After the U.K. voted to exit the European Union on June 23, Rich Walker was in shock. The managing director of Shadow Robot Co. wondered how the so-called Brexit will affect his London robotics company and the British robotics industry.

“From my point of view — a small company with 25 employees and global customers — it is a big risk for us, not participating in Europe and Horizon 2020,” he said, referring to an EU-funded research and innovation program. “We are not part of the European team and not part of the community anymore.”

Walker joined Shadow Robot in 1989 to write software for robots, and he discovered that robots needed building first. He is now leading the London robotics company through exciting and challenging times for the industry.

‘Outside the conversation’

The time period following the Brexit has a high level of uncertainty for Shadow Robot, according to Walker.

“The U.K. is no longer going to be a part of the European Union. It is not so bad for the EU as for the U.K.,” he noted. “Even if the U.K. gets trade agreements, we are not part of the political discussions. The U.K. agenda is not aligning with the EU agenda.”

“Now there is a kind of insecurity: No one knows what will happen and when the decision to fully exit EU is going to be made,” said Walker about the separation process. “It will be at least two years from now. The robotics business cannot be put on hold for such a long time — no business can.”

From Shadow Robot’s point of view, the U.K. has left the world’s largest trading block with one of the world’s largest innovation programs. Does this make sense at all?

“It makes less sense for U.K. technology companies,” Walker said. “Although we have many global customers, we think it is silly not being part of the European Union. By leaving the EU, we have put ourselves outside the conversation.”

Brexit ‘breaks’ professional work

Walker told Robotics Business Review that he expects the Brexit to hurt the cooperation between companies and countries.

“There is a risk that Brexit will have a negative effect on personal relationships,” he said. “It will break the trust, and the damage might be even more profound.”

“As a U.K. technology company, we have to do our corporate risk management,” Walker explained. “There are unintended consequences of Brexit. There will be a shift in intellectual capital, as those newly educated from universities may leave the U.K. and return to their native countries.”

“It is scary to think that they might not be replaced. The skills of robotics will be restricted,” he said. “Brexit is a shock — too much to handle. As a company, we consider if we should leave UK.”

However, the shock and uncertainty may be only temporary. British startups still have a strong demand for skilled labor, and the logistics industry is in the midst of increasing automation.

“We have seen a 35 percent increase in demand for skilled people, from software and electronics engineers through to project managers and systems designers, from start-up businesses,” said Richard Heaton, an automation recruitment specialist at Jonathan Lee Recruitment. “We anticipate that the recent acquisition of Britain’s largest technology company, ARM Holdings, by Softbank in Japan will encourage more entrepreneurs to invest in high-tech industries to capitalize on the strong technical skills base we have in the U.K.”

London robotics firm has EU projects

“Shadow has been in about 10 EU projects, ranging from technology development around our core Dexterous Hand product through to research in 3D vision and medical robotics, so we’re keen that this funding mechanism continues,” Walker said. “One advantage to us of EU funding over national funding is, that the EU funds at a higher rate, so it’s easier to justify taking part in a more speculative project or just being the ‘engineering delivery’ partner in a project that is outside our area — like the medical robotics one.”

“I find it very useful that the European Union has three kind of funding: research, industrial development and solving real-world problems,” he added. “These can be projects to improve security at borders, to make agriculture more sustainable, or to help deal with the aging population. In other words, dealing with cross-cultural issues.”

Horizon 2020 helps U.K. robotics

Horizon 2020 is the biggest EU research and innovation program ever, with nearly €80 billion ($90 billion) of funding available from 2014 to 2020 — in addition to the private investment that this money will attract.

The Horizon 2020 framework promises more breakthroughs, discoveries and world firsts by taking ideas from the lab to the market. There are two kinds of funding in the program:

• “Top-down” funding for strategic research
• “Bottom-up” for more open subjects, such as the SME Instrument (for small and midsized enterprises) and the Future and Emerging Technologies program

The top-down funding for strategic research alone is spread over two-year increments:

• 2014-2015 — €157 million ($176.5 million)
• 2016-2017 — €157 million
• 2018-2020 — €240 million ($270 million)

In total, about €550 million ($618 million) is earmarked for specific robotics research estimated Christian Holstein, a special advisor for EuroCenter and policy analyst at the Danish Ministry of Higher Education and Science in Copenhagen.

The bottom-up budget for 2016 is €85 million ($95.58 million). Companies can apply for the funding to research and develop their own ideas.

Horizon 2020 also funds more fundamental research under the Future and Emerging Technologies program.

Other funding that the EU offers includes support for artificial intelligence research.

The British government does provide some funding. Government agency Innovate UK and the Engineering and Physical Sciences Council are offering £5 million ($6.6 million) through a competition. They will award prizes worth up to £500,000 ($665,000) for innovative partnerships in robotics and autonomous systems.

More on British Robotics:

• The Morning After: Is ‘Brexit’ Set to Hammer U.K. Robotics?
• U.K. Robotics Investment — Fit for Purpose?
• British, Taiwanese Robotics Sectors Forming Strong Links
• Are British Manufacturing and Industrial Automation Turning a Corner?
• Inaugural U.K. Robotics Week to Launch
• Self-Driving Cars Get British Government Support
• U.K. Consortium Gets $3 Million Grant for Home Care Robots
• Soft Robots Get a Grip on Fruit Picking

Shadow hopes to stay in EU Robotics

Shadow Robot Co. is a founding member of EU Robotics, and Walker is a member of its board of directors.

EU Robotics AISBL (Association Internationale Sans But Lucratif) is a Brussels-based, international nonprofit association for all stakeholders in European robotics. As it is a private organisation, Walker will keep his position.

“Shadow was elected as a U.K. company,” he said. “We must see what happens at the re-election.”

Last month, Philip Hammond, chancellor of the U.K. treasury, tried to reassure companies and research organizations that EU funding will continue after the U.K. leaves the EU.

“British businesses and universities will have certainty over future funding and should continue to bid for competitive EU funds while the U.K. remains a member of the EU,” he said in a statement.