Interact Analysis performs research on markets differently from other analyst firms. I’ve appreciated this British company’s insights. It has been sending a constant stream of reports lately. As I’ve been catching up with a flood of news, I’ve consolidated three recent research reports.
The first from CEO and Senior Research Director, Adrian Lloyd.
Manufacturing Recovery Post Covid
China was the first country to be hit by the COVID-19 pandemic, and the authorities’ fierce suppression of the virus has meant it was the first major region to emerge from it. In the Chinese manufacturing sector, the recovery was particularly striking, to the extent that by mid-April 2020, the operating rate of Chinese industrial enterprises exceeded 90%. Interact Analysis has published its latest update to its Manufacturing Industry Output Tracker (MIO).
This latest edition of the MIO confirms the upwards revisions to predictions made in November 2020. The return to growth for China’s manufacturing industry in Q3 of 2020, and sustained growth in Q4 has turned Interact Analysis’s forecast for the full-year from negative to positive. We now expect that China will enjoy a +1.9% increase in overall manufacturing output for 2020, as opposed to our forecast back in August, which suggested a -3.5% decline. 6.0% growth is expected for 2021. This is good news for China.
Rapid rebound for many industries, including automotive
The national Bureau of Statistics of China has reported that the total value-added of industrial enterprises increased by 2.8% last year. The production of industrial robots, new energy vehicles, integrated circuits and micro computer equipment grew by 19%, 17.3%, 16.2% and 12.7% year-on-year, respectively. Significantly, the growth rate of the automotive industry increased compared to 2019. This is quite exceptional given that on a global level the automotive sector has been a serious casualty of the pandemic.
The recovery of China’s manufacturing confidence from the second quarter of 2020 onwards is reflected in the manufacturing PMI, a market sentiment indicator, which clearly describes a v-shaped recovery coming out of Q1.
In December 2020 China’s (PMI) was 51.9%, down by 0.2% from the previous month, but it was above the 50.0% threshold for ten consecutive months, indicating that manufacturing industry has continued to make a steady recovery.
Of the five sub-indices composing PMI, the production index and the new orders index were above the threshold, while the supplier delivery time index, main raw materials inventory index and employment index were below. The production index was 54.2%, down by 0.5 percentage points from last month, but it still stayed above the threshold, indicating that the growth rate of manufacturing production has slightly slowed down but is still higher than the value posted in August.
The new orders index was 53.6 percent, down by 0.3 percentage points from the previous month, but it still stayed above the threshold, indicating that demand was continuing to grow. The supplier delivery time index dipped just below the threshold from 50.1% in November to 49.9% in December, indicating that the delivery time of raw material suppliers in the manufacturing industry was slightly slower than that of last month and slightly down from the August value. In spite of the slight dips, the scores for these three indices ensured that the overall PMI stayed above the threshold.
The performance of China’s Q3 2020 export market has been a key influencer impacting China’s full-year outlook for 2020. Both import and export operations in the region have been improving. The total value of imports and exports for the first three quarters combined increased by 0.7% year-on-year. Across the year so far, Q1 fell by -6.5%, Q2 fell by -0.2%, and Q3 rose by 7.5%. In December, the growth rate of exports dipped slightly by 3% month-on-month, however, it remained 18.1% up on the 2019 value. As of December, China’s exports have achieved positive year-on-year growth for seven consecutive months.
China’s manufacturing industry recovery is setting the pace globally, and defying expectations. While global manufacturing output growth is expected to drop by -3.9% in 2020, it will increase by +1.9% in China. The latest data suggests that, in 2021, both global and Chinese manufacturing output will increase by more than 6%, as we hopefully leave the pandemic behind us. The robustness of China’s industrial chain has shown through during the pandemic. And increased investment in automation upgrades is likely to further consolidate the position and share of China’s manufacturing industry overall.
The second report is from Research Analyst Mayo Xiao on the industrial robot market.
