Jan has more than 10 years of experience in industrial automation and manufacturing research. Jan is leading Interact Analysis’ APAC operations and is also research director for our industrial automation and robotics research.
Recent industry figures for industrial robots have once again put the market in the spotlight. According to the Robotic Industries Association (RIA), North American robotics unit shipments surged 32 percent in Q1 2017, with revenues growing 28 percent over the first quarter of 2016. Similarly, figures from the Japan Robot Association (JARA) show growth of 50% in units for Q2 2017 over the same period in 2016. And for China, according to the National Bureau of Statistics of China, industrial robot production volumes reached 59,097 during the first half of 2017, a 52.3% increase over the same period of 2016.
Encouraged by these positive numbers, more and more discussions about the outlook of the industrial robot market are taking place in the manufacturing world. In fact, the “industrial robot topic” has remained a key theme of major trade shows and forums over the past few years. But why is the topic so favored? And what makes people so excited when robots only account for 1% of the total machinery market? One of the reasons is the changes that industrial robots may bring to the manufacturing world, and how the future of manufacturing may evolve. With its current prominent level of automation, and the ongoing advancements in their “intelligence levels”, industrial robots not only make production more efficient, but also “smarter”. Especially when robot use converges with the other technology trends such as IoT, artificial intelligence, and cloud processing, etc.
Key Market Drivers
Developments in the robot market since the second half of 2016 are linked to changes in its downstream industries and applications, and more importantly, the opportunities that exist.
- Strong demand from its core manufacturing base. The industrial robot market has showed robust growth since the second half of 2016. And most of the data points so far show that growth will reach a record seven-year high in 2017. This is in line with the pace of development of the global manufacturing industry. According to a two-quarter global manufacturing report released by the United Nations Industrial Development Organization (UNIDO), the global manufacturing industry is expected to grow by 3.2 percent this year, the highest in the past six years, and the global market demand for manufactured goods will also be expanded. In fact, the investment in robots for a manufacturing plant is far more than the purchase of a few robot body sets. It’s about the upgrade or transformation of the production line or even the plant. A massive amount of planning, system integration work and capital is necessary to make this happen. So, the robust growth of the industrial robot market, to some extent, indicates end-users’ interest in investing in automation, and the growth of which is likely to continue in the coming six months as end-users make capital investments to increase productivity and boost their competitiveness.
- China the world’s largest manufacturing base is experiencing unprecedented demand. In the second half of 2016, the world’s largest industrial robot market started to see significant growth. Shipments in 2016 reached the highest level ever recorded for a single country. Industrial robot bodies and key components (precision gearboxes and geared motors) were out of stock for several months. Similar trends were seen for many of the other machinery sectors and the industrial automation market in general. It is worth noting that this round of growth in China is neither a replication of early 2000, when low-level industry base started to welcome automation products and many green field projects pushed the growth of the market; nor a replication of 2008/2009, when the market was mainly driven by the government’s 4 trillion CNY stimulus package. The main driving force for this round of growth is upgrades within the installed base to improve manufacturing competitiveness and productivity, taking one step further towards advanced manufacturing. As a result, this round’s robust growth in China has helped to cultivate the market development of more industry applications for industrial robots, such as the electrical & electronics industry, plastic moulding industry and logistics.
- Robot / automation demand increase in general industry. Automotive was the first industry that adopted robots and has been the main market ever since. The automotive industry has the highest level of automation and is likely to invest in new and advanced technology to improve production efficiency. As an example, 10 years ago, around 70% of robots sold to the North America market were used in the automotive sector. And the industrial robotics “Big 4” (ABB, Fanuc, KUKA and Yaskawa), hold their solid position in the market primarily due to their business in the automotive industry. However, this is now starting to change. More industries have started to show strong interest in using robots on their factory floors, and more applications have developed. Stronger demand for industrial robots has been seen in other industries than automotive. In China, robot sales to the electrical & electronics industry increased by 75 percent to almost 30,000 units in 2016. In North America, the share of the automotive sector for industrial robot market has gradually decreased to around 50% in recent years, and stronger growth has been seen in semiconductor, food & beverage and consumer goods sectors. Similarly, logistics has experienced fast growth in the past few years in Japan and in many other regions of the world. Following the changes in applied industries, the application of robots has also expanded widely. More complicated and flexible applications such as assembly, as well as some simple applications such as loading/unloading have all seen a strong increase in the use of robots. All major robot suppliers have realized the ongoing changes and have put more effort on non-auto areas; for example, small payload robots have been added to many suppliers’ portfolios as there is an increasing demand from general industries.
- Technology convergence and more M&A activity. With the expansion of robot industries and applications, suppliers have shown greater willingness to co-operate to create more mutual opportunities. For example:
- FANUC is working together with Cisco, Rockwell Automation and Preferred Networks on the development and deployment of the FANUC Intelligent Edge Link and Drive (FIELD) system – a platform that connects not only computer numerical control machines (CNCs) and robots, but also peripheral devices and sensors – to deliver analytics that can optimize manufacturing.
- KUKA’s acquisition of Swisslog, and Omron’s acquisition of Adept, enabled them to have better access to new high-growth markets such as warehouse logistics, or to augment traditional fixed robots with additional flexibility to end-user applications through mobile robots.
There will also be more new entrants trying to take a slice of this market, which will lead to changes in the supplier landscapes in the coming years.
Particularly in China, there are even more local manufacturers taking bold steps to take participate in this market. For example, Gree Electric Appliances Inc, a leading home appliance maker is stepping up its efforts in intelligent manufacturing by using industrial robots － protected by the company’s own intellectual property rights － for a variety of industrial production processes. Another leading home appliance vendor in China, Midea acquired KUKA AG last year, aiming to create global powerhouse in field of robotics and automation.
The exciting world of industrial robots is developing rapidly and will have a major impact on the manufacturing world in the coming years. We will track the market development of industrial robots and mobile robots closely, with particular attention to their market segments for downstream industries and applications.