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2003 Robotics Industry Outlook: Robot Companies Have Hopes for Recovery

POSTED 01/03/2003  | By: Bennett Brumson and Brian Huse

Many executives in the robot manufacturing business are hopeful that the slow pace of sales will be a thing of the past in 2003. While industry insiders believe that the coming year will bring an increase in sales, most are expecting modest improvements now with a return to better days for the industry in the long-run.

To help gain insight into what the market in general expects next year, a Robotics Online Quick Poll asked ‘‘What is your projection for U.S. productivity between now and next June?’‘ Fifty-two percent of the participants predicted growth. A separate poll which asked, ‘‘When do you think capital spending will turn healthy?’‘ produced results that came in at 33 percent ‘‘by June,’‘ and 67 percent by the ‘‘third quarter 2003 or later.’‘

June is a significant milestone for the industry, as it marks the 2003 advent of the biennial International Robots & Vision Show and Conference in Rosemont (Chicago).

‘‘The Robots & Vision Show is an important stimulus to the industry,’‘ said Craig Jennings, RIA president and president of Motoman, Inc. of West Carrollton, Ohio. ‘‘With its every-other-year format and Chicago, Illinois location, the show is a showcase for new products for both existing and new applications/markets.’‘

Mr. Jennings also touched on a global addition to the 2003 show, ‘‘The addition of the International Symposium on Robotics to this year’s conference will add global presentations on new products and developments for the new and emerging applications of robots. This is a must event for North American manufacturing companies and all entities involved in the field of robotics’‘.

So what does the future hold for various industries and applications for robotics? A number of high-level industry insiders talked with RIA to share their perspective. Among the most talked about sectors were automotive, electronics/semiconductors and life sciences.

Automotive to Get Into Gear
The automotive sector was one of the sectors hit hard during the recent economic slowdown. Robotic industry leaders are cautiously hopeful that their bread-and-butter customers will recover in early 2003.

Some optimism is based on the belief that automotive customers in the Great Lakes area are due for a thaw after a long freeze on capital spending.

‘‘We have seen reactive investment from the automakers and their suppliers in 2002, but a definite delay in many of the large orders that accompany new car platforms,’‘ said Jennings. ‘‘As certain car platforms performed well, automakers and suppliers released orders for robotic systems that increased production capacity and they required very quick execution time lines. In the second half of 2003, we expect to see many more orders for new car platforms that can no longer be delayed. That will mean an increase in robot business for those companies that successfully secure the associated large orders.’‘

Others are equally optimistic, if somewhat cautious, about the prospects for the automotive industry. In fact, many industry leaders see the International Robots & Vision Show as an opportunity to broaden their customer base beyond automotive.

‘‘Consumers have not stopped spending and the automotive sector has stabilized. Things will not be like 2000, but the robotics market will be stronger in 2003 than it was in 2002,’‘ said Leroy Rodgers, executive vice president at Kuka Robotics. ‘‘General industry, where growth is stronger, will bring more business to robotics. General industry is more sensitive to financial markets and that seems to be picking up. Automotive will come back a little, since Chrysler is stable and Ford is spending money on capital equipment again.’‘ Kuka is a maker of robots located in Sterling Heights, MI.

Other robot executives have a similar view on the prospects for the automotive industry.

‘‘Epson’s automotive market has been somewhat steady, despite other sectors having a downturn. I don’t know how long into 2003 the automotive industry can continue with low interest rate car loans that are spurring sales,’‘ said Michael Ferrara. Ferrara is Epson America Inc.’s director of factory automation at the Carson, CA maker of robots and accessory equipment.

Ake Lindqvist, senior Group Vice President responsible for Business Area Robotics North America at ABB, thinks there is a pent up need for new automotive equipment investments.

‘‘I see just a slight increase in the robotics market in the coming year,’‘ said Lindqvist. ‘‘The automotive industry will need to increase spending money on capital equipment eventually for new car models and for robotic equipment.’‘

Many think growth in automotive capital spending is probably coming, and major robot manufacturers are trying to anticipate the needs of their customers.

‘‘During 2003, there will be an increase in the automotive and automotive components markets as companies fund more in plant renovation and capital equipment,’‘ said Kevin Otsby, who is FANUC Robotic’s vice president of general industries and president of Fanuc Robotics Canada.

