Robotics Industry Insights
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Robotics in 2014: Market Diversity, Cobots and Global Investment
by Tanya M. Anandan, Contributing Editor
Robotic Industries Association Posted 01/10/2014
Before the famed crystal ball completed its descent … Before the first verse of “Auld Lang Syne,” there was another celebration of firsts. Twenty thirteen will go down in history as the year robotics took the marquee spot on the world stage.
In November, the NASDAQ welcomed the first-ever robotics stock index and for the first time a robot rang the closing bell, a privilege once reserved for humans. The event was simulcast across the massive, seven-story video tower in New York’s Times Square, headlining the moment robotics joined the commercial mainstream.
Between iRobot’s ads beamed to our living rooms, news of innovators like Google investing in robotics, and now its own globally traded stock index, robotics is attracting global investors and the average Joe alike. In 2014, the industry is poised for an influx of global investment and market diversity.
Named one of the most intriguing exchange-traded funds of 2013, ROBO-STOX™ Global Robotics and Automation Index ETF (Ticker Symbol: ROBO) went from 0 to $54 million invested in 77 stocks around the world.
“And that’s just in the first two and half months!” says Frank Tobe, Cofounder of ROBO-STOX LLC and Editor/Publisher of The Robot Report. “During the same period, ROBO’s price is up over 7%.”
The story of ROBO-STOX began nearly a decade ago when Tobe wanted to invest in the robotics industry. Unable to locate a comprehensive list of robotics stocks, he decided to make his own.
“Now, with ROBO-STOX, there’s a basket of stocks out there,” says Tobe, “so that a person who is interested in investing in robotics doesn’t have to pick and choose his own stocks. It’s like a mutual fund.”
The new index fund includes robot manufacturers such as ABB, FANUC, iRobot, KUKA and Yaskawa. A complete list of companies can be found here.
The index is reevaluated every quarter. “The portfolio could change quite a bit over the next couple of years,” says Tobe, who’s sort of become the E.F. Hutton of robotics. When he talks, people tend to listen.
Tobe sees all this attention on robotics as proof that the financial sector is taking notice. “Most venture capitalists now have a robotic partner. They’re all starting to pay attention, which means to me that Wall Street is paying attention. That was the big news of 2013. The stories of Amazon, Apple and Google, that’s not just technology news, that’s financial news!”
This year’s news is expected to herald diverse markets, intuitive software and cobots on the move.
There’s a noticeable shift in the diversity of the robotics industry. Although automotive still dominates the North American market, other sectors are gaining ground.
“What we’ve already seen in 2013 is tremendous growth in the electronics sector,” says Henrik Christensen, Executive Director of the Institute for Robotics and Intelligent Machines at Georgia Institute of Technology in Atlanta, Georgia. “I think for the first time electronics was bigger than automotive. There’s no doubt that trend will continue.”
“We’ve seen Apple, Lenovo and Foxconn build factories here,” says Christensen. “They’re starting to reshore, and as part of this trend they are using large numbers of robots to be competitive on American soil.”
Robot manufacturers are equally optimistic. “We expect to see good, strong growth in the automotive and non-automotive markets, the food, the beverage, electronic, medical devices and pharmaceuticals. All those industries we think will continue to be strong in 2014,” says Mick Estes, General Manager of Distribution Sales, Marketing and Education at FANUC America Corporation in Rochester Hills, Michigan.
Statistics collected by the Robotic Industries Association (RIA) put the North American automotive market in perspective. “We really took off at the end of 2012,” says Alex Shikany, Director of Market Analysis at RIA in Ann Arbor, Michigan. “We set record-high numbers of orders. Those were in the pipeline, so what we saw in 2013 are those orders being pushed through the system. Shipment numbers were up double digits, while orders actually contracted due in part to the automotive slowdown.”
On the heels of a big purchasing year, this slowdown was inevitable. Shikany expects this trend to continue through the first quarter of 2014.
Christensen, who is also Coordinator of the U.S. Robotics Virtual Organization, sees growth in other automotive areas. “Where traditionally we’ve seen a lot of robots being used in the paint shop and in welding processes, we’re slowly seeing more robots being moved into the assembly part of the automotive sector. I think automotive will get another wind.”
RIA’s stats in fact show an increase in assembly applications. “While the assembly category is notably smaller than the welding and material handling categories, it is up more than 50 percent year over year,” says Shikany.
With robots becoming more adept and cost-effective for assembly operations, this could bode well for a variety of industries.
“Just about all the non-automotive industries (life sciences, plastics and rubber, semiconductors and electronics) were up double digits for 2013,” says Shikany. “Many agree that it is a good thing for robotics to branch out and reach different industries, and it looks like that’s starting to happen.”
