April 15, 2009      

To reduce risk and drive revenue, industrial robotics companies are expanding their customer base beyond manufacturing and assembly within large enterprises in the automotive, electronics and semiconductor industries by way of directed market expansion. The rate, scope and variety of industrial robotics directed market expansion efforts provides opportunities to large and small robotics companies, systems integrators and distributers, technology providers, and domain experts alike.

Opportunities Galore
Among the governmental and industry associations, as well as with industrial robotics companies themselves, there is unanimity in the belief that the industrial robotics sector is undergoing rapid change and market expansion. Robotics Business Review believes that this expansion will continue to accelerate, even as world economies struggle, ushering in a new age of industrial robotics that will radically transform businesses and societies. As with change of any consequence, the growth of the industrial robotics sector will open up opportunities for all members in the industrial robotics value chain, as well as other robotics technology providers and the investment community.

Business Cycles and Sector Dependence
According to the International Federation of Robotics, and as described in Figure 1, the total number of industrial robotics installations have steadily increased year-to-year over the last twenty-five years, and installation growth is expected to continue through 2011. Yet as can be seen in Figure 2, when the number of industrial robots sold over a twenty year period is examined, it is clear that the number of shipped systems vary year-to-year, often dramatically (even if a regression analysis would indicate a general upward trend). These differences are the result of normal business cycles in key geographic areas, as well as the industry’s overdependence on the automotive sector with whom its fortunes are tightly bound.

[Editor’s Note: The comprehensive and well-regarded World Robotics Report, the results of an annual study by the International Federation of Robotics Statistical Department, provides detailed statistical analysis describing the international robotics market, including the industrial and service robotics sectors, broken out by a number of key variables. The report is hosted by the VDMA Robotics + Automation Association. For more information regarding the World Robotics Report, please see WorldRobotics.org.]

As you would expect, the current worldwide economic downturn, especially as it impacts the automotive industry, has slowed the rate of industrial robotics installations. Auto manufacturers are extremely cost conscious and as a result they are keeping their robots in service longer and putting off buying new systems. For example, the Robotic Industries Association (RIA), a north American robotics trade group, noted that for the automotive industry, the largest customer for robotics automation solutions, 2008 orders from automotive OEMs and their suppliers were down 37 percent in unit sales and 32 percent in dollars compared to 2007. According to the RIA, even as Q1 2009 north American orders of industrial robots increased 16 percent compared to 2008 figures, orders from car manufacturers and their suppliers fell 31 percent.

Recession Speeds Expansion
The industrial robotics sector is well aware of the risks associated with over dependence on a customer base linked to a few industry sectors. They understand that to grow their businesses, they must expand usage of their products beyond manufacturing and assembly within large enterprises in the automotive, electronics and semiconductor industries (and Tier 1 suppliers). Suppliers of industrial robotics solutions might be expected to put expansion plans on hold and simply wait out for the eventual economic recovery. with recovery, the indus try’s traditional customer base will increase capitol expenditures for replacement systems (the average lifespan for an industrial robot is approximately twelve years), while other manufactures will invest in automation to quickly replenish depleted inventories. Robotics Business Review does not believe that suppliers of industrial robots will maintain or reduce their rate of expansion into new markets. In fact, the reverse is more likely to occur. Recent business downturns will force industrial robotics solutions providers to increase the pace of innovation and market expansion. Many industrial robotics firms are large, mature companies. As such they have the financial wherewithal to spend to expand, even in a down market. Smaller firms will also seek to expand into non-traditional markets through partnership with larger firms, or by providing innovative enabling technology.

Expansion, Development and Exploitation Industrial robotics companies are expanding their customer base and solutions offerings in two basic ways through directed market expansion and development efforts, often in concert with governmental agencies or industry associations, as well as by exploiting technological advances.

While specific efforts may vary, in general most companies are taking the following approaches:

Directed Market Expansion/Development Efforts

  • Supporting and Expanding the Base;
  • Entering non-Traditional vertical Markets;
  • Supporting non-Traditional Manufacturing and Automation Roles;
  • Supporting Small-to-Medium-Enterprises;
  • Geographic Expansion.