Electronics and Semiconductors Rebooting
Electronics and semiconductors are other areas that locked up and crashed during the recession, although there are signs of slow but steadily increasing activity. There is across-the-board agreement on this score.

‘‘Electronics has been slow for two years now, and still is. There has been a little pickup in activity because of the 300 mm wafer market, which is a whole process that has to be automated,’‘ said Otsby.

Stäubli Corporation’s Harry Beaver has a similar analysis to Otsby’s. Beaver, the national sales manager of the Duncan, SC-based firm, said, 'The semiconductor industry will come back, which had been very flat this past year. Electronics should come back early in 2003.'

The Semiconductor Industry Association (SIA) collects sales and orders statistics that have proven encouraging lately. According to their December data, global semiconductor sales now has three consecutive quarters of growth, with momentum in product sectors that include wireless, digital consumer products, PCs and automotive.

‘‘The November sales of the global chip industry underscore the healthy recovery that has been building momentum throughout this year,’‘ stated SIA President George Scalise. ‘‘The wireless sector continues to be the strongest single market.’‘

The implication for robotics technology is quite positive.

‘‘We are starting to see some small amount of investments in hard drive manufacturing and in semiconductors. These areas have been significant for Epson and we are looking forward to products slated for introduction in 2003 and beyond,’‘ said Epson’s Ferrara.

Joe Campbell, vice president of marketing at Adept Technology, Inc., Livermore, CA, has a similar take on the semiconductor portion of the robotic industry. He cautions about areas not yet gaining strength. ‘‘Segments that are definitely down include photonics and semiconductors, both are quite depressed.’‘

Other areas of robotics that are still in the doldrums include construction and agricultural equipment production. Recreational product manufacturing also is down but not severely.

A more upbeat view is taken toward robotization of injection molding applications such as those used in the manufacture of pagers, cell phones, personal computers and for other interesting things like personal watercraft, sports gear and of course automotive.

‘‘The plastics market, which Stäubli is getting into heavily, will increase during 2003,’‘ anticipates Harry Beaver. ‘‘A lot of people who have been using gantries are beginning to see the benefits of using six-axis robots for de-molding, insert molding, and other secondary tasks.’‘

Signs of Life: Robots for Life Sciences
There is a general consensus that the life sciences sector is one of the few bright spots for the robotics industry.

‘‘Biotechnology is doing quite well, as is anything on the medical side of the robotics industry. Medical devices and instrumentation, along with pharmaceuticals, are doing well,’‘ said Adept’s Joe Campbell.

Campbell’s sentiment is shared by Harry Beaver of Stäubli. Beaver said, ‘‘The medical and pharmaceutical market should continue to be fairly strong. This is one area that continues to spend money when other areas are not.’‘

Likewise, Epson’s Ferrara sees healthy profits in the life sciences area while others are currently weak. ‘‘Biotechnology will continue to be an interesting sector that Epson may see some growth in during 2003. Medical and pharmaceutical applications have seen 10 to 11 percent growth rates over the past year. Even though some sectors have dropped off significantly, we have seen some growth there,’‘ Ferrara said.

While the pharmaceutical and medical sectors are not as large as automotive, they promise the greatest rates of growth according to many in the industry.

‘‘The biggest growth for Kawasaki in 2003 will be in the medical and pharmaceutical industries. These sectors have been traditionally slow to invest in new robotics, but we have made inroads into those industries in the last few years,’‘ says Kurt Hochrein, manager of sales at Kawasaki Robotics (USA) Inc., Wixom, MI. ‘‘Life sciences are investing in robotics because the price is right and the robots offer sufficient speeds.’‘

With all the tedious, repetitive and quality control tasks involved in life sciences product handling and manufacturing, robotics are a clear choice for economic and strategic reasons.

‘‘Clinical specimen preparation, instrument tending, specimen archiving, drug discovery, and many more applications are being done more and more by robotics’‘, said Craig Jennings. ‘‘Our robots are at the core of many OEM products that have designed to perform these and other life science applications. The potential for robots is very high.’‘

Robots for the Services and Consumer Markets
A healthy life sciences market is not the only area that is expected to rejuvenate the robotics industry. Many believe service and consumer goods oriented robots are areas that the industry will continue to tap into during 2003, with profitable results.

