US industry pares robot orders amid caution about economy
For many robot makers, selling existing machines has been hampered by worries about excess stock
North American companies ordered about a third fewer robots in 2023 as worries about a slowing economy and higher interest rates made it harder to justify buying the advanced machines, the first hiccup in five years in what has been a steady progression of the robot invasion of the region’s workforce.
“When the economy isn’t great, it’s easier to delay purchases,” said Jeff Burnstein, president of the Association for Advancing Automation, an industry group that tracks robot orders.
Companies bought 31,159 robots in 2023, a decrease of 30% on the year before, the largest drop in percentage terms since 2006 and largest drop yet in net units, according to the group. The pullback occurred in automotive-related industries — which made up about half of the market in 2023 — as well as other sectors such as food and metals manufacturing.
Orders in the fourth quarter hit 7,683, an 8% drop from the same period a year earlier.
Slowing robot orders came even as some companies announced initiatives to develop more advanced versions of the machines. Robotics start-up Figure said in January that it forged a partnership with Germany’s BMW to deploy humanoid robots in the carmaker’s South Carolina factory to take on certain physical tasks. Electric vehicle maker Tesla also has a humanoid robot in development.
But for many robot makers, selling existing machines has been hampered by worries about a softening economy and the excess inventories built up during the Covid-19 pandemic. Universal Robots, a Danish maker of small, flexible robots, recently reported its revenue fell 7% in 2023 to $304m.
Universal’s president, Kim Povlsen, told investors: “2023 was characterised by a difficult economic and business environment for many of our core customers, with global industrial activity slowing in the first half of the year.”
Robot sales boomed during the Covid-19 pandemic as producers scrambled to use the machines to churn out goods amid a dire labour shortage. Indeed, 2022 marked a record year for orders, according to data from the association.
To be sure, robots are just one type of equipment companies need, and other gauges of spending have held up better in the US. Orders for non-defence capital goods excluding aircraft — a measure closely watched by economists to track trends in business spending — rose 1.7% in 2023, according to the commerce department, suggesting that investments in more basic types of equipment remained close to steady as the economy defied expectations of a sharper slowdown.
Dave Fox, president of CIM Systems, an Indiana company known as an integrator that assembles robotic systems for customers, said his business started off strongly in 2023 but then slumped.
“Several big projects got pushed into this year,” said Fox. “There were definitely a few customers who brought up their concern about where the economy is headed. And interest rates probably didn’t help.” Fox estimated his business volume fell 30% in 2023, compared with the year before.
Fox said some customers who delayed orders were now asking for updated quotes, which is a good sign for business in the months ahead. But he said it was too early to say whether business will return to lofty pandemic levels.
Burnstein said most robot producers he spoke to were optimistic that business will pick up during the second half of this year.
Burnstein said the industry had largely worked its way through the distortions caused by the pandemic.
During the crisis, many companies put in extra orders for robots because they worried about receiving deliveries amid production delays and a breakdown in global supply chains. “There’s still this feeling that companies were buying in advance of their needs [in 2022)]” said Burnstein, “so a lot of companies now have inventory to work through before they order a lot of new robots again.”
Joe Gemma, chief revenue officer of Wauseon Machine, a systems integrator in Ohio, agreed there was an inventory glut that distorted the business. “A lot of us were ordering extra inventory,” he said. “Our customers were too.”
Gemma said an ongoing shortage of labour in the US meant the robot business would continue to thrive. “I was at a plant recently that normally has 600 people working in production — and they have 140 open positions,” he said. “Almost every place we go, there’s still a workforce challenge.”
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