Reports On Cobot and Global Manufacturing Production Markets

Following the post of a personal account from Shanghai from an Interact Analysis research director, I have two market research reports from the firm. One report is global collaborative robot market; the other global manufacturing. Both are updates stemming from geopolitical events.

Interact does the best job of digging up data of any of the firms I’ve talked with. I’d recommend taking all projections with a grain of salt. As Yogi Berra (or any of a dozen other prophets) has said, “Predictions are difficult, especially about the future.”

China to buy half of the world’s collaborative robots from 2023

• Overall cobot sales hit record high in 2021 at 31,325 units

• Cobot market to exceed $2 billion by 2026

• Logistics and service industries will be the long-term market drivers

Updated cobot research from Interact Analysis shows that the market enjoyed 45% growth in 2021 as part of a post-pandemic rebound. The market for collaborative robots will continue to grow strongly out to 2026 with annual growth rates sitting at just over 20%. Logistics and service industries are likely to be the long-term growth drivers. 

The Chinese market for collaborative robots continues to lead over the EMEA and Americas regions. Interact Analysis predicts that China’s market share by shipments will increase from 49.1% in 2021 to a staggering 54.4% in 2026 (at which point annual unit ship ments will exceed 50,000). The research shows that China’s 2022-2026 cobot CAGRwill be 29% – the highest of all the global regions. The Americas – where uptake of cobots particularly in manufacturing is much more cautious – are likely to retain the smallest market share overall with a still impressive 5-year CAGR of 19.4%. 

By 2026 the collaborative robot market will be three times the size it was in 2021, exceeding $2bn that year and with shipment rates hitting the roof at 100,000 units. The outlook is positive for the long-term, with the research showing that growth rates of 20% will be maintained right out to 2030.

A key focus for cobot companies right now is on making their products suitable for new application scenarios. Currently, we are seeing a strong uptake in collaborative robot usage within the medical, education, logistics and catering fields. Moving forward, it is likely that we will see greater uptake within the industrial manufacturing industry where cobots are helping to plug the gaps caused by ongoing labor shortages.  

Maya Xiao, Senior Analyst at Interact Analysis comments, “As we emerge from the COVID-19 pandemic, the issue of labor shortages is seemingly never ending. This is leading many to invest in collaborative robots. Our research shows that once one competitor invests in collaborative robots, and it is seen to work, there is a ripple effect. In 2021, global cobot shipments achieved a phenomenal year-on-year increase of 44.6%. Collaborative robots are being used as a form of ‘future-proofing’ because the pandemic creates so much uncertainty that companies don’t know what to expect next. Annually, we predict a 20-30% growth rate for the market, right out to 2026.”   

Global manufacturing production value to hit $44.5 trillion in 2022

  • Manufacturing output to decline to $44.3 trillion in 2023
  • Ukraine conflict creates perfect storm for automotive
  • Shanghai lockdowns exacerbate China’s supply chain struggles

New research from Interact Analysis projects that total manufacturing industry output will grow by 4% in 2022, then decline by $0.2 trillion in 2023, before rising again in 2024 and 2025.

The new research profiles Russia and Ukraine to ascertain stress points for MIO regions. Despite a GDP of over $1.7 trillion, Russia is considered an ‘emerging economy’ due to its small manufacturing base. However, since the largest companies in Russia are energy suppliers, the country is considered an ‘energy superpower’. Escalating fuel prices, which will impact Europe far more severely than the USA, are an obvious fallout from the conflict. Ukraine on the other hand had a GDP of just over $155 billion in 2020 according to the IMF, of which just over 30% was industrial production. Ukraine produces 70% of the world’s Neon – a key input in semiconductor production – and half of Ukrainian Neon is from Odessa and Mariupol. Since both these cities are key Russian targets, we expect one fallout of the conflict to be severe increases in the price of Neon. This will be a further big problem for the already beleaguered chip industry, which will turn to cheaper suppliers in China for relief.

The Shanghai lockdowns have also had an undoubtable impact on the manufacturing industry, particularly because the city hosts a port that handles over 25% of all Chinese freight traffic. Shanghai is primarily a finance center, however if the Chinese government were to implement similar measures in one of their major manufacturing hubs, it could spell disaster for the global economy, since China accounts for 44.4% of total global production output.

Adrian Lloyd, CEO at Interact Analysis says, “Automotive is particularly worthy of comment at the moment. The sector was already facing severe pressures following the pandemic, and the Ukraine conflict has made matters far worse for the industry. One of these problems is the new pressures on semiconductors, which already hit the automotive sector hard. Another is that Russia provides the majority of the world’s palladium which is used to produce catalytic converters and is now inaccessible. And yet another problem is that Ukraine is a key manufacturer of components for Western Europe’s automotive industry, particularly wire harnesses, supplies of which are now intermittent. As a result of all this, we predict minimal growth for automotive of 2.8% in 2022.

Responsible Computing Consortium

We thought of Artificial Intelligence as something magical. Then we figured out that much of the output of AI depends upon how the application is trained. Then, duh, we discovered bias underneath the AI training. Perhaps concepts we have learned since ancient times such as ethics, morals, and responsibility are important. My adolescent self hates hearing me say things like that. But, it’s true.