Recent news for the industrial robots market hasn’t been cheering, but the future for the sector looks good, with global shipments forecast to increase by over 9% in 2021, and a CAGR of 4.6% forecast for the period 2021-2024.
Major revisions in previous forecasts brought about by unprecedented events
The Covid-19 pandemic has not been the only drag on the economy in the past couple of years. Even pre-Covid, 2019 was not a good year. As reported by the IMF in July 2019, the global economy was dipping before the pandemic hit the world. Sino-US tariff wars, weak demand from the global automotive and electronics industries, Brexit-related uncertainty and geo-political tensions all played their part in subduing global growth. Then came the virus to further disrupt an already weak economy.
The robotics industry was hit particularly hard in those two years, seeing continuous negative growth. In our new industrial robots report, Interact Analysis highlights the downturn for robotics by looking at our own predictions made in Q3 2019 in the second edition of the report, and comparing them with revised figures made in the new third edition.
The chart above shows the effect of the slow-down in 2019 on the robotics industry, when shipments fell by 5.4%, and the profounder effect of the pandemic of 2020 when they fell by 5.9%. Put more starkly, there were 80,000 unit shipments less in 2020 than previously forecast.
Although earlier forecast figures for the longer term are not now going to be realised, Interact Analysis has identified strong drivers for the increasing use of automation and industrial robots. These include new industry applications and reducing prices. Revenues are forecast to accelerate in 2021 with an increase of 9.2% in revenue terms and 9.6% in shipment terms. Thereafter there will be a steady uptick in shipments.
All classes of robot except articulated robots are predicted to return to 2019 shipment levels before 2021. The sluggish market growth rate of articulated robots is explained by their predominant use in the automotive industry, which has been hit badly in the past two years. This downturn is predicted to continue. SCARA robots, used for light duty pick and place and assembly operations, have suffered delayed demand in the 3C industry but are predicted to rebound swiftly as their potential for use in different applications is recognised.
Market growth for Delta robots, used in the food and beverage and pharmaceutical sectors will be steady, whilst Collaborative robots are expected to show negative growth for the first time in 2020, but their growth rate is predicted to be an impressive 15-20% year-on-year up to 2028. They are currently strongly established in the electronics sector, but they are a relatively nascent technology offering the potential to be applied across a range of sectors. Cartesian robots are, like SCARA robots, used in material handling. Other applications include pick & place and packaging. Their advantage over SCARA robots is that they offer heavier payload options, and it is these that will drive their market.
The pattern of regional recovery for the industrial robot sector is very similar to that of other industrial sectors. The virus started in the Asian regions, and then moved to Europe and North America, and the infection continues to spread. As a result, normal business operations will resume earlier in the Asia-Pacific region, and this will impact on robot shipments in those areas, most notably in China, where stringent measures had brought the virus under control by May 2020. The impact of the virus on the industrial robot sector in the Asian regions, particularly China, has in fact been relatively small, and the Chinese market is the only one forecast to surpass 2019 levels by 2021. This is in the main due to the large domestic demand in China. Covid-19 has had greater impact on foreign trade.
Interact Analysis predicts that by 2023 all regions will have surpass 2019 levels of industrial robot shipments, with China and North America achieving the highest growth rates.
Suppliers – The Big Four forge ahead – for now. Prices set to drop
Where suppliers of industrial robots are concerned there are many new entrants to the market bringing with them exciting new technologies, but 4 major manufacturers – Fanuc, Yaskawa, ABB and Kuka – took an estimated 58% of revenues in the world market in 2019 and continue to dominate. The market has been led by articulated robot suppliers, because of their many payload options and the industries and applications they can serve but take note of the slowdown in articulated robot sales noted earlier. Things may change, especially with the promised coming of age of the collaborative robot. Japan is home to most leading suppliers, including the world leaders in industrial robots, Fanuc and Yaskawa.
Although the technology used in robots is becoming more advanced, Interact Analysis forecasts the price of industrial robots will continue to fall at a rate of around 3-5% a year from 2019 to 2024 – a likely significant driver of investment by end-users.
