down by 41% to 1,350 units. The shipments to the UK also decreased by 26% to some 600 units. All three countries are important automotive production sites and since 2006, the robot installations were decreasing.
The economical downturn as well as the decreasing or stagnating car market in Western Europe in the past few years revealed the existing overcapacities in the region. While Germany is hardly affected by the restructuring of the automotive industry, all other production sites in Western Europe saw a continued decline of investments of the automotive industry as a whole already between 2005 and 2008.
Robot sales to the Central/Eastern European countries dropped by 44%. Only the shipments to the Russian Federation increased, but the number of units is still rather low.
• Value of the market decreased to $3.8 billion
In 2009, the value of sales of industrial robots converted in US$ decreased by 39% to US$3.8 billion. It should be noted that the figures cited above generally do not include the cost of software, peripherals and systems engineering. This may result in the actual robotic systems market value to be about two or three times as large. The world market for robot systems in 2009 is therefore estimated to be $12 billion.
• Strong recovery in 2010, continued growth between 2011 - 2013
A strong recovery of worldwide robot installations in 2010 will result in an increase of about 27% to about 76,000 units. The main impulses are coming from China, the Republic of Korea and other South-east Asian countries. But the robot supplies to Japan and North America will also substantially increase. In Japan robot sales were decreasing since 2006. In North America sales already declined in 2008. In Europe, the recovery has a slow pace and is mostly based on the exports. The domestic demand is still weak although major investments in capacities and modernization took place between 2005 and 2008. Robot sales continuously increased between 2005 and 2008.
The main driver of the recovery is the automotive industry which has restarted to invest in new technologies, further capacities and renovation of production sites. The General Industry - all other industries, except automotive - already increased its robot investments between 2005 and 2008. This will continue between 2010 and 2013. The trend towards automation was stopped by the economic crisis in 2009. The IFR conducted a study on the worldwide automation potential requested by the Messe Munich. The number of robots in operation per 10,000 employees in various industry sectors and countries were evaluated (robot density). The results show a tremendous potential for industrial robots especially in growing industries, such as the pharmaceuticals and cosmetics industry, medical devices industry and the food and beverage industry. However, in the metal industry and the solar industry the robot applications are still far behind that of the automotive industry.
But there are more reasons for a bright future in robotics: Huge consumer markets are opening up in China, India, Brazil and Russia. The competitive nature of the automotive companies results in new investments in production facilities in these markets. Other industries are following as well. The degree of automation in North America is comparatively low with a need to catch up through investments in robotics. Companies in high-wage and in low-wage countries have to reduce costs and guarantee high quality to remain competitive on the world market. The Middle Eastern countries are becoming new markets for automation.
After the substantial rise of robot sales in 2010, a further increase will resume in the period between 2011 and 2013 about 10% per year on average attaining a level of more than 100,000 units. In the Americas sales will be up by 33% in 2010, in Asia/Australia by 34% and in Europe by 12%. Between 2011 and 2013, robot shipments will increase by about 9% per year on average in the Americas, about 12% in Asia/Australia and by 8% in Europe.
• The operational stock of industrial robots
In terms of units, it is estimated that the worldwide stock of operational industrial robots will increasefrom about 1,020,700 units at the end of 2009 to 1,119,800 at the end of 2013, representing an average annual growth rate of less than 1% between 2011 and 2013. In 2010, the stock will increase by 7%. In the traditional markets: North America, Japan, and Western Europe, the stock is stagnating or decreasing while it is surging in the emerging markets
Courtesy of an article dated June 11, 2011 appearing in Robotics Online