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Industrial Robotic Arms Race Leaves Experts Asking 'What Manufacturing Slowdown?'

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New Year’s Day hangovers were still being nursed when analysts around the world, spotting declines in various industrial activity indexes, blew their noisemakers: The U.S.-China trade spat was causing a global manufacturing slowdown.

But it turns out there's at least one corner of manufacturing that seems to be on the upswing, and on a pace, even amidst trade tensions, to experience a spurt during the next few years: industrial robotic arms.

Analysts at Framingham, Mass.-based technology industry research firm IDC recently forecast that the total market for robotics spending will reach nearly $120 billion in 2019, an 18% increase over last year's spending.

By 2022, the size of the robotics market – robots, drones, and all related technology and services – will total $210 billion. Around half of that will be in manufacturing, said John Santagate, research director of commercial service robotics, IDC. "Slowdown?" Santagate replied during a phone interview Jan. 8. "What slowdown?"

Okay, maybe for certain industries, such as auto making, continued sluggishness could be coming down the line, he conceded. “But we expect to see demand for robotics overall to grow around 20% each year for the next 5 years,” Santagate said.

He and other experts in the space say that even if U.S.-Chinese trade tensions escalate, there likely will not be a reduction in demand for robotic arms, as well as for end effectors, or specialized tools, that are paired with the arm; think hands, or, rather, talons.

Of course, a malaise in automotive manufacturing inherently can’t be couched as anything but potentially troublesome for robotics, as the auto industry is the largest buyer of industrial robots.

However, even as there was an ebb in robot sales to automakers, other industries experienced significant increases in orders. Non-automotive industries cumulatively experienced more than 20% growth in orders during the first three quarters of 2018, compared to the same period in 2017, Santagate said.

This past fall, the International Federation of Robotics released its annual World Robotics Report that examined global sales of robotic arms using 2017 data. Some 381,000 "units" worth $16 billion shipped in 2017, an increase of 30 percent.

“Industrial robots are a crucial part of the progress of manufacturing industry,” Junji Tsuda, President of the International Federation of Robotics, said in a public statement at the time. Robots within manufacturing are evolving as more types of cutting-edge technologies rise to the fore. These technologies include skill learning, failure prediction utilizing AI and the burgeoning realm of man-machine-collaborations, Tsuda said.

By 2021, the annual number of robots being supplied to factories around the world will reach about 630,000 units, the IFR said.

A closer look at one particularly massive sub-sector of robotic arms – we're talking Full Metal Popeye, or what's known as the heavy payload market – reveals further positivity.

The size of the heavyweight sector alone is expected to reach $14 billion by 2025, up from around $10 billion as of 2017, according to Allied Market Research.

Despite all of this anticipated positivity for the robotics sector, there rightfully remains palpable consternation among humans employed in manufacturing. Robotics evangelists emphasize that the rise of machines is not to be feared – that it’s merely an extension of a centuries-old rolling arc of innovation that impacts, ultimately, job descriptions more than net total of jobs available for humans.

But even the pro-robot champions admit that not all assembly line workers can be re-assigned. Add to this picture the possibility of a protracted, perhaps worsening, trade spat, as well as a continued drip feed of negative manufacturing activity statistics – the latest U.S. Manufacturing Purchasing Managers' Index (PMI) reading (December’s), for example, revealed the weakest pace of expansion in the manufacturing sector in 14 months – and it’s not easy to feel super psyched if you are made of flesh and bones, and work in a factory.

“We are really seeing a global [manufacturing] slowdown into this year,” Irene Cheung, an ANZ Asia strategist told Reuters on January 1. In Asia, particularly, export-oriented countries are hurting.

Asia is most firmly in the grippers of automation. This is especially true for China. As a manufacturing juggernaut, China represents the largest market in terms of industrial robotic arms sold and purchased. But there's another motion being sensed here: decades of strict population control measures have reduced China's available workforce, leaving it even more reliant on machines.

"That's not changing any time soon," Santagate said.

According to IFR, five major markets comprised roughly three-fourths of total robotic arm sales in 2017: China, Japan, South Korea, the U.S. and Germany.

China, which has the strongest demand, enjoys the largest market share, producing 36 percent of the total supply in 2017. With sales of about 138,000 industrial robots (2016-2017, up 59%) China´s sales volume surpassed the total sales volume of Europe and the Americas combined.

Foreign robot suppliers increased their sales in China by 72%, up to 103,200 units. This includes robots produced locally by international suppliers in China.

This is the first time that foreign robot suppliers have a higher growth rate than the local manufacturers, the IFR said. Chinese robot suppliers, meanwhile, saw their market share decrease, from 31 percent in 2016 to 25 percent in 2017.

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