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Robots increasing wine production, while reducing environmental impact

Freixenet robots.png

 

Founded in Spain in 1861 in Penedès, the main district of Catalonia, Freixenet S.A. currently owns 18 wineries across three continents and is one of the best-known Spanish wine brands. The 155 years old family owned business has annual sales exceeding Euro 500 million (US$ 560 million) and produces over 200 million bottles of sparkling wine each year.

The sparkling wine is known as “cava” due to the fact that much of the production fermentation process is in a network of several miles of underground caves or cellars. To be branded cava, sparkling wine must be produced in the ‘champenoise traditional method’, in the past cava was referred to as “Spanish champagne”, however this branding is no longer permitted under European Union law. Nevertheless the method of production for cava and Champagne are pretty much the same in which wine is fermented twice and sugar added to make it bubbly.

Sparkling wine is currently the key growth area in the beers, wine and spirits category. This growth has caused some challenges for Freixenet to increase production capacity to the same degree as an increase in the success of the brand and its products. The challenges are compounded by the traditional methods of production which require that processes are maintained, in fact according to Josep Palau, Head of Production at Freixenet:

What has not changed at all is our traditional elaboration process, which still includes each and every one of the stages as they were undertaken 50 years ago. We collect the grapes, make the base wines, bottle them, ferment them, then the crianza process begins, disgorging, etc. But what we have done continuously is make these stages more technical and automated in order to adapt ourselves to an increase in demand.

Those changes in production also depend on the particular cava being produced; the process is either done by hand (for the very top cuvees), or increasingly by automation. For example the company now uses pneumatic presses with a soft membrane that creates a pressure similar to traditional foot treading for pressing the grapes.

Once the grapes are pressed the ‘must’ from which the base wines are made is mixed in large vats by adding sugar, yeast and clarifiers, this then undergoes a bottling process and then the wines are taken to the cellars for fermentation. The fermentation involves the use of computerized automation that slowly rotate the bottles to help the build up of the carbon dioxide gas needed for cava’s characteristic bubbles. Depending on the product, this may range from a minimum of nine months to three years or more in higher quality wines.

Of Freixenet’s 1700 employees worldwide approximately 350 are employed at their main production facility. According to Josep Palau a large number of employees are involved in heavy manual tasks of moving the bottles around.

Once the base wines are bottled, the bottles have to be stored in cellars and this requires a great deal of internal logistics.

The cellar process, whether it is positioning the bottles or retrieving them a year later for the clarifying process before disgorging, involves a lot of internal movement and labor.

To help overcome many of the handling, maneuvering and bottling problems Freixenet have installed 36 industrial robots from Fanuc. With the help of Fanuc’s robots production capability has increased substantially. Josep Palau says:

Now an operator can move 500 bottles with each action rather than the two bottles before. The disadvantage before was that, as well as continuing to need somebody to intervene manually, the process also took up a lot of space in our cellars.

The next major innovation was automating the stacking process, or placing the bottles in the cellars, which had previously been done manually until Freixenet’s technicians and a local engineer came up with and implemented a robotic system that allowed the job to be done more efficiently. Mr. Palau believes this automation was the most significant milestone in improving productivity and reducing waste:

This was probably one of the most important innovations that was introduced. Later, and in the aim of being able to manage a great number of bottles, a new bottling process was created, which was almost completely automated and was fully robotized during the end stage. The bottles leave the production line via an automated transport system and arrive directly to the cellars, where an automatic robot system positions them in place for the crianza stage.

By automating this process, work was greatly simplified and our ability to handle this removal step increased enormously, thereby allowing us to handle growth.

In addition to increasing productivity by more than 32 per cent since the introduction of the robots and securing jobs, Freixenet have also discovered environmental benefits from the new technology for bottling and handling. The automation has resulted in a reduction of 25 per cent of the organic pollution load, chemical oxygen demand (COD) of wastewater per unit produced between 2012-2014, and glass waste has been reduced by 7 per cent.

In Spain, one of the key dates on the calendar in the run-up to Christmas is the first broadcast of the Freixenet TV advert. A tradition established in 1978, which has been graced through the years by celebrities such as Demi Moore, Pierce Brosnan, Penélope Cruz, Kim Basinger, Sharon Stone, Antonio Banderas, Paul Newman, Josep Carreras, Plácido Domingo, and many more. The celebrities of the 2012 campaign were two of Freixenet’s production Fanuc robots saluting with 2 glasses of cava. Cheers!

 

 

 

 

 

The facts about Co-Bot Robot sales

Findings – It may be a good time to be a manufacturer of Co-Bots, one manufacturer sold for up to 100 times profit, whilst another Co-Bot manufacturer attracted significant equity investment. Research indicates that sales of Co-Bots are set to increase significantly over the coming decade, causing productivity and profit gains for manufacturers but mass disruption for factory workers.

 

As sales of larger ‘caged’ industrial robots show signs of slowing down (according to the latest filed annual reports of industrial robot manufacturers), sales of Collaborative Robots, or Co-Bots, smaller, more agile industrial robots have been proclaimed as ‘booming,’ with headlines such as Agile Robots Will Rule and claims that demand for collaborative robots is growing exponentially:

“We see this market exploding right now,” says Henrik Christensen, chair of Robotics at Georgia Institute of Technology and executive director of the Institute for Robotics and Intelligent Machines.

Whilst Frost & Sullivan’s membership-driven’ Manufacturing Leadership Council indicates adoption of Co-Bots is ‘unstoppable:

More affordable robots that can work safely alongside human employees in collaborative ways will begin to transform many plant floor working environments in the year ahead…” and “the overall adoption trend will be unstoppable.

