Daily Management Review

In 2023, The Robot Invasion Saw A Lull As The US Economy Weakened


In 2023, The Robot Invasion Saw A Lull As The US Economy Weakened
The robotic invasion of North America's workforce has been steadily increasing over the past five years, but there was a hiccup last year when businesses in the region ordered roughly one-third fewer robots due to concerns about a slowing economy and rising interest rates.
According to Jeff Burnstein, president of the Association for Advancing Automation, an industry body that keeps track of robot orders, "it's easier to delay purchases when the economy isn't great."
According to the group known as A3, companies purchased 31,159 robots in 2023, a 30% decrease from the previous year, the highest decline in percentage terms since 2006, and the largest decline in net units ever. The market was largely dominated by the automobile industry last year, but other industries like food and metals manufacture also saw a decline.
7,683 orders were placed in the fourth quarter, an 8% decrease from the same time last year.
Orders for robots began to decline even as some companies revealed plans to create more sophisticated models.
A robotics startup called Figure said last month that it had partnered with BMW of Germany to install humanoid robots in the factory in South Carolina to perform specific physical duties. Robotics company Tesla is also working on a humanoid robot.
Unfortunately, concerns about a slowing economy and the excess inventory that accumulated during the COVID-19 pandemic have made it difficult for many robot companies to sell their current models. Danish manufacturer of tiny, flexible robots Universal Robots recently revealed that its sales for the previous year dropped to $304 million, a 7% decrease.
"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," Kim Povlsen, president of Universal, said to investors.
During the COVID-19 epidemic, robot sales skyrocketed as manufacturers rushed to use the devices to make goods in the face of a severe labour shortage. According to A3's data, 2022 was a record year for orders.
Indeed, other metrics of spending have performed better in the United States, and robots are but one kind of equipment that businesses require. According to the Commerce Department, orders for non-defense capital goods, which do not include aircraft, increased 1.7% last year. This indicates that, despite expectations of a sharper slowdown in the economy, investments in more basic types of equipment remained relatively stable. Economists closely monitor these orders to track trends in business spending.
According to Dave Fox, the president of CIM Systems Inc., an integrator based in Noblesville, Indiana, that puts together robotic systems for clients, his company did well in the first half of 2018 before faltering.
"Several big projects got pushed into this year," Fox stated. "Some consumers did voice their concerns about the direction the economy is taking. Interest rates also most likely didn't help." According to Fox, his company volume decreased by 30% in 2023 when compared to the previous year.
Fox stated that a positive indication for business in the upcoming months is that several customers who postponed their orders are now requesting revised bids. However, he stated that it is too soon to predict if company will reach its pre-pandemic heights.
According to Burnstein of A3, the majority of robot manufacturers he speaks with are hopeful that business will increase in the second half of this year.
According to Burnstein, the business has mostly overcome the distortions brought on by the pandemic.
Many businesses placed additional orders for robots during the crisis, fearing that deliveries would be hindered by manufacturing delays and a collapse in international supply chains. "There’s still this feeling that companies were buying in advance of their needs (in 2022)," Burnstein continued, "so a lot of companies now have inventory to work through before they order a lot of new robots again."
Chief revenue officer Joe Gemma of Ohio-based systems integrator Wauseon Machine concurred that an excess of inventory was distorting the business. 
"A lot of us were ordering extra inventory," he said. "Our customers were too."
According to Gemma, the robot industry will continue to prosper because of the persistent labour deficit in the United States. "I was at a plant recently that normally has 600 people working in production - and they have 140 open positions," he stated. "Almost every place we go, there’s still a workforce challenge."