Exploiting Technological Advances

  • Adding Sensing and Intelligence;
  • Supporting Fine Manipulation;
  • Adding Mobility;
  • Mobile Manipulation.

[Editor’s Note: Due to page limitations, a discussion of how the industrial robotics sector is expanding their customer base and increasing their solutions offerings by incorporating new technologies is not covered in this article, but will be featured in a subsequent issue of Robotics Business Review.]

Supporting and Expanding the Customer Base
The use of robotics systems for industrial manufacturing is commonplace, almost to the Machinery point of saturation within certain industry sectors. This is especially true of the automotive industry, which still accounts for 40 percent to 50 percent of all robotics installations (See Figure 3).

Still, there are opportunities in those market sectors that have been well served by industrial robotics companies in the past, and companies are creating new, innovative solutions for their traditional customers. Common approaches include automating new processes, developing wholly new classes of products and extending existing products lines.

Automating New Processes — Over their forty year history, industrial robotics companies have incrementally improved their products and services, largely in service to the automotive industry. The close relationship between the industrial robotics sector and the automotive industry was not simply the result of happenstance. The first industrial robotics systems were designed to automate continuous flow assembly line manufacturing, a process first developed and then perfected by auto makers. The earliest systems of the 1960s, 70s and 80s, simply added further automation to a process designed by Henry Ford in 1913 to manufacture his Model T (Ford actually borrowed the idea from meat-packing industry ‘disassembly’ lines).

Beginning in the 1980s, and expanding in the 1990s, a number of production process improvement methods and philosophies designed to address inadequacies in earlier production models came to the fore. Many of these methods fell under the auspices of ‘Lean Manufacturing,’ a management philosophy based on the Toyota Production System (TPS), a system developed by Toyota between 1948 and 1975 for managing production, logistics and supplier/customer interactions.

A discussion of Lean Manufacturing is beyond the scope of this article. Suffice it to say, the well documented ability of robots to increase product quality and production efficiency, maps well to Lean Manufacturing’s overall goal of producing the highest quality products at the lowest operational costs and minimum inventory levels. Over the years, suppliers of industrial robots enhanced their systems and built new ones that could better support the tenets of Lean Manufacturing, as well as other manufacturing philosophies including ‘Just-in-Time’ Production and Flexible Manufacturing (linked manufacturing cells under computer control that are able to produce small volumes of products at very low costs).

Today, industrial robotics vendors are adding new technology and releasing new system that support the latest manufacturing approaches such as Adaptive or Agile Manufacturing, which makes no assumptions as to volume levels or even types of products. As with the emergence of other production philosophies, opportunities exist for those industrial robotics companies that can develop robotics systems and technologies that support the doctrines of Adaptive/Agile Manufacturing.

Developing New Classes of Products — As one example of how industrial robots developed a new classes of robots to support their traditional customer base, consider the development of collaborative robots or ‘cobots’ and their insertion into automotive assembly lines. Invented by northwestern university professors Edward Colgate and Michael Peshkin following a grant from the General Motors Foundation in 1995, Cobots, often referred to as Intelligent Assist Devices (IADs), are designed to work directly with a human to assist lifting and guiding heavy or unwieldy objects.

At this time, the manufacturing of car chassis is highly robotized. However, the bulk of the other steps in the car production process remain manual. Cobots assist humans in these manual operations. The Cobots are passive devices, they do not move on their own, but instead are directed by human workers. The Cobot provides lifting power, and sensors and software are employed to constrain and guide motion (thus they are real robots) initiated by the worker.

Cobots are more than industrial robotic systems used by car manufacturers to automate formally manual operations such seat and dashboard insertion. The products are also an example of the first generation of a new class of industrial robotics systems that are not designed to replace workers, but instead work safely with them. These collaborative robotic systems seamlessly integrate the best qualities of both of humans (complex sensing and cognition) and robots (repeatability) to produce products of higher quality, faster.