Co-Bot Predictions

During more than two years of detailed research, interviewing hundreds of executives and reading over 1500 corporate filings, to ascertain the impact of robots on jobs, production and profitability at the companies who have installed industrial robots, I consistently heard the claim that as industrial robots progress they take on tasks that previously only humans could – but with each new robotic capability a new opportunity for humans presents itself, although many of these opportunities are away from the factory floor.

It was also clear during my discussions that many of the manufacturers researched intended to increase their number of robots with the evolution of the smaller more agile Co-Bots.

Co-Bots are linked to accuracy, repeatability, quality of service, and further well-defined, quantifiable metrics. “These low-cost robots have the potential to increase precision and raise productivity by reducing the number of workers required.”[1]

Leaving aside the potential impact on jobs, productivity and profitability through installations of Co-Bots, and believe me it will be significant, let’s take a look at the predictions and numbers driving Co-Bot growth.

One prediction indicates that:

It is easy to imagine that co-bots could be on track to sell hundreds of thousands of units beginning as early as 2018.

Another prediction of the Collaborative Robot market prospects, by Barclays Equity Research analysts, estimates that global sales of Co-Bots reached approximately “US$ 120 million at the end of 2015;” and that the Barclays Analysts[2]:

Expect this market to grow to $3.1bn by 2020 and $12bn by 2025.

Barclays base their forecasts on current (2015) global sales of 4,100 units and an average selling price of $28,177 per unit; declining to a forecast $21,000 per unit in 2020, with annual unit sales of 150,000, thereby estimating a global market of $3.1 billion in that year.

They further estimate unit prices continuing to decline by 3-5% per annum through 2025 to circa $17,500 per unit, and global sales of a staggering 701,000 Co-Bot robot units in 2025 when they forecast a market size of around $12 billion.

Co-Bot analysis Barclays research

The Barclays predictions are based on current manufacturing headcount in the 5 core robotics markets (China, South Korea, Japan, US and Germany), using statistics from the International Labour Organization (ILO) and China’s National Bureau of Statistics. Factoring in conservative estimates of GDP growth and productivity the Barclays analysts then estimated a potential robot penetration versus current manufacturing headcount as below:

Barclays Co-Bot market demand projections 

Note by Barclays analysts for ‘Other markets: We forecast 2020 sales of 30,000 units, rising to 70,000 in 2025, using the same growth and adoption rates as we do for Germany.’

Current Co-Bot sales – Reality versus hype

Universal Robots

The most successful Co-Bot manufacturer by far is Universal Robots (UR) of Denmark. Founded in 2005, UR shipped their first robot in December 2008. By the end of 2014 they had installed a total of 3,800 Co-Bots worldwide  and added an additional 2,200 units in 2015.

During 2014 UR moved into a new 12,000 square meter Headquarters and factory, seven times bigger than their former production facility, enabling them to increase robot production capacity to 150 robots per day as demand increases.

Between 2013 and 2014 Universal Robots sold 2,200 robot units at an average selling price of US$ 23,627.[3]

According to Universal Robots Annual Report for year ended 2014, UR had annual sales of US$ 33 million and recorded net profits of US$ 3,25 million.[4]

Robotenomics analysis of UR annual report

During 2015 Universal Robots was acquired by Teradyne, Inc. for an initial cash payment of US$ 285 Million plus an additional US$ 65 million against performance related targets (total US$ 350 million).

According to the Form 8K filing by Teradyne on 14th May 2015 “up to $15 million would be payable upon the achievement of certain EBITDA-based performance targets through 2015 and up to $50 million would be payable upon the achievement of certain revenue-based performance targets through 2018.”[5] Barclays Research analysts indicate that the performance related targets include “50% annual organic sales growth.” [6]

In 2015 they are estimated to have installed 2,200 robot units, bringing UR’s total worldwide installed units to 6,000.

Rethink Robotics

If headlines counted then Rethink Robotics of Boston certainly gained most traction, much of it due to the perceived ‘attractiveness’ of Baxter their two-armed robot with an animated face. However headlines do not always translate into sales.

Rethink Robotics have raised US$ 113.5 million in venture capital and equity investment since being founded in 2008, having completed a US$ 40 million series D round in March 2015[7], (although their SEC filing omits the first round and confirmation of share allocation in the last round).[8] The press around Baxter and capital injections, together with a stellar management team may be one reason the New York Times listed Rethink as one of the next billion dollar valued Unicorn companies.

However Rethink have lagged behind in sales compared to Universal Robots, with Rethink recording estimated 2015 annual sales below US$ 10 million and less than 400 Baxter robots shipped in 2015.

Since the company began shipping Baxter in 2012 a cumulative number of between 850 and 900 Baxter robots have been installed worldwide.

Average selling prices are a little under US$ 24,000 including warranties, pedestal, grippers and Rethink’s Intera software subscription. Rethink may have booked a little over cumulative recorded revenue of US$ 20 million which would indicate the company has been burning through much of the investors capital.

At least 40% of Rethink’s sales of Baxter have been to research labs and universities with the rest to industry. About one third have been overseas with customers in France, UK, Japan, Australia and Hong Kong being the main recipients and the balance in the United States.

Whilst sales of Baxter may have been below market expectations given the media attention, sales of Rethink’s new one-armed little brother to Baxter, named Sawyer have certainly been brisk. Our market research indications are that the company shipped a nominal number of Sawyer to date (less than 50), however it is expected that, based on current orders received, sales and shipments in the first quarter of 2016 for Sawyer will exceed the total recorded bookings in 2015 for Baxter and Sawyer combined.

