Automated systems and robotics will account for 25 percent of industrial companies’ capital expenditures over the next five years, according to data from the 2022 McKinsey Global Industrial Robotics Survey.
The report from consulting and professional services firm McKinsey & Co., which outlines the current state of robotics and expected trends over the next few years, is loaded with actionable ideas and telling data points useful for both users of automation and the companies that manufacture and install it.
However, many of the insights from this report aren’t exactly new and advanced manufacturing companies will recognize several of the themes in this report. Most of the factors driving the trends reported by McKinsey are also not new developments.
However, the timing of the report combined with its useful, easy-to-digest insights make it a valuable piece of business intelligence.
“What this shows is that the challenges faced in the automation sector aren’t thresholds that can’t be overcome,” says Joel Reed, executive director of the Pittsburgh Robotics Network., an organization that helps boost the automation ecosystem in Pittsburgh, Penn., and the surrounding regions.
Reed says there are several reasons why automation is expected to see a period of strong growth.
“We are experiencing fundamental demographic shifts and cultural changes which are impacting the available workforce, and growth in competing low-cost regions means it’s harder to find people who will work for lower wages,” says Reed, who thinks these conditions make automation ripe for a surge.
Near-Term Trends
The report highlights four top line trends McKinsey expects will impact automation companies and their customers over the next few years. These are:
Automation will account for 25 percent of capital sending over the next five years
McKinsey expects billions of dollars of capital expenditure to be dedicated to automation, with logistics/fulfillment and consumer/retail being the biggest spenders. But advanced manufacturers are shopping for automation solutions too, with automotive expected to account for just over 30 percent of the spend over the next five years, an increase of almost 10 percent over its spending over the previous five years. The biggest takeaway here is that implementation is hard, and automation providers/implementers that find a way to get it right are in for a big boost to the bottom line.
Key applications for automation in industrial companies are material handling, palletizing and sorting
Nothing new here, except for the number of companies expected to seek out solutions. The task of moving stuff from one place in a facility to another—or one machine to another—is the kind of easily repeatable job that automation has always excelled at doing. A big change in this space is the advent of automated mobile robots (AMR). There is a major difference in both functionality and breadth of applications AMRs can perform compared to their older siblings, automated guided vehicles.
Automation will improve speed, safety, quality and capacity
Again, this is not a bleeding-edge take on automation. These traits have been the selling features of automated solutions since the days of Henry Ford. Obviously, a lot has changed since then. After decades of constant innovation and advancement in technologies, manufacturers’ facilities have now accumulated equipment of varying vintages, and some of the older equipment tends to be the more critical processes manufacturers rely on. This means there is a lot of opportunity out there for companies that are good at connecting older legacy equipment to the latest generation technology that offers all the benefits of Industry 4.0.
Cost and lack of knowledge of how to implement automation will be major bottlenecks in adoption
It’s safe to say that prices and lack of understanding of how to install technology have been the main bottlenecks to adoption for virtually all technology. Cost is a constant, and so is people who worry about cost. What's more surprising is that even after the amount of technological advancement over the past 30 years, lack of knowledge and understanding of automation is still a significant roadblock to adoption. This is likely a combination of human nature to be wary of new things and the speed of innovation in the automation sector. But it shows that there’s gold in the hills for any company that figures out how to break through these challenges.
“Up until this point, [automation users] had to become experts at automation in addition to being experts in the sectors they serve,” says Reed. “Now, automation providers will specialize in their niche, handling installation, implementation and maintenance.”
The McKinsey study highlights wrapping maintenance into a service model to demonstrate cost control and value. Another way to address cost and implementation problems is the “as-a-service" model. At its core, this essentially an equipment leasing model where the end user only pays for the equipment’s uptime. On paper, this model costs the end user more than simply buying the equipment outright. But the cost predictability is a huge upside, and the program wraps maintenance and service into the price, so there won’t be many unexpected surprises.
“Moving forward, these are generational career opportunities we are talking about,” says Reed. “Not just in the automation providers, but horizontal industries such as batteries, mapping and navigation solutions. Even when people talk about declines in the industry or a general recession, it’s important to understand that this industry is not going anywhere.”