Extending Product Lines — Another method employed by industrial robotics companies to expand their customer base and increase their product offerings is to extend existing product lines. Adding technology such as vision systems to better support production methodologies such as Lean Manufacturing, Flexible Manufacturing and Agile Manufacturing, provides one example. Another approach that companies have recently applied is to “go large.” For example, in May 2007, KUKA Roboter GmbH released the 6-axis KR 1000 ‘Titan,” The Titan has a each by 3,200mm and a payload capacity of 1,000 kilograms. In September 2008, FANUC Robotics followed KUKA’s lead releasing the M-2000iA/900L, a “super heavy duty” six axis robot that offers a 900 kg payload. According to FANUC, the M-2000iA/900L is specially designed for manipulating truck, tractor and auto frames. At the opposite end of the robot payload continuum from the KUKA and FANUC giants are smaller ‘benchtop’ systems. These systems are characterized by their small form factor, easy set up and simplified programming, that are well suited to niche applications. Many of the major industrial robotics players offer benchtop systems (see SMErobots, below), but smaller companies, such as ST Robotics are represented as well.

Non-traditional Vertical Markets
Industrial robotics suppliers, working with industry groups such as the Robotics Institute of America (RIA) and the International Federation of Robotics (IFR), have made a concerted effort to expand into other vertical industries. These efforts have met with success, particularly since 2000. This is largely due to the fact that the field proven advantages robotic automation brought to the automotive and electronics industries can be applied to other vertical market segments. They include:

  • Increased product quality;
  • Improved capacity utilization;
  • Enhanced manufacturing flexibility;
  • Improved labor efficiency;
  • Able to work under extreme conditions;
  • Frees workers from performing monotonous, dangerous or unhealthy tasks.

Non-traditional Challenges
There is inherent risk for industrial robotics company’s offering automation solutions for non-traditional markets. with these risks are associated opportunities particularly with respect to:

  • Domain Specific Expertise — Industrial robotics companies and the automotive industry have partnered for over 40 years to produce robots that support the automaker’s needs (and build an industry in the process). This provides opportunities for systems integrators with specific domain expertise to work with robot suppliers to enter new markets, and build product lines and applications that support customer needs.
  • Domain Specific Technology — Each different vertical market has their own domain specific technical requirements, many of which might not be suited by robotics systems designed to manufacture automobiles. For example, compared to robotic welders in the automotive industry, medical or food processing systems are required to operate under extremely hygienic conditions. As such, these systems must be completely sealed, use particular classes of lubricants and be impervious to caustic cleansing solutions. As robotics is increasing employed for work outside of the automotive or electronics indus try, opportunities open up to those companies that can provide domain specific technical solutions.


The Food Industry and More
The use of robots for solar manufacturing and pharmacy automation, to name but two, has resulted in many column inches in the industrial robotics press praising their success. For many of these non-traditional industries, companies have released products specifically designed for them based on existing, but modified systems. In november 2008, for example, FANUC Robotics introduced its new M-430iA/2Pv intelligent pharmaceutical robot which is based on its M-430iA general-purpose robotic arm platform. The pharmaceutical variant was designed to be waterproof, completely sealed to prevent bacterial contamination and can withstand decontamination by Hydrogen Peroxide vapor (HPv). On a similar note, in September 2008 Adept Technology introduced its new Solaris product line designed specifically for the solar manufacturing industry. The Solaris systems are based on Adept’s existing Quattro s650 packaging robot, Cobra s600 SCARA unit-assembly robot and AdeptSight vision guidance and inspection software.

Food processing is one area where industrial robots have been employed to great success and is considered by many to be a major untapped market. Robotics systems in food production are typically used either in picking, packaging or palletizing operations. Initially, high investment costs made food manufacturers reluctant to introduce robots. However, the first generation of systems demonstrated a quick ROI, proving themselves at improving throughput rates and cutting costs, as well as allowing food processors to reallocate their line packaging workforce to less monotonous roles.

Even with the success of robotically assisted picking, packaging and palletizing operations, hygiene requirements made food manufacturers reluctant to introduce the technology into other areas their plants where the robots would interact directly with foodstuffs. But the use of robots reduces the time humans, which are a great source for contamination, work in food handling environments. Thus industrial robots have proven to increase food hygiene, an area of increasing concern for businesses in an era of rampant litigation and 24×7 global news coverage.

