Is Robot Adoption Slowing Down?
Posted on Feb 06, 2020 7:00 AM
Signs suggest that robot adoption might be slowing down… but is it true? It's a bit more complicated than that. Here are the facts.
It's the start to a new decade. As the sun rises on the '20s, a feeling of uncertainty has fallen across many businesses in the manufacturing industry.
Consumer interests are changing, supply chains are more volatile than they have ever been before, and the robot stock index just had its first real dip since 2008.
Yes, things are changing. That is undeniable.
A look back to when the first Universal Robots e-Series arrived at Robotiq's office in Fall 2018.
But, is robot adoption really slowing dow?
To answer this question properly, we need to look closer at the signs and the bigger picture.
Here are the facts…
The signs: 2 suggestions that robot adoption might be slowing down
There have been a couple of signs recently that the robotics industry could be experiencing a lull.
1. Robotics stocks dipped a bit
At the RoboBusiness conference 2019, Jeremy Capron from ROBOGlobal said the following:
"2017 was an incredible year for the world of robotics because the industry was firing on all cylinders – factory automation was booming in all major regions of the world. Then in 2018, manufacturing activity peaked around February, and since then, we’ve been in a down cycle."
ROBOGlobal is a stock index that tracks the performance of the robotics industry. It was started in 2013 to benchmark the industry and back-projected all the way to 2008.
Since 2008, the index (and thus the robotics industry) has risen gradually in value every year. There have been a few years where it leveled out or growth slowed (e.g. 2011 and 2014-2016) but there has never been a huge dip… until 2018 when the index fell quite rapidly throughout the year.
BOTZ (another robotics stock index) also saw similar trends.
As Capron said, the industry entered a slight downward spiral in 2018…
2. Robotics companies have failed
Another sign that robot adoption could be falling is the failure of several notable robotics companies over the last few years. Back in 2018, a stream of companies closed their doors, including Mayfield and Jibo. Rethink Robotics was on the verge of shutting down before it was acquired by the HAHN group.
However, these failures weren't actually a sign that robots were becoming less popular. As we reported at the time, they were an example of robotics companies failing to determine and set user expectations. The companies weren't sustainable as businesses and they folded as a result.
What these 2 signs really show
On the surface, these 2 signs could suggest that robotics adoption could be falling, but in reality, this doesn't seem to be the case — robotics is doing as well as it has been for the last decade.
Just as it has done in the past, the robotics industry has continued to grow at a reasonably steady rate. Despite the 2018 dip, the overall trend is that the robotics industry is booming, as evidenced by these 2019 figures from the International Federation of Robotics.
Since the fall of ROBOGlobal stock index in 2018, the index itself has also recovered. It has almost (but not quite) returned to the peak level that it had achieved in February 2018.
Plus, since those notable robotics companies failed in 2018, there have also continued to be investments across the robotics industry. Many more robotics companies have experienced successes. At Robotiq, we had our own major success by achieving a round of investment to help us to continue to grow.
The bigger picture: Manufacturing is changing around the world
To put the current situation into context, it's also worth looking at the bigger picture worldwide.
There are 2 relevant factors which affect the robotics industry:
- The manufacturing industry itself is entering slightly difficult times.
- The robotics industry is performing differently in different countries.
Taking these both into account, the robotics industry could actually be doing rather well!
1. Manufacturing is experiencing a lull
The manufacturing industry has begun this new decade in a less-than-great situation. According to a recent report from Deloitte, there was a slowdown in the growth of manufacturing during 2019. The report attributed this slowdown to various challenges within the wider market, including slowed production in some industries, trade tensions, skills shortages, and supply chain volatility. All of these factors have combined at once to mean that manufacturing is currently entering uncertain times.
Manufacturing is one of the core industries for robotics. If it experiences a lull, the robotics industry will also be affected. However, as the Deloitte report explained, one of the best ways for manufacturing businesses to "weather the storm" is to invest in robotics and other digital technologies to help streamline operations.
2. It's not the same worldwide
Another important factor is that the robotics industry is doing very well in some countries and not so well in others.
According to data from 2017 (admittedly a few years ago now), there is quite a big discrepancy between how many robots are being adopted internationally compared to the predictions.
In that survey, the top 5 countries where robot adoption exceeded expectations (where figures are the percentage of the expected number of robots) were:
- South Korea: +239%
- Singapore: +179%
- Thailand: +159%
- China: +153%
- Taiwan: +126%
On the flip side, the 5 countries had dropped most below expectations were:
- United States: -49%
- Denmark: -49%
- Canada: -44%
- Italy: -40%
- Sweden: -39%
This data suggests that the robotics industry is thriving in some parts of the world. If we only look at the local situation (e.g. the US, Canada, Europe) and find that there is a slowdown in robot adoptions, it isn't a realistic representation of the true state of the industry.
What does this all mean for you?
From all the factors explained above, we can draw a few conclusions:
- Yes, there has been a bit of a dip in the robotics industry recently.
- It was only a small dip and the industry continues to grow despite it.
- There is also a bit of a lull in some areas of manufacturing right now, but this could be the best time to invest in robotics.
- Robot adoption is exceeding expectations in some parts of the world more than others.
For you, this means that there is nothing to be concerned about. Investing in robotics is still a strong move to help your business continue to grow in the new decade.
As a recent report from the Information Technology and Innovation Foundation concluded:
"Robot adoption will likely be a critical determinant of productivity growth."