Other manufacturers

The four main Industrial robot manufacturers ABB, Fanuc, Yaskawa and Kuka have all announced their own Co-Bot robots over the last few years, however many of these only began increasing the market awareness and delivery of their Co-Bots in 2015. The most prominent being General Motors use of Fanuc’s CR351 for stacking tires. Other manufacturers such as Kawasaki and Nachi and new entrants from China will come on stream strong within the next few years,

As the numbers in the tables below show, based on our research, annual sales of Co-Bots reached 3,670 units in 2015 with a market value of US$ 104 million. Unit prices differed considerably with target prices of US$ 100,000 at the top end of the ‘established’ robot manufacturers and special prices by the new entrants including special offers of buy 1 robot and receive a 50% discount on a second. Plus very attractive bonus structures to resellers for stocking Co-Bot units.

To date there are a little over 7,800 Co-Bots installed worldwide. However order books at current manufacturers together with prospects, sales leads and feedback from resellers indicate that 2016 will see more than 15,000 Co-Bots installed.

Robotenomics estimates of cobot sales

Note: ABB’s sales include those by Gomtec a company ABB acquired in 2015.

Based on current manufacturing capabilities, network and demand it is not too difficult to conceive that Universal Robots will achieve annual sales of 50,000 units and revenue of US$ 1 billion within five years. It is also highly probable that Rethink Robotics will catch up to UR and also achieve annual sales of 50,000 units by 2020, however to do that they will need to establish the vital manufacturing capacity. Rethink’s current order book for Sawyer would indicate that they are on track to achieve considerable growth in 2016 with revenue of US$ 8 to US$ 10 million in Q1/2016 and revenue of between US$ 36 and US$ 40 million with sales of up to 2,000 units by the end of the year.

In part two of this special report on Co-Bots I will outline, with examples, the industries and companies that are using Co-Bots, the return on investments that Co-Bot manufacturers claim, the future projections for productivity and profitability gains by manufacturers and impact on jobs.

Whilst I do not expect hundreds of thousands of Co-Bot units to be installed by 2018 — one thing is clear; Co-Bots are living up to the hype with tasks they can take on. Indeed there are claims that up to 90% of manufacturing processes are still to be automated – I expect Co-Bots will be a major driver in that automation.

 

 

Footnotes:

[1] Baily and Bosworth. US Manufacturing: Understanding Its Past and Its Potential Future. Journal of Economic Perspectives Volume 28, Number 1—Winter 2014—Pages 3–26

[2] Barclays Equity Research – The rise of co-bots: Sizing the market. Barclays European Capital Goods Analysts Brorson, Maidi, Stettler, and Vos

[3] Analysis based on UR accumulated revenues between 2013 and 2014 (approximately US$ 52 million divided by 2,200 robots sold in the same period according to UR press kit, facts and figures. The company also declared sales of 1,800 robots from inception through to end of 2012)

[4] Universal Robots A/S Annual Report for the year ended 31 December 2014, approved at the annual general meeting of shareholders on 14 April 2015

[5] Teradyne Form 8K

[6] Barclays Equity Research – The rise of co-bots: Sizing the market. Barclays European Capital Goods Analysts Brorson, Maidi, Stettler, and Vos

[7] Rethink Robotics Completes $40M Series D Financing. New Investors, Including Wellington Management, Bring Total Funding to $113.5 Million

[8] Rethink Robotics, Inc. SEC Edgar Search Results, last accessed 11th January 2016

Are sales of robots overstated and overhyped?

Car Factory Assembly LineResearch finds Robot sales in 2014 may be overstated by approximately 100,000 units 

Abstract – Based on our analysis of legal compliance documents and other sources  – we analysed manufacturing capacity and revenue of Yaskawa, ABB, Fanuc and Kuka Robotics, who together supplied close to 70% of the world robot market in 2014, and others, and concluded that there were approximately 128,000 industrial robots delivered in 2014, significantly less than the approximately 230,000 the industry claims.

We also discovered, by compiling multiple data sets that could be replicated, that there are currently 850,000 installed and operational robot units in service worldwide.

In Robotics, just like in much of life, historical myths have perhaps played nearly as great a role in shaping opinion as historical facts.

Thomas Piketty in his book Capital in the Twenty-First Century bemoans that much of social policy and public knowledge of statistical facts are created on the back of: “reports <that> must often rely on heroic hypotheses and approximations, not all of them convincing.” He goes on to write that: “in the absence of reliable information… it is possible to say anything and everything and to feed fantasies of all kinds.”[1]

Piketty also reminds us in his extensively researched book with comprehensive data that: “economic theory needs to be rooted in historical sources that are as complete as possible.”[2]

As our heads swirl in a number of announcements on record sales of robots which are causing growing productivity claims, but leading to the erosion of jobs and as a consequence greater inequality, Isn’t it time to ask what historical sources can we rely on for sales of industrial robots?

The more reliable the data, the more we can analyze the impact robots are having on jobs. After all, every day, these robots that historically performed dull, dangerous and dirty jobs to produce the cars we drive, the goods we use and the foods we consume are increasingly moving into healthcare and other sectors.

What the industry claims

The latest reported statistics for worldwide sales of industrial robots indicate a ‘record number of 229,261’ were sold during the 12 months to the year-end 2014.[3] Additionally Statista and the IFR had indicated approximately 225,000 sales in 2014[4] Furthermore the IFR claimed that “The total worldwide stock of operational industrial robots at the end of 2014 increased by 11% to about 1.5 million units.”[5] This may lead to a case of what we believe, or what we think we know, about the annual sales of and total number of installed robots is dependent on data that may not mean what we think they mean. Indeed using Piketty’s model this data would not be accepted as truly objective -conclusions drawn from them must be somewhat tenuous.

Yet, the datasets announced by the industry federation have led to government policy discussions and detailed economic studies on robot outcomes such as employment, total factor productivity and wages. With one important study using the IFR data and concluding that robots are: “fairly comparable to the estimated total contribution of steam technology to British annual labor productivity growth” during the industrial revolution.[6]

Objective data

Until there is a truly independent source of robot units in operation then in the meantime to obtain objective and reliable data of robot sales one would reasonably think the most complete and reliable data would come from legally reported publically available formal compliance documents such as annual reports, 20F filings, 10K filings, legally released press releases, statements and associated information from the manufacturers and its executives of industrial robots, especially those manufacturers that are listed on a recognized stock exchange, which is the case for the majority of industrial robot manufacturers, at least those that supply some 80% of world robotics sales.

