Economic slowdown halts robot invasion in North America as interest rises

Economic slowdown halts robot invasion in North America as interest rises

North American companies ordered about a third fewer robots last year as concerns about a slowing economy and rising interest rates made it more difficult to justify purchases of advanced machines, the first problem in five years in a steady evolution of robots replacing the region’s workforce.
“When the economy isn’t good, it’s easier to delay purchases,” said Jeff Bernstein, president of the Association for the Advancement of Automation, an industry group that tracks robot orders.
Companies bought 31,159 robots in 2023, down 30% from the previous year, the largest percentage decline since 2006 and the largest ever decline in net units, according to the group known as A3. The decline occurred in automobile-related industries, which constituted about half of the market last year, in addition to other sectors such as food manufacturing and metals.
Orders in the fourth quarter amounted to 7,683, a decrease of 8% compared to the same period of the previous year.
The slowdown in robotics orders came as some companies announced initiatives to develop more advanced versions of the machines. But for many robot makers, the sale of existing machines is hampered by concerns about a slowing economy and excess inventories that have built up during the Covid-19 pandemic. Universal Robots, a Danish company that makes small, flexible robots, recently reported a 7% drop in revenue for the year. Last, reaching $304 million.
“2023 was characterized by a challenging economic and business environment for many of our core customers with global industrial activity slowing in the first half of the year,” Kim Povlsen, president of Universal, told investors.
Robot sales have boomed during the Covid-19 pandemic, as producers rushed to use the machines to produce goods amid a severe labor shortage. In fact, 2022 was a record year for orders, according to A3 data.
Dave Fox, president of CIM Systems Inc., a Noblesville, Ind., company known as an integrator that assembles automated systems for customers, said his business started strong last year but then declined.
“Several major projects have been pushed forward this year,” Fox added. “There were certainly a few clients who raised concerns about where the economy was headed. Interest rates probably didn’t help.” Fox estimates that its business volume decreased by 30% in 2023, compared to the previous year.
A3’s Bornstein said most robotics producers he spoke with are optimistic that business will pick up during the second half of this year.
Bernstein stated that the industry has largely worked its way through the distortions caused by the pandemic. During the crisis, many companies placed additional orders for robots because they were concerned about receiving deliveries amid production delays and the collapse of global supply chains. “Inventory to work on before you order a lot of new robots again.”
Joe Gemma, chief revenue officer at Wauseon Machine, a systems integrator in Ohio, agreed that a glut of inventory has distorted business. “A lot of us were asking for additional inventory,” he said. “Our customers were too.”
Gemma added that the ongoing labor shortage in the United States means that the robotics business will continue to boom. “I was in a factory that normally had 600 people working in production, and they had 140 open jobs,” he said. “Almost everywhere we go, there is still a workforce challenge.”


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