Barron’s Weighs In on Robot Shares: 2013-2016 - Robotics Business Review
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Barron’s Weighs In on Robot Shares: 2013-2016
stock exchange
With the “60 Minutes” robot segment still reverberating, Barron’s takes a close look at the numbers
By Tom Green

Connecting the dots

Connecting the dots on the where, why and how of a predicted 11 percent increase in robot sales from 2013 to 2016 presents an intriguing look at the nation’s future. Freedonia, the research group making the forecast, notes that such an increase outpaces both the world’s economy and overall manufacturing activity, which is something robot sales have never previously been able to pull off.

Freedonia elaborates a bit in saying that “sophisticated, high-value industrial and medical robots” won’t be the biggest factors in pushing sales from $12B to over $20B by 2016, rather, the big push will come from smaller, less expensive service robots. Kiplinger robustly seconds that future, saying “The U.S. is on the cusp of an explosion in robotics that will have a significant impact on business and the economy over the next decade.”

So, if the lion’s share of 2012’s sales went to industrial robots, how and why will these new robots supplant their big brother robots to become the new sales leaders?

The “60 Minutes” bombshell

When 60 Minutes aired its prime time, Sunday evening segment, March of the Machines, on the very subject of these service robots and how they will take jobs from humans, shock waves reverberated throughout TV land and into corporate boardrooms.

Here in the flesh were the drivers of Freedonia’s forecast—Kiplinger’s explosive agents. In addition to putting a face on these service robots, the program pinpointed what kinds of jobs they will threaten, and even that they will work at a very sub-minimum wage of $4.30 per hour.

The Automation Industry Association or AIA (whose members are the engineering companies that are automating America) reacted by crying both fair and foul, saying, yes, robots will revolutionize the workplace, while adding a vociferous, no, that they won’t take peoples’ jobs.

Robots taking peoples’ jobs is fast becoming a familiar chant; it’s probably true, especially if we remember how computing and IT ravaged the job scene. Gone or going are analog engineers and technicians, typing pools, comptometer rooms, telephone operators, elevator operators, bank tellers, librarians—generations of good jobs that many once called careers.

Strangely coincidental—some called it a rating’s play—was CBS choosing to air March of the Machines two weeks prior to automation’s huge, annual tradeshows being held in Chicago, Automate and Promat. Probably not true: 60 Minutes’ ratings are too strong to need such ploys. Only the Super Bowl could steal significant eyeballs from it.

Fact is, when 60 Minutes speaks, everyone listens. Not an eyebrow was raised throughout all of 2012 as PBS’s NOVA, BBC Television, National Geographic and the Discovery Channel aired similar programming—with similar findings about the loss of jobs.

Boardroom glee

barrons makes picks

Corporate officers and shareholders of robot manufacturers must have regaled themselves over the 13-minute, 60 Minutes’ segment, ecstatic over the near-term prospect of legions of their robots punching timecards to go to work. 

However, aside from all of the hype, spin and high emotions, what picture do the early returns paint about this gathering workplace revolution?

Barron’s went looking and reached out to Robotics Business Review to gain some insight into this march-of-the-machines movement and where it’s headed. Part of that exchange came from editor Casey Nobile’s recently completed 41-page special report: Outlook for Next-Gen, New-Gen Industrial Co-worker Robotics, in which she details the how, why and ramifications of the robotics revolution that is rolling into manufacturing, warehousing, materials handling and supply chains all over America.

Barron’s three picks as drivers behind future robot sales:

1. Resurgent car makers, long the dominant force for industrial robots, are now back from four years of recession and near bankruptcy to finally restock their robots. “Germany’s KUKA (KU2.Germany) rose 76% and Switzerland’s ABB (ABB) was up 3%, along with a boost of two Japanese manufacturers, Fanuc (6954.Japan), up 23%, and Yaskawa (6506.Japan), up 29%. That compares with a 13% increase for the Standard & Poor’s 500 index.”

2. Wage inflation in China, “which has reduced the advantages to U.S. companies moving jobs there. In fact, many are moving jobs back home—and taking the opportunity to keep costs down by automating their production lines by using robots.”

3. The ever-emerging “expansion in the number of jobs robots can do at reasonable cost” ($4.30 per hour) , and better robot technology like advanced visions systems that “allow robots to tackle jobs that involve bin-sorting, or selecting the parts they need from a jumbled pile, rather than be handed parts by humans.”

Car makers have delivered up “handsome returns in the past year. In local currency, Germany’s KUKA (KU2.Germany) rose 76% and Switzerland’s ABB (ABB) was up 3%, along with a boost of two Japanese manufacturers, Fanuc (6954.Japan), up 23%, and Yaskawa (6506.Japan), up 29%. That compares with a 13% increase for the Standard & Poor’s 500 index.”

Barron’s picks for investor consideration “include KUKA and ABB, and Milwaukee-based Rockwell Automation (ROK), which overhauls factories to make them more efficient. KUKA, Europe’s largest robot maker, is growing faster than either Fanuc or Yaskawa—revenues rose 33% over the past quarter—and it trades at a more reasonable 16 times earnings.” Although KUKA specializes in car-making, it “expects future growth to come from general industry and service robots.”

“Smaller robotics outfits look risky. Tiny Adept Technologies (ADEP) has enjoyed a 53% stock gain already this year, thanks to a mention on 60 Minutes, but it’s not yet profitable. Cognex(CGNX), a maker of vision systems, reported flat third-quarter sales on a ‘pull-back in spending by manufacturers,’ yet its shares go for 23 times projected 2013 earnings.”

First things first: China

As far as the fear factor of robots taking U.S. jobs, Barron’s reasons that “China’s factory workers have more to fear from robots than do their American counterparts. China’s manufacturing rise has been based on its labor-cost advantages, which are disappearing. As robots further close the gap, they may manufacture a return of lost jobs to the U.S.”

See related:
Casey Nobile’s 41-page special report Outlook for Next-Gen, New-Gen Industrial Co-Worker Robotics

Traditional Markets, Emerging Customers

Robots, Re-shoring and America’s Manufacturing Renaissance

RIA Chief Slams “60 Minutes’” Robots Report

Script from “March of the Machines” which aired on Jan. 13, 2013.  Steve Kroft,  correspondent.

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