Still, all those other industries combined account for only 40 percent of all robot orders in North America. Automotive OEMs and automotive component manufacturers account for 60 percent. “It’s still a work in progress, but it is shifting,” says Shikany. “The auto industry used to be more than 70 percent.”
Others are noticing the shift. “Arguably, the North American market has been a bit behind some of the other markets as far as the speed of adopting automation,” says Stuart Shepherd, CEO & Area Sales Manager - Americas for KUKA Robotics Corporation in Shelby Township, Michigan. Shepherd, who is the incoming Chairperson for the RIA Board of Directors, attributes the recent upsurge to several factors.
“I think they’ve seen other countries with low-cost labor purchasing and installing robots at an alarming rate,” says Shepherd. “I also think employers in North America don’t want to hire people and then turn around and lay them off again, if there’s a downturn. By investing in flexible automation, that gives them the ability to increase the production capability of their current workforce and help bridge any gap due to the skilled labor shortage.”
“The best-performing companies are adding robots and growing. Look at Tesla,” says Shepherd. “Tesla Motors wasn’t even on the face of the Earth a few years ago and now they’re producing cars, hiring people, and investing in equipment. Robots are a part of that success.”
“Investments in robots are also bringing growth and employment back to North America as we become more competitive with the global market,” adds Shepherd.
Cobots on the Rise
A new breed of collaborative robots designed to work safely alongside humans is also transforming the robotics landscape to include more small and mid-sized businesses.
“I think we will see a lot more applications in the future where robots and humans are working directly together,” says Enrico Krog Iversen, CEO of Universal Robots A/S in Odense, Denmark. “Our main focus is still the small and medium-sized enterprises. Now, having said that, it’s not like if BMW, Volkswagen, Apple, or Procter & Gamble call us that we’re going to turn down their business. We are actually running two separate business models, one to handle the very large global accounts and one to handle our main target, the SMEs.”
Universal’s nimble cobots are already on the job at BMW and Volkswagen and in testing at P&G. And while other cobot manufacturers are scaling back, Universal is exploding.
“We are hiring additional people for our offices in New York and in China, and elsewhere,” says Iversen. “We expect to see significant global growth.”
Iversen says Universal shipped more than 1,000 units in 2013 and plans to ship about 2,000 in 2014. This will bring the manufacturer’s total installed base to about 5,000 units by the end of this year.
Universal’s success is indicative of a trend toward smaller and lighter robots for pick-and-place applications, small-part assembly, machine tending, and material handling and logistics.
“Robots are getting smaller, they’re able to handle more complex and intricate tasks,” says RIA’s Shikany. “End users in the semiconductor and the electronics market are starting to tool their factories with automation because the robots are more capable.”
Attend the Collaborative Robot Workshop hosted by the Robotic Industries Association to learn more about Collaborative Robots, their applications & capabilities, potential limitations, and possible safety issues. This one day event is being held on Wednesday, April 4, 2014 in Boston, Massachusetts at the Hynes Convention Center. For more information, click here.
Semiconductors on the Move
Collaborative robots come in many forms. Some are mobile.
“In the semiconductor space, we’re uniquely positioned because we have an autonomous mobile robot that is clean-room certified,” says Rob Cain, President and Chief Executive Officer of Adept Technology Inc. in Pleasanton, California. “These robots are moving around production wafers in a fab in Singapore.”
According to Cain, cleanliness issues and missed processing errors are the top two causes of wafer scrap in fabs. He says Adept’s mobile robots have been able to eliminate both issues. “At the same time, we’re able to reduce operating costs by allowing fab workers to do other high-value jobs.”
Cain says Adept has a mobile fleet of 25 units working in production. With continued development in hardware and enterprise software, their objective longer term is to have 100 of these mobile robots working in harmony within the same factory.
“And not only working together, but also linked to the customer’s ERP system and job management system,” adds Cain.
Cain, a turnaround expert, brought renewed focus to Adept in 2013. “We think of our company as more of a software company wrapping hardware around our software solutions. The software and analytics we’re building for the semiconductor marketplace play very nicely with our overall mobile strategy for going into other verticals, such as the warehouse and logistics space.”
Logistics in Sight
Reported to be a billion-dollar market, the logistics and warehousing space is in the crosshairs of many players in the robotics industry.
“One of the big challenges in the logistics area is that we have labor turnover,” says Georgia Tech’s Christensen. “In many of these companies, people only stick around for a few months because it’s very physically demanding and it’s not intellectually challenging.”
Christensen says until recently it was the cost of technology that was holding back expansion in this market. “Now we’re getting lower-cost and standardized solutions. Vision plays a huge role in this sector. We’re getting an entirely new generation of applications we can solve because we can get much tighter vision integration.”