In 2008, FANUC became the first manufacturer of industrial robotic solutions to receive equipment acceptance from the united States Department of Agriculture (USDA) for meat and poultry processing. This is significant given that meat and poultry work has very stringent hygienic requirements beyond that for other types of food handling applications. It also means that virtually all classes of food production processes are now open to automation. As meat and poultry processing is the poster child for work that is ‘dirty, dull and dangerous,’ it is ripe for robotic automation and a huge opportunity.

As the first to receive USDA acceptance for meat and poultry processing, FANUC not only enters a new market (and gains a first-to-market advantage), it has also laid the groundwork for other companies to do the same… and they have. For example, in October 2008 Applied Robotics announced an FDA and USDA approved gripper for handling meat and other food products. Like Applied Robotics, companies participating in the industrial robotics value chain, such as suppliers of grippers, should rework products and services offerings, as well as seek regulatory approval, to avail themselves of the food processing and preparation opportunity.

Non-Traditional Manufacturing and Automation Roles
The automotive, and electronics industry are the largest users of robots, with welding, painting, handling, loading, unloading, cutting, assembling and trimming being the most common applications. Other industries that are employing robotics are using them for roles different roles. ‘Pick-and-Place’ robots are finding wide usage in the pharmaceutical industry, for example, and systems employing advanced visioning technology are commonly found in a number of industries for quality control applications. Loading and unloading applications are common in fertilizer plants, granaries and chemical plants.

One of the fastest growing of the non-automotive, non-traditional, robotic applications is packaging. According to a recent survey performed by the Packaging Machinery Manufacturers Institute (PMMI), the percentage of manufacturers using robotics in their packaging lines is expected to rise sharply over the next five years (Figure 4). Also, the use of robotics among packing companies is also expected to rise (Figure 5).

[Editor’s Note: The Packaging Machinery Manufacturers Institute (PMMI) is a trade association with more than 500 member companies that manufacture packaging and packaging-related converting machinery, commercially-available packaging machinery components, containers and materials in the United States and Canada. They are the producers of “Robotics: Usage and Trends in Packaging Applications,” which is available for sale to non-members. For more information regarding the Packaging Machinery Manufacturers Institute, please see www.pmmi.org.]

Packing is a application common to many industries, and automation has proven to be very effective at reducing costs for the process, as well as provide a higher quality solution. Since many industries require packaging at some level of their manufacturing process, the use of robotic packaging systems is expected to rise. As with all industry specific applications, specific domain expertise is required to provide optimal results. Opportunities for robotic packaging applications are available to both robot suppliers and systems integrators with domain knowledge and robotics proficiency.

Small-to-Medium Enterprises
The worldwide economic downturn has resulted in a slump in demand for automobiles and electronics products, leading to a reduction in industrial robotics sales into these hard hit industry sectors, once a consistent, dependable source of revenue.

Moving into vertical market segments outside of the automotive and electronics industries presents industrial robotics companies with a way to diversify their customer base and drive revenue growth. For the most part, however, the industry’s initial non-automotive and non-electronics installations into, say, the pharmaceutical industry, were into large enterprises that could afford sizable amounts of capitol investment and had large production volume requirements.

Other opportunities exist for robotics companies to expand into small-to-medium enterprises (SMEs), especially in the manufacturing sector. In fact, the market for robotics installations into small-to-medium-businesses exceeds that for large enterprises. But most SMEs cannot afford large capitol investments. Also, they typically have greater need for flexible automation solutions that can easily be changed to meet shifting consumer demand. In addition, many SMEs do not have the personnel available with a deep understanding of how robots operate or how to maintain them, nor can they afford to outsource or use robotics consultants for an extended period of time.

Industrial robotic companies understand this and have made a concerted effort to expand into SMEs. Most solution providers have released products engineered specifically for the SME market. These systems meet some or all of the particular requirements of SMEs by:

  • Supporting small scale manufacturing, assembly and packaging;
  • Automating multiple tasks;
  • Being lightweight, portable and offering a small footprint;
  • Being very reliable;
  • Offering a low purchase price and minimal life-cycle costs;
  • Providing for quantifiable cost justification and short payback;
  • Allowing for rapid deployment, simple programming and easy maintenance.