Sometimes I despair at the general lack of taking responsibility for our words and actions I too often observe.

In a bit of mining that same vein, the Object Management Group announced last Friday, May 20, a new consortium called Responsible Computing (a trademark of IBM, by the way). The founding members of this group are IBM and Dell. Its purpose is to focus on sustainable development goals.

From the news release, “Responsible computing is a systemic approach aimed at addressing current and future challenges in computing, including sustainability, ethics, and professionalism, stemming from the belief that we need to start thinking about technology in terms of its impact on people and the planet.”

“Responsible Computing aims to shift thinking and, ultimately, behavior within the IT industry and affect real change,” said Bill Hoffman, Chairman, and CEO of RC and OMG. “We’ve made our manifesto and framework freely available, and we’ve asked every RC member to implement RC principles. Our goal is that someday every IT professional will adhere to RC principles.”

The new consortium’s manifesto defines RC values to restore trust in IT by responsibly applying technology and by sharing experiences with other organizations. These values include sustainability, inclusiveness, circularity, openness, authenticity, and accountability.

The consortium’s RC framework focuses on six domains of responsible computing, including:

  • Data centers – are designed and operated with a focus on efficiency and sustainability, including emphasizing green energy and improving the handling and disposal of chemicals, toxic materials, and rare metals.
  • More sustainable infrastructure – monitoring the energy usage of products and technologies. Efficient and more sustainable operations, including proper disposal of products.​
  • Code – choosing code that optimizes environmental, social, and economic impact over time. Optimal code includes efficient algorithms, frameworks, and tools and KPIs to accelerate decision-making and pinpoint areas requiring more scrutiny during software development.
  • Data usage – the safe use of data will drive transparency, fairness, privacy, and respect for users.
  • Systems – that address bias and discrimination by driving equality for all, for example, the use of Artificial Intelligence (AI) for transparency.​
  • Impact – the technologies and innovations that drive a positive impact on society at large such as building to improve human conditions and mitigate social risk.

Through interviews with over 100 CTOs concerns were raised around developing practical actions to progress Environmental, Social, and Governance (ESG) programs. They wanted to contribute to becoming more sustainable businesses and demonstrate progress through consistent metrics. In November 2020, IBM’s Academy of Technology (AoT)’s responded to these challenges and created the Responsible Computing Council, an international team of technology and computing leaders who collaborate in validation and the implementation of the RC framework and lead by example in becoming a responsible computing provider. Object Management Group (OMG) was an early member of the council, and shortly after that, the OMG board approved the formation of the RC consortium.

“Now is the time for companies to adopt a holistic approach that places sustainability strategy at the center of their business,” said Sheri Hinish, Global Lead, IBM Consulting Sustainability Services. “IBM is proud to be a founding member of the RC consortium. Through this collaboration, we hope to help companies establish new and innovative ways to transform their business operations through ethical, impactful ways that can help contribute to a more sustainable future.”

“Dell is proud to be a founding member of the RC consortium. We are aligned with and driven by a similar passion to help leading technology organizations realize their sustainable development goals, in line with the planet’s,” said Marc O’Regan, CTO EMEA, Dell Technologies. “In addition to being socially and environmentally responsible, we also expect that RC members will see improved go-to-market solutions, strategies and bottom-line results by following RC principles.”

An organization can become more operationally efficient and demonstrate a return on investment (ROI) when meeting sustainability goals. The ROI can potentially include:​

  • Reduced power consumption
  • Waste reduction for packaging
  • Cost-effective heating and cooling solutions​
  • Supply chain efficiency, and more

Emerson and AspenTech Complete Transaction Creating New AspenTech

I consider the Emerson Chief Marketing Officer the best branding expert in our market. She must have lost a battle this time. Emerson and AspenTech announced the successful closing of the combination of Emerson’s industrial software businesses – OSI Inc. and its Geological Simulation Software business – with AspenTech “to create a global industrial software leader.” The new entity is called—new AspenTech. Evidently they are using the lower case “new” on the name.

With the close of the transaction, Emerson owns 55% of new AspenTech on a fully diluted basis and AspenTech shareholders own the remaining 45%. Shares of new AspenTech will begin trading on NASDAQ under the ticker symbol “AZPN” (previously AspenTech’s ticker symbol) starting May 17, 2022.

This reflects the new wave of bringing software businesses into mainline hardware businesses. Don’t do a complete acquisition. Restructure the investment so that the company owns a majority of shares and the “acquired” company becomes the minority holder. I’m not a financial genius, but from an organizational point-of-view it makes sense. The finances of a hardware business are much different from those of a software business. This keeps the messy part separated.

This deal also makes sense in that AspenTech has been one of those tech companies with good technology but has struggled financially. I’m sure Emerson brings strong financial controls along with its investment that should help stabilize the company. This should be good for customers.