Finally, a report from Senior Analyst Blake Griffin about variable frequency drives used for predictive maintenance.
Drives and Predictive Maintenance
Predictive maintenance is fast becoming recognised as one of the more easily exploited applications of that popular but not always easily defined concept in industry – digitalization. Also known as Industry 4.0, digitalization remains a broad concept which can be difficult to justify in terms of investment. One aspect of digitalization, however, stands out as worthy of swift and serious consideration: predictive maintenance. Predictive maintenance can save millions of dollars of lost output by pre-empting production line downtime. In our predictive maintenance report, researchers at Interact Analysis have turned their focus on the ability of motor drives to perform predictive maintenance diagnostics not only on themselves, but also on the equipment they control, potentially saving millions in machinery downtime. This technology, whilst in its early days, is expected to be a key enabler of predictive maintenance initiatives as it opens up a new stream of data for both OEMs and end-users to tap into.
More than just a drive
Motor drives can be highly sophisticated pieces of equipment, capable of performing diagnostics on themselves, and giving signals to alert engineers when maintenance is necessary, thereby avoiding breakdowns and subsequent costly machinery downtime. Companies such as Siemens have recognised the potential of this predictive maintenance technology and offer it as a service to end-users through their digitalization platform called Analyze MyDrives.
However, drives can do more than diagnostics on themselves. For example, they can monitor the status of the motor they are controlling by measuring the voltage and current the motor requires to perform a task in real-time. This data is used to control torque and motor speed, but it can also be used to identify the imminent failure of a component in a motor. Drives vendors will argue that voltage and current measures give more sophisticated insights into motor failure than the standard monitoring of vibration.
As OEMs and end-users are beginning to recognize the value of data housed in the smart devices driving their systems, some drives vendors are developing software for their products which are aimed at making the process of gathering, organizing, and monitoring trends in this data easier. One of the earliest pioneers of this technology, and one of the strongest voices, has been Danfoss. The company has already brought this technology onboard with their VLT AutomationDrive and it is a great example of this trend in action.
Vendors offering drives incorporating predictive maintenance software need to ask themselves these questions:
- What data will be captured, and how?
- Where will the data be analysed?
- What is the most cost-effective option?
These questions have significance in terms of the capabilities of the drive from a predictive maintenance perspective. This is where vendors need be ready to respond to end-user needs when developing their products.
Big players likely to be first in the queue for drive-based predictive maintenance technology
As a general rule, the bigger the motor, the greater the financial loss when it stands idle for repair. We believe the industries that will be first in the queue for motor drives offering predictive maintenance capabilities will be those using the largest and most expensive machinery. Additionally, process industries in which downtime could represent the loss of a batch being manufactured are expected to adopt predictive maintenance early. These industries are likely to include metals, oil and gas, water and waste-water, power, chemicals and pharmaceuticals, and various other sectors involving large industrial processes. As well as being the largest, they are also some of the swiftest growing sectors in the market.
The potential for savings in these areas through predictive maintenance is huge. Automotive, another big player on the industrial landscape, has already started utilizing predictive maintenance technologies. We anticipate these larger industries, often with multiple sites, will use a combination of edge and cloud computing for predictive maintenance analytics.
Smaller-scale industries may be slower to adopt predictive maintenance owing to cost issues, but we can expect these operations to increase their demand for drives that can diagnose issues on the spot, on the motors they are controlling.
Drive vendors offering equipment with smart sensor capability include ABB, Siemens and Danfoss. The ABB Ability Smart Sensor transfers data to a secure server via Bluetooth and can be used on traditional motors, pumps and bearing blocks. The Siemens SIMOTIQ IQ uses Bluetooth to communicate through gateways known as Connect 300 or Connect 400 to the cloud. Predictive maintenance enabled drive vendors include Rockwell Automation, Danfoss, and Schneider Electric. The Schneider AltivarProcess 630, used in a range of settings including pumping, lifting, aeration and compression operations can analyse data on the drive itself, or send it to an external network for processing.