How many robots are sold each year?

During our research we set out to ascertain two things.

  1. How many industrial robots have been delivered and accounted for in sales revenue from the beginning of 2004 to the end of 2014. And;
  2. Which companies use robots and what is the total number they have in operation.

During this process we went further than our initial targets and analyzed 15 years of legal filings for all robot manufacturers (where available) and their customers, together with associated reports from the manufacturers, detailed discussions with users of robots and in some cases factory visits. This analysis has resulted in an extensive database of installed robots including which robots are in use, what are their functions and at which location.

What we found:

  • There were approximately 128,000 industrial robots delivered worldwide in 2014.
  • The top four robot manufacturers delivered a combined 89,000 robot units, which they claimed represents 80% of all robots delivered. We found that the top four manufacturers total delivered robot units amounted to approximately 70% of the total robot units delivered in 2014.
  • There were between 800,000 and 850,000 robots installed and operational worldwide between 2004 and 2014 – around 650,000 less than the approximately 1,460,000 to 1,500,000 numbers reported on the Statista and IFR charts.
  • The robot manufacturers collectively indicate single digit sales growth in 2014 compared to 2013 on average.

As we can see in the analysis below the numbers were obtained from the robot manufacturers legal compliance documents, self-reported total cumulative sales of robots, and the production capabilities of those robot manufacturers (how many robots each manufacturer can produce).

To double-check our numbers we have created two complimentary and indispensable datasets. Although in some case the information received may not be perfect as to some extent it is reliant upon the manufacturers marketing claims, albeit in legal compliance documents. Nevertheless we have analyzed the sources and methods in minute detail and found comparison data from other sources in an effort to lead to clear, transparent and reproducible datasets.

In addition to the annual sales of robots reported by robot manufacturers in their legal filings we have also compiled a detailed database of robots installed. This database ranges from the 780 active robots at the Nissan plant in Sunderland, in the north east of England, to the 387 active robots at that the Porsche Macan factory in Leipzig, Germany. This total database reflects the current base of installed robots to be between 750,000 and 800,000.

Essentially we have used multiple sources and data points to compare and contrast installed robots worldwide.

See the footnote below for the definition of industrial robots.[7]

How many robots were delivered in 2014?

For the purpose of this article let’s take a look at the numbers for 2014 as legally reported in compliance documents and compare the legally reported sales of robots with the claim of approximately 229,000 delivered robots in 2014 as reported elsewhere and referenced above.

The top 4 industrial robot manufacturers

Yaskawa bill themselves as the leading Japanese robot manufacturer who: “introduced the first commercially available robot to the industry in 1977” and had delivered “cumulative shipments <since 1977> surpassing 290,000”[8] by the end of March 2014 and ‘more’ than 300,000 by the end of 2014.[9]

Yaskawa generated 136 billion Japanese yen (or about 1.13 billion U.S. dollars) in net sales revenue from its robotics segment for the year ended March 2015 according to its legally filed annual report. Which represents a nominal increase of approximately 9% on the financial year commencing from 1st April 2013 through to the end of March 2014. The various statements made by the company and financial income recorded by Yaskawa would indicate that they delivered between 19,000 and 21,000 industrial robots in the year to March 2015.[10]

The company has been very transparent on its production capacity and expects to add considerably to its production capabilities since it opened a new factory in China in 2013:[11]

In the robotics business, the production of robots at the plant in Changzhou, China, which was launched in May 2013, will be ramped up as annual production of approximately 4,000 units and annual production of approximately 6,000 units are planned for FY2014 and FY2015, respectively.

By which time (end of 2015) Yaskawa will have a total robot production capability of 2,500 industrial robots per month, or 30,000 per year:[12]

The breakdown of our production plan as of 2015 has changed from domestic production (Kitakyushu, Japan) of 1600 units per month and Chinese production of 900 units per month to domestic production of 2000 units per month and Chinese production of 500 units per month by shifting part of the Chinese production plan to domestic production.

Which represents a leap in production capabilities compared to the revenue recorded of approximately 21,000 robot sales for the year under review.

Before the addition of the China plant, Yaskawa had an annual production capacity of 19,200 robots in Japan (“Previously, we have produced robot bodies only in Kitakyushu Japan.”)[13]

The company has also expressed its hopes that this extra production capacity together with production in a new plant in Japan (Nakama City, Fukuoka Prefecture) which will begin in August 2015, will help it to increase its share of the global industrial robot market from 20% to 30%:[14]

At present, in the industrial robot global market, each of the top four companies including Yaskawa holds a share of around 20%. Although we boast of the highest cumulative shipping performance among our competitors, we have a desire to be an overriding leader by realizing a 30% share of the global market.

Based on the company records and production capabilities for 2014 we can safely estimate that they delivered 21,000 industrial robots from 1st January 2014 to 31st December 2014.

If 20% of the robot sales equals 21,000 what are we to think?

If we are to believe that Yaskawa deliver 20% of industrial robots per annum we could stop our analysis assuming that the top 4 companies have approximately 80% of the market and annual sales of circa 18,000 to 22,000 on average each, and thus the total market had global annual sales and production capability of approximately 110,000 at the end of 2014. In other words based on Yaskawa’s claim of producing 20% of the global robot sales and 3 others produce an additional 60% — this 110,000 is considerably lower than the 225,000 robots delivered as otherwise reported. However, we can’t take one companies word for it and proceed with our analysis of what other manufacturers in the sector state.