Of particular interest is a collection of a 17 European partners, including a number of major European robot manufacturers such as ABB, KUKA, COMAU S.p.A., Reis Robotics GmbH and Güdel AG, who have joined forces in the SMErobot initiative with the goal of producing a whole family of SME-suitable robots. The SMErobot program, which began in March 2005 and is slated to finish in May 2009, has produced a number of successful demonstrations automating work such as welding and woodworking, as well as the ability for rapid installation and production changeover.

The purpose of the initiative from a business standpoint was to:

  • Design SME robot systems supporting multiple types of automation that would operate at a third of current automation life-cycle costs;
  • Develop new business model options for financing and operating robots that take into account shifting product volumes and life-times, as well as the wide range of workforce qualification levels found among SMEs;
  • Create designs focused on the needs and culture of SME manufacturing.

The SMErobot initiative also indicates that the robot designs should:

  • Be capable of understanding human-like instructions;
  • Be safe and productive while interacting in workspaces occupied by humans; and
  • Be deployed and integrated within three days.

Robotics support for SMEs is also underway through the natural evolution of existing robotic platforms. Leading vendors have released a number of low cost, flexible, user friendly automation systems. KUKA Robotics, for example, recently demonstrated a new small footprint, medium payload palletizing solution, the KR40PA. The KR40PAs can be configured to perform a variety of tasks, and the robot’s monoblock cell configuration allows the devise to be set up quickly to support a number of tasks, as well as making the robot cell portable.

Low Cost — As the industrial robotics industry matured and robots became fixtures in many industries, competitive pressures and advancements in technology drove down the price for robotics systems. The price for industrial robots have declined dramatically since they were introduced in the 1970s and proliferated in the 1980s. In the 1980s, a typical 4 axis robot might go for $50K. A similar robot today would cost less than half that amount. The unit price for a robot today is only 40 percent of the unit price of a robot in 1990, even though today’s systems boast of great increases in speed, performance and accuracy. The dropping price of robots has occurred at a time when labor costs were moving in the complete opposite direction (although productivity of human workers has also increased over the same time). For small-to-medium-enterprises, however, even the reduced prices are beyond their means. Moreover, the capitol costs for the robots themselves account for only approximately 25 percent-30 percent of the total work cell costs. The remaining costs are associated with robot programming and setup. Even with dropping prices, small and medium sized manufactures often cannot afford robotics systems.

For robots to proliferate among SMEs and cottage manufactures, robotics suppliers must:

  • Produce even smaller, extremely low cost systems suitable for low production volumes;
  • Offer flexible financing (including interest-free financing);
  • Support system leasing;
  • Allow for the trial use of robots.

Application Oriented Solutions
In the past industrial robots were limited to sales of general purpose models that could be used for a variety of process (with a change of tooling or processing equipment such as welding packages and dispensing guns) or that would require extensive modification to make them optimized for a single process. For a number of years, however, industrial robotics companies have released robotics packages that are specifically designed to optimize performance for a particular process. Motoman, for example, offers ten different families of optimized robotic systems for a wide range of applications including arc welding, coating, palletizing, material removal and so on.

Offering application oriented solutions is a common method for industrial robotics companies to expand their customer base and solution set. For both large and small suppliers, it holds the promise of continuous product introductions and addition of incremental revenue streams. By basing individual application offerings on standard systems and modules, as well as limiting application support to the most promising markets, companies can avoid the problems associated with supporting a large number of product variants. Tuning systems to the exact needs of client companies offers resellers and integrators additional business opportunities.

New Countries
A very common method for companies to increase their customer base, particularly in to day’s era of a single, global economy, is to expand operations into new countries. Industrial robotics companies are doing exactly that. Many of the largest industrial robotics companies have added subsidiaries and distributorships throughout the developed world. Companies of all sizes are now targeting the rapidly emerging BRIC countries (Brazil, Russia, India and China).

Locations for Outsourced Manufacturing — Countries that are centers for outsourced manufacturing understand that that in order to compete in the global economy, they must adopt global practices, including manufacturing automation by way of robotics. For these manufacturers, robotics can further reduce manufacturing costs, while increasing product quality.

