A report released this week by an industry watch group revealed that robot orders to North American-based vendors were down 36% for the first nine months of this year, driven primarily by the persistent slump in the domestic automotive industry.
The order decline, however, was not a complete collapse, according to the Robotic Industries Association (RIA) report, as new robot technologies are beginning to permeate other industries, including life sciences, aerospace, and CPG. In fact, non-automotive orders were down just 3% in the first nine months of 2006 compared with the year-earlier period, the RIA noted.
Through the first nine months of 2006, worldwide robot orders came in at 10,338 units, valued at $740.1 million, the RIA report estimated. North America accounted for the majority of sales, generating $698.3 million of the industry's total revenues.
Business has slowed significantly compared to the third quarter of last year, when a total of 15,791 robots shipped worldwide, at a value of $961.5 million. In 2005, the robotic industry set a record high, reporting $1.22 billion in worldwide revenue -- $1.16 billion of which came from North American accounts. The previous record was set in 1999, largely due to an increase in automotive industry activity, the RIA said.
In 2005, automotive manufacturers -- which account for about 60% of robot sales -- increased their orders by 49%. This year, that number has reversed.
"With robot orders from the automotive sector down 49% so far this year, it's no surprise we're in the midst of a down year for the robotics industry," said Donald A. Vincent, executive vice president of RIA, in a statement. "Automotive orders are traditionally quite cyclical and were at record levels last year. We expect to see automotive orders turn up within the next year or two as automotive manufacturers and their suppliers ramp up spending for future new product launches."
Earnings reports from big robot vendors such as ABB are showing the results of the recent spending slowdown. ABB's third-quarter numbers revealed a 2% decrease in robot orders, which in turn resulted in a 34% decrease in revenue, from $426 million in the third quarter of 2005 to $281 million in this year's third quarter.
Sales in automotive are likely to rebound, industry observers noted. But the real opportunity for robot vendors may exist in industries outside automotive. Vincent noted modest growth this year in some sectors, including life sciences, pharmaceuticals, and plastics & rubber. While the majority of robot applications in these sectors fall into the domain of material handling, new kinds of robots are beginning to emerge that are designed for industry-specific needs.
For example, OC Robotics has designed a "snake-arm" robot that features a number of vertebrae -- much like the human spine -- and can be used in aerospace applications to get inside jet engines, wings, and fuselages. OC Robotics and KUKA Robotics Corp. are currently working on a solution whereby the snake-arm acts as an extension of an industrial robot. It's currently being tested by Airbus UK, according to the companies.
Despite this week's gloomy RIA report, the overall outlook for the robot industry remains positive, as new types of applications extend robot capabilities, and as suppliers like ABB and KUKA focus their efforts on better-performing European car makers.
In North America, "I don't see things turning around among the Big Three anytime soon," noted Dick Slansky, a senior analyst at ARC Advisory Group, in an e-mail interview. But things are not quite as bad in Europe, he said. "The European car makers are basically going through a re-tooling phase now to upgrade and automate more. You will see companies like VW, Porsche, Daimler-Benz, and BMW applying a lot more 'Smart Assembly' methods and technology to replace manual final assembly processes."
In addition, Slansky noted, the North American market is staying afloat because of the European companies as well as Japanese and Korean automotive manufacturers, all of which are building new plants stateside. "If it wasn't for that, robot sales would be even worse in the U.S.," he said.