Robotics Market Update The Outlook in North America Jeff Burnstein President Robotic Industries Association
North American Economic Outlook The Great Recession of 2008-09 Financial meltdown in US caused by bursting housing bubble and sub-prime mortgage defaults. Failures of US financial institutions dried up credit, spreading contagion to the real economies of the US and Canada. Current Situation The good news: US and Canada have exited recession; weak recovery underway. Expanding manufacturing sectors are leading the recovery. The bad news: Causes of US financial meltdown not yet addressed and US economy is still on life support from federal government. Danger of a double-dip recession lingers. What to Expect Going Forward Weak recovery and high degree of uncertainty depending on policy decisions of government. A key unknown: sustainability of manufacturing sector expansion Weak, Tentative Recovery Double Dip Recession is Possible 1
Actual and Projected Real GDP 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% Year-over-Year Percent Growth 2007 2008 2009 4th Q 07 1st Q 08 2nd Q 08 3rd Q 08 4th Q 08 1st Q 09 2nd Q 09 3rd Q 09 4th 4th Q Q 1st 1st Q Q 2nd 2nd Q Q 3rd 3rd Q Q 4th 4th Q Q 1st 1st Q Q 2nd 2nd Q Q 3rd 3rd Q Q 4th Q 07 07 08 08 08 08 09 09 09 09 08 08 08 08 09 09 09 4th Q 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Annual 0.4% -2.5% 2.7% 2.4% 2008 2009 2010 2011 09 4.0% Annual 3.0% 2.0% 0.4% 1.0% -2.6% -2.6% 0.0% 2.6% 3.6% -1.0% -2.0% 4th Q -3.0% 2008 2009 2010 2011 09 Weak Recovery in US and Canada Predicted for 2010 and 2011 2
US and Canada Manufacturing Sector Purchasing Managers Index (PMI) 80 2007 2008 2009 2010 70 60 50 40 30 20 US Canada Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Manufacturing Sectors Improving in North America but Upward Trend May not be Sustainable 3 Contraction Expansion
How Large is the North American Robotics Market? 2% North America 15% Europe 27% Asia 56% Based on IFR Shipment Data North America Represents 15% of Total World Robotics Market 4
North American Robotics Market: Total Orders in Units and Dollars (000s) 2005 2006 2007 2008 2009 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 18,228 Units 18,228 Units $1,163,628 $1,163,628 12,765 Units 12,765 Units $904,198 $904,198 15,941 Units 15,941 Units $1,067,528 $1,067,528 12,557 Units 12,557 Units $894,868 $894,868 9,451 Units 9,451 Units $569,245 $569,245 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1st Q. 05 2nd Q. 05 3rd Q. 05 4th Q. 05 1st Q. 06 2nd Q. 06 3rd Q. 06 4th Q. 06 1st Q. 07 2nd Q. 07 3rd Q. 07 4th Q. 07 1st Q. 08 2nd Q. 08 3rd Q. 08 4th Q. 08 1st Q. 09 2nd Q. 09 3rd Q. 09 4th Q. 09 UNITS DOLLARS North American Market Size at Lowest Level Since 2005 5
North American Market : Total Shipments in Units and Dollars (000s) $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 2005 2006 2007 2008 2009 19,594 Units 13,497 Units 14,919 Units 12,781Units 10,443 Units 19,594 Units 13,497 Units 14,919 Units 12,781Units 10,443 Units $1,183,762 $1,020,181 $971,617 $953,502 $663,390 $1,183,762 $1,020,181 $971,617 $953,502 $663,390 1st Q. 05 2nd Q. 05 3rd Q. 05 4th Q. 05 1st Q. 06 2nd Q. 06 3rd Q. 06 4th Q. 06 1st Q. 07 2nd Q. 07 3rd Q. 07 4th Q. 07 1st Q. 08 2nd Q. 08 3rd Q. 08 4th Q. 08 1st Q. 09 2nd Q. 09 3rd Q. 09 4th Q. 09 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 DOLLARS UNITS North American Market Size at Lowest Level Since 2005 6
North American Market Trends Trend 1: Decreasing Market Size Trend 2: Increasing Shares of Market Applications Spot Welding, Material Handling Trend 3: Decreasing Shares of Market Applications Arc Welding, Assembly, Material Removal Industry Segments Food & Consumer Goods Life Science/Pharma/Biomed Industry Segments Automotive Components, Automotive, Metals Share Changes Derive from Differences in Growth Rates 7
Market Trends $1,500,000 Auto Sector Robot Orders All Other Industries 68.9% 62.1% 58.5% 47.7% 48.1% $1,000,000 $500,000 $0 Total Automotive (Including Components) 2005 2006 2007 2008 2009 Total Auto Sector Related Non-Auto Sector Robot Sales to Auto Industry are Down as a Percentage of Total Robot Sales 8
Market Opportunities: the Other Side of the Coin Increase the Penetration Rates of Industrial Markets Target Higher Growth Industrial Markets (Less Emphasis on Automotive) Longer-term: Focus on the Emerging Opportunities Identified by the US and European Roadmaps Longer-term: Branch out into Service Robots Decline in Robot Sales is Reversible 9
Conclusions While Modest Improvements in the Business Cycle and Some Expansion in the Manufacturing Sector are Occurring, Erosion in the Manufacturing Base Continues to Shrink the Size of the Addressable Market for Robots Challenges to the Robotic Industry in North America are both Cyclical (The Great Recession) and Structural (Erosion of the Manufacturing Base) The Structural Challenge Derives Primarily from Strong Dependence on Automotive, which is Shrinking. Economic Recovery will Help Address the Cyclical Impact on Robot Sales but not the Structural Impact. New Market Opportunities can Reverse the Decline in Robot Sales We Face Big Strategic Challenges but also Big Opportunities 10
International Organization for Standardization ISO TC 184 Automation Systems and Integration SC 2 Robots and Robotic Devices Working groups WG1 Vocabulary (Revised Standard) WG3 Industrial Safety (Revised Standard) ISO 10218-1:2006 1:2006 Harmonized standard (in revision - clearing comments from DIS ballot) ISO/FDIS 10218-2 (Parallel Inquiry closes 15 June 2010) WG7 Robots in Personal Care (New Standard) WG8 Mobile service robots (New advisory group) 11
Collaborative Industrial Robots New mode of operation allowed by ISO 10218 Robot exhibits certain controlled performance Properly configured robot remains in automatic operation Operator may interact with robot for production purposes Robot stops when a human enters / is in the collaborative workspace Operator controls robot with hand-guiding equipment Robot maintains given speed and position from human Robot has given power and force limitations New ISO TS 15066 Will provide more information on using collaborative industrial robots 12
Thank You!