Frost: New Markets Present Opportunities for Robotics Manufacturers

June 28, 2006

Robotics in materials handling should realize significant potential from small and medium-sized enterprises (SMEs) and consumer markets, such as food and beverage and pharmaceuticals. According to Frost & Sullivan, these traditionally conservative industries anticipate that robots will reduce labor costs and manage both product line changes and fluctuating volumes.

Recent analysis from Frost & Sullivan found that European robotics for materials handling markets earned revenues of $762.3M in 2004, with estimates to reach $1.28B by 2012.

In respect to consumer markets, the booming packaging industry offers immense potential for robotics. Changing product types and varying product volumes necessitate flexible automation solutions. Analysts said manufacturers in consumer markets are opening up to the idea of investing in robots to reduce costs and maintain quality, thereby boosting sales of robotics in the packaging market.

"However, with the slump in demand from automotive OEMs (original equipment manufacturers), an increasing number of robotics manufacturers will look to the food and beverage and life sciences sector for growth opportunities, which results in intense competition," said Frost & Sullivan research analyst Kashyap Chandrasekar.

Most SMEs cannot afford huge investments in flexible automation, and the need for flexibility is greatest among SMEs that have to constantly cope with changing demands of end-users. Analysts said in the short run, the success of robot manufacturers depends on their efforts to offer reliable and inexpensive robotic solutions to SMEs.

Given the decreasing demand from automotive OEMs in 2003 and 2004, robot manufacturers have to stop depending on this sector for consistent revenues. Niche market participants should take a more generalist approach and look to developing markets for regaining profits.

"The automotive sector has traditionally been the biggest user of flexible automation in manufacturing, and hence most robot manufacturers have a presence in this sector," said Chandrasekar. "Intense competition and price pressures from OEMs and the slump in demand are making a niche automotive approach highly unfavorable."

Niche participants have immense technical know-how, successful pricing strategies and experience in competing globally with the generalist participants in the automotive sector. Analysts said widening their end-user spectrum will be profitable in the near future and a necessity in the long run. Generalist participants should focus efforts on taking their robotic materials handling solutions to the high potential SMEs market.

Source: Frost & Sullivan.