‘‘There will be an increase in the food packaging market in general,’‘ said Jennings.  At the November, 2002, packaging show we met a large number of companies interested in having us help them automate their product packaging. Examples include frozen pizzas, salt containers, ice cream, sport drinks, cosmetics, and muffins. The packaging industry has embraced robots and are focusing on flexible robotic solutions to give them the manufacturing flexibility to meet the constantly changing consumer demands.’‘

There are interesting developments in applications such as meat butchering, milking of cows and other robotics innovations in the general service sector. However, many believe it will take a long time before these applications have a significant impact on the robotics industry, so don’t expect dramatic mainstream adoption in 2003. History has shown that lead times for applications outside of robotics’ core industries are quite long.

‘‘Food and service applications will continue to grow. These are areas of robotics that Epson is not involved in yet, but will be the next new thing on a mass basis,’‘ remarked Ferrara. ‘‘This includes fast food and other types (of service industry applications) that robots will be used for.’‘

Breakthroughs are already happening for robots in the consumer market. One is the Roomba personal vacuum robot from iRobot. Attendees of the annual Robotics Industry Forum (November 6-8, sponsored by RIA) saw the promise in this and other consumer and service related robots that have the potential to open up new markets and new opportunities.

‘‘I think there will be an increase in the consumer industry for robotics, though some of the robot providers have been struggling in the past few years in that area,’‘ asserts ABB’s Lindqvist. ‘‘There is a need for flexible robotics here because consumers increasingly demand a variety of whatever they are buying and there are quicker changes to consumer demand,’‘ said Lindqvist.

Whether it is the service industry or manufacturing, the need for robotics is inescapable with respect to ever-shortening product life cycles and fast-changing consumer demand.

On With the Show
One of the things the robotics industry looks forward to in 2003 is the biennial International Robot & Vision Show . This event will be held in the Chicago, IL, area June 3-5.

Kurt Hochrein, who co-chairs this industry-wide event with Kraft Foods’ automation manager Paul Doll, explains how this event can help inspire manufacturers who traditionally were reluctant to invest in robotics.

‘‘As a co-chair of the planning committee, I am looking to increase attendees,’‘ said Hochrein. ‘‘Moving the show to Chicago (in 2001) brought new life into an already good show. The show will recognize the variety of manufacturing that is in the Chicago area.’‘

RIA’s Don Vincent has high expectations for the show as well. It is designed to help educate, and to provide a showcase for new products and how they can be used in specific applications and industries.

‘‘We like to use the Robot & Vision Show as a springboard to find new customers. The show is an international event that brings in people from 26 different countries. There will be exhibits and technical sessions. The latter will include case studies and success stories,’‘ said Vincent. ‘‘The show’s theme is ‘Accomplishing your Mission with Robots and Vision.’ Potential users can come to find documentation on feasibility and justification of buying a robot.’‘

Aside from strong educational and networking opportunities, the International Robots & Vision Show is a launch pad for new and improved robotic products and peripherals.

‘‘At the Robot & Vision Show there will be more variety of products. There will be robots with payloads from 2 kg to 500 kg,’‘ said Hochrein. ‘‘Also, there will be more robots and peripherals for more specific applications and types of products for specific industries. This is to make new and potential users more comfortable with robotics.’‘

What would RIA members like to see at the Robot & Vision Show? The response of Don Satterlee, director of robotics at Comau Pico, Southfield, MI, proved to be representative.

‘‘It is good that the show is based in Chicago. It is still close to Detroit and the automotive industry (which is largely familiar with robotics and the key players in the industry), and helps more non-automotive participants see all of the robot manufacturer's products.’‘

New For 2003?
What is in store for the robotics industry in 2003? Right now it may seem like “strange days indeed,” to borrow from the musical great, John Lennon. But in the long run, a return to the “glory days” is deemed likely (apologies to Bruce Springsteen). Craig Jennings summed this up:

‘‘The robot industry will exceed its high of $1.25 billion in a few years as our economy gets back on track and new, high growth markets for robotics mature. Robots will help North America to continue to be a world leader in manufacturing and help prevent the emigration of jobs outside of North America. Many of the markets that are just now starting to install robots within their manufacturing lines will begin using them extensively in the future, much like the automotive market does today. The federal reserve reports that one of the things that has kept North America from experiencing a more severe decline these past few years is our manufacturing productivity and the resolve of the consumer to believe things will get better. It is certain that in the near future we will see our economy get back on track and robots will have played a key role in helping our manufacturing and service industries to be more productive, and correspondingly, more competitive in this global economy.’‘