Assessing the other leading robots makers legal submissions

In it’s legally filed compliance document “ABB Annual Report 2014”, the company states:[15]

ABB is a leading supplier of industrial robots and modular manufacturing systems, and has installed more than 250,000 robots worldwide.

Which interestingly is a similar number declared in the legal compliance document “ABB Annual Report 2013” for the financial year ended 31st December 2013:[16] “Since 1974, ABB has delivered 250,000 robots for a wide variety of industries.” The difference between the two statements is ABB’s use of the phrase “more than” in its 2014 filing. The number of 250,000 is however 60,000 more than the: “190,000 installed worldwide,” reported on it’s legally compliant corporate website on 7th July 2011 and elsewhere.[17]

Let’s keep in mind the ‘more’ than 250,000 of total delivered robot units since they began production of robots in 1974 up to the end of 2014

Now let’s take a look at several other factors; a) ABB’s stated reorganization in the robotics division during the 3 and half year period from mid 2011, b) the long lead times from receipt of orders to delivering the final products, c) ABB’s annual manufacturing capabilities for robots, and d) numbers from ABB’s reported revenue indicators from their annual reports and SEC filings from 2004 through 2014. In 2013 and 2014 these data points indicate ABB had annual revenue applicable to sales of a maximum of 22,000 robots each year (2013 and 2014).

As a side note — it is also worth noting that ABB indicates in its 2014 annual report that sales for the division responsible for robotics grew by 2% from 2013 to end of 2014 (it is possible robotics grew more within this division and other automation products performed lower comparatively). See for example ABB’s statement in its SEC 20F filing for the year ended 2014:

Supported by growth in the second half of the year, orders in the Discrete Automation and Motion division grew 2 percent (2 percent in local currencies), as higher orders in the Robotics business and the positive impact of acquiring Power-One.[18]

What we can decipher from the numbers reported is that delivered robots, those actually sold and counted in revenues appear to have grown in the single digits versus 2013. This is similar to the single digit growth numbers reflected at Yaskawa of 9%.

Additionally ABB is very diligent at formally announcing robot sales orders received and providing many case studies of companies using its robots. Through these legal press releases, whilst for multiple reasons not all sales orders of robots are announced, we can further build our understanding of the activity related to orders received and clients usage of ABB’s robots – and therefore ascertain extra data when arriving at the number of total robot sales.

Building the numbers

Now we know that ABB and Yaskawa, arguably among the largest providers of industrial robots, and both of whom delivered and recorded sales revenue of 22,000 robots and 21,000 robots respectively in 2014 or 43,000 collectively, and thus (theoretically) 40% of total robots delivered, how did the other robot manufacturers perform and what are the real total annual sales of industrial robots?

Like Yaskawa, Fanuc headquartered in Japan commenced commercial production and shipment of Robots in 1977. For the fiscal year ended 2015 Fanuc recorded sales of Japanese Yen 181,988 millions or USD 1,516,567.[19]

This represents sales of approximately 24,000 to 26,000 robots in the year reviewed, based on competitive sales analysis and recorded knowledge of individual robot costs.

Fanuc, who uses many of its own robots producing robots states, that it’s “Robot Factory has a capacity to produce 5,000 robots a month.”[20] Which would give it the largest production capacity of all current robot manufacturers. However as it’s sales revenue for the robot division shows over the last 10 years, it has not reached this level of production capability, currently producing less than 2,000 robots per month. Which is a significant increase on the 200 to 250 per month the company was capable of producing in 1984.[21]

To help with our analysis of global sales of industrial robots Fanuc claims it has “250,000 robots installed worldwide,” since it began deliveries in 1977.[22] From the companies reported revenues between 2004 and 2014 we can see that 180,000 of these units were delivered over this 10 years period or an average of 18,000 per year (an average which is skewed as it reported sharp declines in robots sales between 2008 and 2011).[23]

For our 2014 compilation, allowing for annual growth and based on the review of Fanuc’s legal annual report we will consider that they delivered 26,000 industrial robots in 2014.

At this stage we can reasonably estimate from the above three companies stated data, albeit some of it marketing material, that they have collectively delivered approximately 800,000 robots since they began deliveries more than 38 to 40 years ago. In the case of Yaskawa circa 300,000 since 1977, ABB claiming 250,000 since 1974 and Fanuc stating 250,000 since 1977. Are we to believe that this 800,000 represents 60% of all robot sales, since robots sales began? The manufactures seem to indicate this to be the case.[24]

Now we turn our attention to Kuka robots of Germany.

Kuka is another company that indicates in its legal annual reports that it delivers 20% of the world’s industrial robots. Kuka also offers us detailed data on its current and target manufacturing capability numbers in its 2014 Annual report.

The goal is to produce more than 20,000 robots per year,” says Andreas Ostermann von Roth, Executive Vice President Operations at KUKA Robotics.[25] And later we read that according to Sebastian Bodenmüller, head of robot production ‘the target number of robots was produced even before 2014 drew to a close.[26]

This would hold up to other statements by Kuka in the same 2014 annual report.

Back in 2013 and during the year under review (2014), annual production capacities in Augsburg were increased from 15,000 robots previously to a current level of up to 22,000 (as at end March 2015).[27]

In addition during 2014 Kuka’s newly opened factory in shanghai China began an annual production of 3,000 Kuka Robots.

Kuka’s order book for 2014 was only slightly ahead of 2013 (by approximately Euro €12 million) as can be understood from this statement in Kuka’s 2014 annual report:[28]

KUKA Robotics exceeded the orders received in 2013 of € 793.5 million with a total of € 805.5 million in 2014. The orders from the automotive industry totaled € 327.9 million in 2014 (previous year: € 318.3 million). Orders received from general industry continued to remain at a high level at € 315.0 million, yet were slightly below the value for the previous year of € 330.9 million.