Vision is one of the focuses of Georgia Tech’s renowned robotics program. “This is sort of our sweet spot,” says Christensen. “Right now we’re testing vision solutions for testing the accuracy of robots and we’re using vision solutions for looking at new applications in laboratory automation as well.”
Other software solutions are making robots more perceptive than ever before.
“In the old method of designing robots, you designed really stiff robots and that gave you very high repeatability,” explains Christensen. “Now we design robots that do not necessarily have the same stiffness, but by using smart sensing and control, we can get the same performance. That also reduces the cost of the system. That’s going to be one of the big drivers going forward.”
In 2013, FANUC was named one of Forbes most innovative companies. “We focus on intelligent robots,” says Estes, “robots that can touch, see and feel.”
“We have a patented software product that we use to improve robot motion,” explains Estes. “It actually learns the characteristics of the program path and smooths it out, so we’re able to optimize the robot path and increase the speed of the robot. That enables us to reduce the cycle time, which allows our customers to increase their throughput. When you’re increasing their production throughput, you’re saving them money.”
“Where it’s had the biggest impact initially was in the spot welding market,” says Estes. “You typically have a lot of spot welding robots on a line. Cycle time is critical and so we focused on applying it there first. Now we’re applying it to high-speed motions for pick-and-place robots.”
This video courtesy of FANUC America Corporation shows the Genkotsu Learning Control software in a pick-and-place application.
Real-time learning is also an advantage of Adept’s mobile systems. “Most of our competitors still require a grid system or some sort of alteration to your facility,” says Cain. “Every one one-thousandths of a second our robot is relearning what’s going on in your facility, and it requires no alterations to the facility. So if you have 25 robots working in a factory and you decide to move a piece of equipment, you don’t have to re-learn 25 robots the new layout.”
Robots and Food
Adept is also applying sophisticated sensing technology with in-house vision integration to the growing food processing and packaging market.
“The food market is expanding nicely in North America, Europe and Asia Pacific Rim,” says Cain. “In North America, a lot of that catalyst is related to the Food Safety and Modernization Act. It encourages companies to instill more machinery and automation into the manufacturing process to eliminate potential bacteria and hazards.”
“We’ve also launched a specific initiative with our Quattro product which is USDA accredited and accepted,” says Cain. “It’s the only robot accepted by the USDA, and to go with that product we offer a unique set of grippers that are IP protected.”
This video montage courtesy of Adept Technology Inc. shows various food processing and packaging applications from donuts to drumsticks.
“In the food world there are issues of contamination and sanitation. Things have to be cleaned. There’s high-pressure spraying and washing. That’s not a good environment for an automotive spot weld robot,” explains Bob Rochelle, Food and Packaging Industry Specialist for Stäubli Corporation in Duncan, South Carolina. “The typical robot has nooks and crannies. In the food world, all the nasties (Listeria and salmonella) love those nooks and crannies.”
“The Stäubli robot is made to be in a clean room,” says Rochelle. “It’s made to be sterilized, it’s made to be wiped down, washed down and cleaned. So we make our products to eliminate these nooks and crannies. Now we have what we call a wash-down HE (humid environment) robot. It’s the closest thing to any true food wash-down, sanitary robot design.”
Rochelle says the advantages of robotics in the food industry are numerous. “The human body is one of the filthiest things on the planet. The more robots, the fewer contamination sources, and the less chance the president of the food company doesn’t sleep at night because of contamination issues.”
He also says labor for these kinds of jobs is hard to find. If there was ever a dull, dirty and dangerous job ripe for robotics, food processing is it.
This video shows a Stäubli deboning robot in action.
The Food Safety and Modernization Act hit some roadblocks and is not expected to go into force until 2015. In the meantime, Rochelle is working in concert with the standards writers at RIA to develop a robot sanitary standard to emulate the provisions of the stringent 3-A sanitary standard, which covers dairy and meat processing.
Highly contamination-prone, quality-critical applications are also found in the life sciences sector. These include applications in the pharmaceutical and biomedical markets.
“We’re seeing new robotics applications for menial tasks that are often carried out at pharmaceutical companies and in laboratory testing,” says Christensen. “Those are the next frontiers.”
This video shows Stäubli robots hard at work in a laboratory testing 3 million specimens a week, a feat that would take a human more than 12 years.
Adept recently fulfilled an order for 12 of its autonomous mobile units for biomedical handling. “Those Lynx robots will go into a blood-borne pathogen space moving different types of fluids,” says Cain, “and will allow for much better traceability, absolute repeatability and documentation of the whole process.”
The life sciences market has already experienced a growth spurt, which is expected to continue in 2014.