Ready Markets for Manufactured Goods — Many countries acting as outsourcing centers are expanding rapidly, creating a new class of consumers and expanding demand for manufactured products. For example, in 2006 China became the second largest market for automobiles. To serve these market needs, manufactures are increasing their in-country presence to build products for local markets. Companies that have set up BRIC subsidiaries since late 2007 include Murata Machinery (India, november 2007), ATI Industrial Automation (China, December 2007), Acme Manufacturing (India, June 2008), Applied Manufacturing Technologies (India, July 2008), Stäubli (Russia, February 2009), Perceptron (India, April 2009) and KUKA (Russia, June 2009). Companies are also targeting non-BRIC emerging countries, including HIMA (Malaysia, July 2007), Omron Electronics (Mexico, March 2008) and Beckhoff Automation (Slovenia, (May 2008).

Reduce Risk and Drive Revenue
To reduce risk and drive revenue, industrial robotics companies are expanding their customer base beyond manufacturing and assembly within large enterprises in the automotive, electronics and semiconductor industries by way of directed market expansion, as well as exploiting technological advances. Directed market expansion takes many forms, with each form often intersecting with other approaches. These efforts have been successful, and each success gives evidence to the quantifiable benefits of robotics automation, thereby making subsequent expansion efforts easier justify and support. The rate, scope and variety of industrial robotics directed market expansion efforts provides opportunities to large and small robotics companies, technology providers, systems integrators and distributors, and domain experts alike.

—Dan Kara

RESOURCES
Companies

  • ABB – www.abb.com – www.us.abb.com
  • Adept Technology Inc. – www.adept.com
  • Beckhoff Automation www.beckhoffautomation.com
  • DENSO Robotics – www.densorobotics.com
  • Epson Robots – www.robots.epson.com
  • Fanuc Robotics – www.fanucrobotics.com
  • Hirata Robotics GmbH – www.hirata.de
  • Hyundai Robotics – www.hyundairobotics.com
  • Kawasaki Heavy Industries – www.khi.co.jp
  • K-Robotix – www.k-robotix.de
  • KUKA Roboter GmbH – www.kuka-robotics.com
  • Motoman – www.motoman.com
  • Omron Electronics LLC- www.omron247.com
  • Seegrid Corporation – www.seegrid.com
  • ST Robotics – www.strobotics.com
  • Staubli Robotics – www.staublirobotics.com
  • Thermo Electron Corp. – www.thermo.com
  • Yamaha Robotics www.yamaharobotics.com

Associations and Industry Groups

  • British Robot Association – www.bara.org.uk
  • European Factory Automation Committee – www.efac.org
  • European Robotics Network – www.euron.org
  • International Federation of Robotics – www.ifr.org
  • International Organization for Standardization – www.iso.org
  • Japan Robot Association – www.jara.jp
  • Packaging Machinery Manufacturers Institute – http://pmmi.org
  • Robotic Industries Association – www.robotics.org
The Bottom Line

  • The rate, scope and variety of industrial robotics directed market expansion efforts provides opportunities to large and small robotics companies, technology providers, systems integrators and distributers, and domain experts alike.
  • The worldwide economic recession will increase the pace of industrial robotics innovation and market expansion.
  • Opportunities exist for robotics technologies that support the doctrines of Adaptive/Agile Manufacturing.
  • Robotics technology that works collaboratively and in close proximity to human workers to automate complex manual manufacturing processes represents a large opportunity.
  • The spread of robotics outside the automotive and electronics industries open up opportunities for companies that can provide domain specific expertise and technology.
  • Companies should rework products and services offerings, as well as seek regulatory approval, to avail themselves of the robotic food processing and preparation opportunity.
  • Domain knowledge, coupled with robotics proficiency, provides both robot suppliers and systems integrators with opportunities in the packaging industry.
  • Robotics suppliers must offer creative financing and leasing options to expand robotics usage among SMEs and cottage manufactures.
  • Standardization and modularization, plus support for only the most promising markets, are the keys to a successful applications oriented solutions strategy.
  • BRIC countries are outsourcing centers as well as new markets for manufactured goods, and therefore, excellent sites for geographic expansion for industrial robotics suppliers of all sizes.