However Kuka Robotics recorded sales revenues of € 834.6 million (USD $ 941 million) for the year ended 2014, which would indicate delivery of approximately between 18,000 to 20,500 robot units for the year under review.

We will consider the top end and add 20,500 to our list of robot units delivered in 2014.

After the addition of the Shanghai factory and increases in Augsburg Kuka indicate that they will have an annual production capacity of 25,000 robot units.

Total robots delivered over the last 10 years

Crucially, with respect to the ten year period we are assessing, the sales reported in annual reports and associated legal compliance documents for each of these 4 companies indicate that between 2004 and 2014 they have collectively delivered approximately 640,000 robot units over the 10 years analyzed. Representing approximately 80% of total robot sales during the period.

Total robots delivered by top 4 manufacturers in 2014

Now we know that the top 4 manufacturers, who combined supply approximately 80% of the industrial robot sales, delivered robot units as follows in 2014:

Manufacturer   Total delivered
Yaskawa 21,000
ABB 22,000
Fanuc 26,000
Kuka 20,500
Total delivered 89,500

Which effectively would indicate that the total number of industrial robot sales for 2014 was approximately 112,000 units – If as these manufacturers suggest they each have 20% of the market.

How many robots have these companies delivered since they began making robots?

Our analysis has covered all know manufacturers of and their claims of total robots delivered since robots entered the factory floor – as one snapshot we can see that the following manufacturers have delivered approximately 920,000 robots.

Manufacturer Total stated as delivered by manufacturers over approximately 40 years to the end of 2014
Yaskawa 310,000
ABB 260,000
Fanuc 250,000
Kuka 100,000
Total delivered 920,000

Note this 920,000 represents ALL units delivered since these 4 manufacturers began delivering robots, in some cases over a 40 years period.

Robot sales not as high as thought

We analyzed the above companies together with sales and production capabilities of other robot manufacturers such as Kawasaki (claims to have delivered 100,000 units since it began production), Hitachi, Nachi, Stäubli, China’s LXD Robotics, robots’ that are ‘self-built’ by companies such as Foxconn and many others.

What we found

Based on our analysis of legal compliance documents and other sources indicated above – we consider that Yaskawa, ABB, Fanuc and Kuka supply closer to 70% of the world robot market in 2014 (not 80% as claimed) and there were approximately 128,000 industrial robots delivered in 2014.

We also discovered by compiling multiple data sets that could be replicated that there are currently 850,000 installed and operational robot units in service worldwide.

The future – How many robots can be built per year?

The total robot manufacturing capabilities for 2015 of these 4 manufacturers are:

Manufacturer Total manufacturing capability for 2015
Yaskawa 30,000
ABB 25,000
Fanuc 50,000
Kuka 25,000
Total delivery potential 130,000

Despite the current manufacturing capacity for all robot manufacturers being approximately between 180,000 to 200,000 units per annum we believe that this number will increase significantly with the advent of the smaller, more lightweight robots such as YuMi from ABB, Baxter from Rethink Robotics, Inc. Universal Robots and other lightweight models from existing manufacturers, which will greatly increase the number of robots installed worldwide and lead to further job displacement.

Call for National Statistic Offices to assess robot impacts

To overcome the hype cycle of claims and counter claims we need a truly objective database of robots installed and operational. This is something we believe that national governments should be doing as a matter of urgency through their national statistics offices to closely monitor the impact of robots on total factor productivity, employment and wages.

Notes.

This is an abridged discussion of a far more detailed report produced by Robotenomics for our clients.

This specific analysis excludes other robots such as automated guided vehicles (AGV’s) as seen for example in Amazon, Inc. dispatch centers).

[1] Thomas Piketty, Capital in the Twenty-First Century (2014, page 437)

[2] Thomas Piketty, Capital in the Twenty-First Century (2014, page 10)

[3] International Federation of Robotics – 2014: By far the highest volume ever recorded (Last accessed 15th October 2015 – http://www.ifr.org/industrial-robots/statistics/)

[4] “Industrial robot sales increased from about 179,000 in 2013 to around 225,000 in 2014, mainly due to decreased demand in the motor vehicle manufacturing industry.” (http://www.statista.com/statistics/264084/worldwide-sales-of-industrial-robots/) and “Sales go through the roof” – “Based on the preliminary results of the global statistics on industrial robots, the IFR estimates that about 225,000 units were sold in 2014, 27% more than in 2013.” (IFR International Federation of Robotics – http://www.ifr.org/news/ifr-press-release/global-survey-703/ both links accessed on 5th October 2015)

[5] International Federation of Robotics – 2014: By far the highest volume ever recorded (Last accessed 15th October 2015 – http://www.ifr.org/industrial-robots/statistics/)

[6] G. Graetz and G. Michaels , Robots at Work. Centre for Economic Performance
London School of Economics and Political Science (Last accessed 15th October 2014 http://cep.lse.ac.uk/pubs/download/dp1335.pdf)

[7] For the purpose of defining a robot we have used the International Organization for Standardization as defined by ISO 8373 which refers to a manipulating industrial robot as: “An automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes, which may be either fixed in place or mobile for use in industrial automation applications.” And further defined by the International Federation of Robotics as: “An automatically controlled, reprogrammable, multipurpose manipulator programmable in three or more axes, which may be either fixed in place or mobile for use in industrial automation applications. Reprogrammable: whose programmed motions or auxiliary functions may be changed without physical alterations.”

