Industrial robots have moved from maturity to a rapid growth phase
The industrial robot market has, in the wake of COVID, done something very unusual: it has moved from a mature, conservative phase to an exciting, fast-growing, almost start-up-like phase.
The last five years have been a roller coaster for the industrial robot market. A market decline in 2019 was followed by disruption in 2020, a record high in 2021, and now we see a positive long-term growth forecast. In fact, you could say that the industrial robot market has, in the wake of COVID, done something very unusual: it has moved from a mature, conservative phase to an exciting, fast-growing, almost start-up-like phase. -up.
That said, in the short term, although industrial robots have received a COVID boost, they are also susceptible to the same post-COVID challenges as all industries.
2017-2021: A story of ups and downs
2017 was a good year for the industrial robot sector, with revenues up 20%. But bad times were just around the corner. As of 2018, weak consumer demand in the automotive sector (by far the largest consumer of industrial robotic technology), an underperforming electronics market, including smartphones, a difficult machine builder market, and wars commercial activities have led to a sharp drop in income. And then the pandemic hit.
Over the 2019-20 two-year period, revenue decreased by 10%. These losses are mainly the result of the poor performance of the automotive industry and the global macro-economic environment, and have not been compensated by a growing demand from the automotive sector for new energies. If the market cycle had followed the expected trend, 2020 would have seen the industry rebound. However, covid has broken this cycle and completely disrupted the pace of recovery due to forced slowdowns and warehouse and factory closures.
But the 2020 trough was followed by a 2021 peak, when shipments saw a 31.9% year-over-year increase. This remarkable growth was in part only a rebound in 2020, but pandemic-driven enthusiasm among manufacturers for automation solutions as a way to ease labor shortages and plant shutdowns ongoing companies made the market surpass its 2019 level.
A revitalized market facing multiple challenges
Repeated waves of COVID continue to disrupt machinery production in Asia, where China accounted for 52.5% of global industrial robot shipments in 2021. These recurring COVID outbreaks are disrupting the supply chains feeding robot manufacturers. Other major issues with shipping capacity and pricing and wild fluctuations in commodity prices are also affecting supply lines. Industrial robot order books may be full, but if parts aren’t on the shelves, production lags behind demand and delivery times skyrocket.
The Russian-Ukrainian conflict also impacted the robot market, especially in the EU, as energy prices, which were already rising, reached record highs. The war also causes monetary instability around the world, affecting exchange rates, which has a significant impact on foreign trade. In this unstable atmosphere, renewable energy investment decision making has become a hesitant process for all manufacturers, and especially for end users of industrial robot solutions, as industrial robots tend to be very expensive.
Robot prices will decline at a much slower pace than we were used to
The pressures described above, combined with increased demand, naturally have a large impact on the prices of industrial robots. We had already seen price increases in 2021 in the Americas and EMEA markets, and they also started showing up in APAC markets earlier this year.
Even local Chinese suppliers who are more price sensitive are following this upward price trend due to pressures in the supply chain. Upstream of robot manufacturers, it has become a seller’s market for suppliers of key components to the robotics industry, such as gearboxes, servos, controls and sensors. The performance of the major component manufacturers is very strong and, if demand exceeds supply, they are the ones in control of prices.
This will inevitably drive up the prices of finished industrial robot products. But we consider that this is essentially a short-term phenomenon, with price increases soon followed by average price decreases at constant scope of the order of 2 to 3% per year over the next 5 years. . These reductions will be moderate compared to what we are used to, in part due to increased sales of larger payload models that come at a higher cost.
Medium-term optimism: 10% annual growth expected until 2026
The COVID-19 pandemic, resulting labor shortages, and rising labor costs have accelerated factory automation across a range of industry sectors. It is widely recognized that automation protects businesses against future crises and increases levels of efficiency and productivity, and with that, profitability. Despite the current tensions in the industrial robot market, there is strong optimism for the future.
We forecast overall 10% year-over-year growth in the robotics market through 2026, when global sales are expected to exceed 770,000 units. The continued increases in labor costs, the continued decline in robot prices, the trend to move from mass production to semi-custom production, the demand for shorter and faster product cycles and the desire to further increase the efficiency and quality of products encourage the adoption of robots. The future of the industrial robot industry seems secure for one simple reason: robots increase productivity. And, as the famous saying goes, “Productivity isn’t everything, but in the long run, it’s almost everything.”
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