Machining is another evolving market for robotics. “Traditionally, we’ve used CNC machines because they have very high accuracy and robustness,” says Christensen. “We’re beginning to see high-performance robots that can out-compete a CNC machine. And we’re starting to see the industrial robotics providers having CNC kernels running on their controllers. Now if you’re trying to shift to robotics, this makes for a very easy migration path.”
Flexibility and lower cost are making a strong case for robotic material removal. Stäubli makes a dedicated milling robot in which the sixth axis is a high-speed spindle. KUKA introduced the first commercial CNC control software that can be paired with a robot.
“Because of the rigidity and high performance of our robots, as well as the open nature of our controller, we’ve been the preferred company for developing robotic machining,” says KUKA’s Shepherd. “Having an open PC interface allows us to receive data differently than some other robots and makes it easier to program. Machining can be very challenging to program, if you don’t have a good methodology, so we introduced KUKA CNC, where you can use machine G-code to actually program the robot directly or through post-processors.”
The sophisticated control technology has found success in aerospace assembly.
Cobots Breaking the Cost Barrier
Cost also plays a pivotal role in the popularity of collaborative robots. “We’re seeing a lot of these smaller, lightweight robots doing pick-and-place operations,” says Georgia Tech’s Christensen. “It’s not so much the collaborative part as the fact that we can get robots that are relatively inexpensive to do these kinds of operations. That makes a big difference.”
Universal Robots’ base model sells for only $34,000. You can see why these cobots are particularly attractive to small and mid-sized businesses.
“It helps that we’re starting to get user interfaces with these collaborative robots that are simple enough to use that you don’t have to spend days training,” says Christensen.
Christensen says the big driver is cost. “Because we can take away the safety fences and reduce training, that opens up a number of new opportunities for introducing robots where before we would have said this is simply way too expensive.”
Universal’s CEO echoes this trend. “I think when you go to the end users and really talk with them, and observe what they are looking for, the real value driver is cost payback period,” says Iversen. “With easy programming and the collaborative mode where you save on all the safety equipment, we can actually bring down the total investment and that brings down the payback period.”
Iversen says the payback period in Europe and North America is between 3 and 12 months. He said Eastern China is a bit longer at about 12 to 18 months, due to the lower salary levels.
KUKA also has a new collaborative robot it calls the LBR5. Similar to Universal’s robot, it’s small and lightweight, but it commands a higher price tag for its increased precision and control.
“The market is evolving towards collaborative robots in general industries, automotive tier manufacturers, and other markets,” says Shepherd. “It’s clearly an area of growth opportunity.”
Investing Time, Money and Talent
ROBO-STOX’s Tobe recognizes this growth opportunity for cobots. That’s one of the reasons he chose Universal’s robot to ring the closing bell the day his stock index was inducted.
“I wanted something that existed in the real world,” says Tobe. “I didn’t want a humanoid robot because those are academic and they don’t exist in the real world.”
Tobe also said he wanted companies represented that were ripe to go public. He feels both Universal Robots and SCHUNK, which provided the gripper on the end of Universal’s arm, could be headed in that direction.
“I wanted to show that there’s a breadth of companies in the industry and a lot of them are privately held, just waiting for enough success to go public,” says Tobe. “That’s part of the group that I track. It’s good for my IRA and yours.”
So what do the experts think will contribute to these up-and-comers’ success and the robotics industry as a whole?
Georgia Tech’s Christensen suggests a three-prong approach. “We need better mechatronic components where we really have a much tighter integration than we had before. We need to combine that with more artificial intelligence to make the systems smarter, both in terms of diagnostics and higher-level robotic languages. Third, we need to build the right interface for the user. I think these three things will drive the industry forward.”
“We have probably one of the largest groups in the country studying usability,” says Christensen. “Most young people have spent about 12,000 hours playing video games and when they look at our robots they say, ‘Did you stop developing these in the ‘70s?’ They feel that today’s robots are old fashioned in their interface design. So we’re looking at how we can upgrade the user experience so that it’s on par with these video game interfaces.”
Christensen cited examples such as standardized button layouts for teach pendants and advanced 3D graphics. These are off-the-shelf characteristics of $300 home consoles, but not their five-figure robot counterparts.
FANUC’s Estes says one of their focuses will be on education. “We work with tech schools and universities to educate workers on how to successfully implement robots into automation.”
“Now that there’s a reshoring effort taking place, we need to make sure there are enough automation workers to support the surge of companies coming back here,” says Estes. “Robots aren’t about displacing workers. They’re about supporting and supplementing the workforce.”
Clearly, the robotics industry has work to do and an exciting future ahead. We could even have more to celebrate this time next year. The industry’s new investors are betting on it.
RIA Members featured in this article:
Adept Technology Inc.
FANUC America Corporation
Georgia Institute of Technology
KUKA Robotics Corporation
Universal Robots A/S