[8] Yaskawa Report 2014, page 15 (Last accessed 6th October 2014 at http://www.yaskawa.co.jp/wp-content/uploads/2014/12/ar2014e1.pdf

[9] Yaskawa Motoman corporate profile (Last accessed 6th October 2015 http://www.motoman.com/about/corporateprofile.pdf)

[10] Yaskawa Report 2015 (Last accessed 5th October at http://www.yaskawa.co.jp/en/wp-content/uploads/2015/01/ar2015_E.pdf)

[11] Yaskawa Report 2014 (Last accessed 6th October 2014 at http://www.yaskawa.co.jp/wp-content/uploads/2014/12/ar2014e1.pdf

[12] Ibid

[13] Ibid

[14] Ibid

[15] ABB Annual Report 2014 | Customer segments (page 19) – Last accessed online 5th October 2015 at http://new.abb.com/docs/default-source/investor-center-docs/annual-report/abb-group-annual-report-2014-english.pdf

[16] What ABB does | ABB Annual Report 2013 (Page 12) – Last accessed online 5th October 2015 at http://www02.abb.com/global/seitp/seitp255.nsf/0/74b9eafca5502c14c1257c850037b8f8/$file/ABB+Group+Annual+Report+2013_English.pdf

[17] “ABB has installed more than 190,000 robots worldwide.” (Archived 3rd July http://web.archive.org/web/20110707074107/http://www.abb.com/product/us/9AAC910011.aspx – on 7th July 2011 and accessed 5th October 2015).

[18] ABB -SEC Filings 20F report 2014 – http://new.abb.com/docs/default-source/investor-center-docs/sec-filings/abb-ltd-2014-form-20f.pdf last accessed 6th October).

[19] Fanuc Annual Report to 31st March 2015, page 29 (Last accessed 6th October 2015 – http://www.fanuc.co.jp/en/ir/annualreport/pdf/annualreport2015_e.pdf)

[20] Fanuc corporate website (Last accessed 6th October 2015 http://www.fanuc.co.jp/en/profile/production/factory1.html)

[21] The International Robot Industry Report. By John Mortimer, Brian Rook

[22] Fanuc EU corporate website, About Us, History (Last accessed 6th October 2015 http://www.fanuc.eu/uk/en/who-we-are/fanuc-history)

[23] See for example Fanuc corporation annual report for 2013 (Last accessed 6th October 2015 http://www.fanuc.co.jp/en/ir/annualreport/pdf/annualreport2013_e.pdf)

[24] Note also that most manufacturers indicate the current life span of an industrial robot is 10 to 12 years.

[25] Kuka Annual Report 2014, Page 15 (last accessed 6th October 2015 – http://www.kuka-ag.de/res/AG/financial_reports/2015/kuka_gb14_e_s.pdf )

[26] Ibid. Page 16

[27] Ibid. Page 23

[28] Ibid. Page 25

Photo credit – Tobias Mikkelsen (Car Factory Assembly Line) Creative Commons on Flickr

Chinese city aims to have 80% of production done by Robots by 2020

South China’s economic powerhouse of Guangzhou has set a goal of having 80 percent of the city’s manufacturing production done by robots instead of human labor by 2020.

According to an industrial development guideline issued by the municipal government on Tuesday, the use of industrial robots will be encouraged in mechanical and automobile manufacturing, food processing and the manufacturing of pharmaceutical, electronic and dangerous products.

The document says that there will be subsidies of up to 30,000 yuan (4,800 US dollars) for those who purchase or rent a robot, and a maximum one-off subsidy of 500,000 yuan for companies that introduce a complete set of automation equipment in Guangzhou, capital of Guangdong Province.

The Guangzhou municipal government believes the rising human resource costs and increased demand for sophisticated manufacturing have provided an opportunity for accelerated roll-out of robots. Fostering a robot-making industry with estimated output value of over 100 billion yuan (US$16 billion) by 2020 Source Global Times China. (HT Iza Kaminska)

Study indicates Robots could replace 80% of Jobs

PerezIn a few decades, twenty or thirty years — or sooner – robots and their associated technology will be as ubiquitous as mobile phones are today, at least that is the prediction of Bill Gates; and we would be hard-pressed to find a roboticist, automation expert or economist who could present a strong case against this. The Robotics Revolution promises a host of benefits that are compelling (especially in health care) and imaginative, but it may also come at a significant price.

The Pareto Principle of Prediction

We find ourselves faced with an intractable paradox: On the one hand technology advances increase productivity and wellbeing, and on the other hand it often reinforces inequalities.

A new study due to be published in the forthcoming Oxford Handbook of Skills and Training by Stuart Elliot visiting analyst at the Organisation for Economic Co-operation and Development (OECD), who incidentally is on leave from the Board on Testing and Assessment of the National Research Council, indicates that technology could replace ‘workers for 80 percent of current jobs.’

In his study Elliot relies on advances in speech, reasoning capabilities and movement capabilities to illustrate how robots and technology can replace jobs. I am in agreement with the general thoughts of the study, although I believe speech recognition is now far more advanced than Elliot states. This element alone will lead to a reduction in many jobs, such as translation over the next five years.

Elliot is not the first to claim that robotics and technology will have such a profound impact on employment or inequality. Michael Hammer, a former MIT professor and prime mover in the restructuring of the workplace in the 1990’s estimated that up to 80 percent of those engaged in middle management tasks were susceptible to elimination due to automation.

In the book Average is Over Professor Tyler Cowen also predicts a hollowed-out labor market, devoid of middle-skill, middle-wage jobs, where 80% or more of our citizens will be unable to prosper. They will become a permanent underclass, unable to improve their lot.

This ‘underclass’ may be happening sooner than Cowen predicted. While there are ‘short term’ adjustments in the employment numbers, the majority are in the low-paying sectors, 73% of ‘new’ jobs are in the bottom of the wage pyramid and temporary employment positions rather than permanent.

The US Bureau of Labor Statistics estimates that among the most rapidly growing occupational categories over the next ten years will be “healthcare support occupations” (nursing aides, orderlies, and attendants) and “food preparation and serving workers” – overwhelmingly low-wage jobs.

Projected job marketAs recent as last month the FT reported that: “New technologies are transforming the structure of the US economy but creating only modest numbers of jobs, according to the biggest official survey of businesses, conducted only once every five years.”

In the book Race Against The Machine the authors state: “Digital technologies change rapidly, but organizations and skills aren’t keeping pace. As a result, millions of people are being left behind. Their incomes and jobs are being destroyed, leaving them worse off.”

Speaking at the World Economic Forum in Davos earlier this year, Google’s Eric Schmidt warned that the problem of new technologies substantially changing and replacing jobs will be “the defining one” for the next two or three decades.

Thinking machines

Increasingly, machines are providing not only the brawn but the brains, too, and that raises the question of where humans fit into this picture. Earlier this year, Jörg Asmussen State Secretary in the German Ministry of Labor and Social Affairs emphasized this trend when he said:

“Digitization, or the “second machine age” (as in the title of the best seller by Erik Brynjolfsson and Andrew McAffee), has only just begun. It is in the process of relieving and ultimately replacing first our physical and then our intellectual labor. This trend will be a threat to brainworkers such as accountants and stock-market traders. And check-out clerks at supermarkets will also soon be a thing of the past.”

Echoing this, Randall Parker, Professor of Economics at East Carolina University, recently wrote:

“Robots and other automated equipment have increased factory automation so much that factories are a dwindling source of all jobs. The next big target for automation has been and continues to be office work.”

In the US manufacturing sector there was a solid increase in sales of 8 percent between 2007 and 2012 but with significant falling employment, the industry shed 2.1m jobs and its payroll dropped $20 billion.

Approximately one out of 25 workers in Japan is a robot, this is in part due to a growing elderly population and declining birthrates, which mean a shrinking workforce, but it is also a fact that global business seeks to drive productivity, efficiency, and effectiveness to new heights with robotics.

This time is different, or maybe not

In his seminal book, The Enlightened Economy, Joel Mokyr argued that: “in Britain the high quality of workmanship available to support innovation, local and imported, helped create the Industrial Revolution.” Dig a little further and Mokyr refers to: “the top 3 to 5 percent of the labor force in terms of skills: engineers, mechanics, millwrights, chemists, clock and instrument makers, skilled carpenters and metal workers, wheelwrights, and similar workmen.”

It was a small minority of the working population that had the skills to help advance the Industrial Revolution, others had to learn new skills to adapt to the technology changes. This time is no different. Just as each revolution sets a higher potential level of productivity each revolution requires a new set of skills to overcome the resistance of the old paradigm, which is deeply embedded in the minds and the practices.

Despite the job losses in the US manufacturing sector factories are increasingly employing more skilled engineers to tend complex equipment and at higher wages, Annual payroll per employee in the manufacturing sector rose from $45,818 in 2007 to $52,686 in 2012.

It’s time to act

Robotic hardware, Artificial Intelligence, automated software and connected networks are only going to get more powerful and capable in the future, and have even bigger impact on jobs, skills and the economy.

The message for all of us can be summed up in a quote from Abraham Lincoln’s second address to Congress.

“As our case is new, so we must think anew, and act anew.”

In his paper Elliot raises a very good question: “Even if alternative jobs are available, how will the displaced workers acquire the necessary skills for the new tasks?” This should be a wake up call. All of us must give serious consideration to our future and learn the skills that will give us the best chance of working WITH the machines. I’ll repeat Lincoln’s statement, since that’s the big takeaway. “As our case is new, so we must think anew, and ACT anew.” These are exciting and challenging times…

5 Monday reads on Robots, Artificial Intelligence and the Economy

Five robotic, artificial intelligence or drone related reads for Monday 17th March:

  1. Victor, an emotional Scrabble playing robot who is very insecure. The Wall Street Journal.
  2. How the science of robotics is being used for religious purpose in Iran. The Independent.
  3. US lags as commercial drones take off around globe. Associated Press.
  4. The brief rise and long fall of Russia’s Military Robots… could be resurrected. Popular Science.
  5. We have entered ‘the post normal world.’ Pew Report.

What are you reading?

UK Government betting on driverless cars and robotics

The UK is the latest government to announce large scale investments into driverless cars and robotics. Through its infrastructure plan (pdf) the British government has indicated projected investments in the region of £375 billion ($612 billion) by public and private entities over the next decade or so to create an advanced infrastructure.

Reporting specifically on driverless cars the roadmap states:

Driverless cars are innovative technology that will change the way the world’s towns and cities look and the way people travel; they present opportunities for the British automotive industry in the manufacture of the cars and the wider science and engineering sectors in the design of towns.

To ensure that UK industry and the wider public benefit from the development of driverless cars, the government announces in the National Infrastructure Plan that it will conduct a review, reporting at the end of 2014, to ensure that the legislative and regulatory framework demonstrates to the world’s car companies that the UK is the right place to develop and test driverless cars

Of course the British government are not the first to seek to be a ‘champion’ for driverless cars; Google has permission to test its autonomous cars in several states in the US. Volvo received permission to test driverless cars in Gothenburg, Sweden. Researchers are testing driverless cars in Berlin and earlier this year the French government laid out a ten year roadmap to be leaders in driverless cars, robotics and other advanced technologies.

The UK government report indicates:

This investment will support UK capabilities by funding research and its commercialisation
in priority areas such as robotics, synthetic biology and biologic medicines, regenerative
medicine, agricultural technologies, the exploitation of space, high performance computing and big data analytics.

In its efforts to establish itself as a leading player in autonomous and furthermore, environmentally friendly, cars, the UK Government would be well advised to woo Tesla Motors to set up a European manufacturing facility in the UK. Tesla, who have also announced their plans for an autonomous car, has one of the most advanced robotic factories and electric cars available today.