“I am excited to announce the close of our transaction with AspenTech, which accelerates Emerson’s software strategy and creates an enhanced, high-performance, leading industrial software company with immediate scale and relevancy in a fast-paced, evolving market. Today marks a significant milestone for Emerson and is a testament to our commitment to continue building a higher growth, more diversified portfolio. Together with new AspenTech, we expect to realize significant revenue and cost synergies, while having the platform and flexibility to strategically deploy capital for growth through continued investment and M&A,” says Lal Karsanbhai, President and Chief Executive Officer of Emerson.

“We have now begun a new era at AspenTech, expanding our global leadership in industrial software by providing capabilities that support the entire lifecycle of complex operations across a wide range of industry verticals,” said Antonio Pietri, President and Chief Executive Officer of new AspenTech. “With a comprehensive software portfolio, an expanded global sales channel and an even stronger balance sheet reinforced by Emerson, new AspenTech will be uniquely positioned to help our customers address the dual challenge of meeting the increasing global demand for resources in a sustainable manner. As we move forward, I am confident that new AspenTech is poised for significant growth and continued success as we deliver value for our customers, employees and shareholders.”

Goldman Sachs & Co. LLC and Centerview Partners LLC served as financial advisors to Emerson, and Davis Polk & Wardwell LLP served as legal counsel. J.P. Morgan Securities LLC served as financial advisor to AspenTech, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.

Phoenix Contact Unveils Rooftop Solar System

Seth Godin initiated a project that has enlisted many volunteers from many countries called The Carbon Almanac. You can get yours soon. I thought I could contribute from the point of view of manufacturing and industrial production. I couldn’t get any information in time to contribute. However, I have had a couple of sustainability reports in the past month. Here is one from Phoenix Contact which has installed a nearly 1-megawatt array that will produce 30% of facility’s energy needs.

“We estimate this solar power installation will reduce our electricity costs by approximately $150,000 per year. While a smart business choice for us, reducing our company’s carbon footprint is more important in the long term,” said Jack Nehlig, president of Phoenix Contact USA. “Sustainability and renewable power generation are at the heart of Phoenix Contact’s vision for an All Electric Society. This is one critical step on our journey to becoming a carbon-neutral company by 2030.”

Phoenix Contact partnered with Gatter & Diehl Consulting Engineers and Terrasol Energies, Inc. to design the rooftop solar array. Phoenix Contact designed and installed the monitoring portion of the system, which features numerous Phoenix Contact products. 

Terrasol Energies, Inc. also installed the solar array on the roof of Phoenix Contact’s Logistics Center for the Americas last year. The solar array consists of 2,185 SunPower photovoltaic panels, which can generate up to 961 kilowatts. A $250,000 PEDA restart grant and a $270,000 grant from the PPL ACT 129 fund helped offset the $1.8 million investment into the solar array.  

In 2014, Phoenix Contact installed a 1-megawatt Combined Cooling Heating and Power (CCHP) facility. The system provides 65 percent of the facility’s energy needs and saves the company more than $300,000 annually. With the CCHP and the solar array, Phoenix Contact will generate enough energy to go off the grid on sunny days during the shoulder seasons (spring and fall). 

Zebra Technologies Acquiring Matrox Imaging

Consolidation hits the vision system market yet again. Zebra Technologies, pursuing a strategy of becoming a broader automation player, announced intent to acquire Matrox Imaging. Matrox has been around for a long time. I remember it from my days as an integrator. It’s a tough market to go alone.

Zebra Technologies announced it intends to acquire Matrox Imaging. This acquisition further expands Zebra’s offerings in the fast-growing automation and vision technology solution space following last year’s acquisitions of Adaptive Vision and Fetch Robotics.

Matrox Imaging offers platform-independent software, software development kits (SDKs), smart cameras, 3D sensors, vision controllers, input/output (I/O) cards, and frame grabbers which are used to capture, inspect, assess, and record data from industrial vision systems in factory automation, electronics and pharmaceutical packaging, semiconductor inspection, and more.

“Customers are increasingly deploying automated solutions to augment their front-line workers, enabling them to focus on more complex, higher value workflows, and machine vision is a key technology to help them get there,” said Anders Gustafsson, Chief Executive Officer of Zebra Technologies. “This acquisition enables us to meet our customer’s evolving needs, regardless of where they are on their automation journey—from capturing and analyzing data to facilitate decision-making to deploying physical automation solutions to accelerate the production and movement of goods and materials. We are excited to welcome the Matrox Imaging team to the Zebra family.” 

Matrox Imaging’s solutions complement Zebra’s recently launched fixed industrial scanning and machine vision portfolio as well as significantly augment Zebra’s growing expertise in software, machine learning and deep learning.

“The combination of Matrox Imaging’s technical expertise with the global footprint of Zebra Technologies presents an opportunity for Matrox Imaging to accelerate its long-term strategic plan,” said Lorne Trottier, President and Co-Founder of Matrox. “With its complementary machine vision and fixed industrial scanning portfolio, Zebra Technologies will be an excellent home for Matrox Imaging.”

Zebra expects to fund the $875 million purchase price with a combination of cash on hand along with fully committed financing under its credit facility. The transaction is subject to customary closing conditions, including regulatory approval and is expected to close in 2022. Matrox Imaging generates annual sales of approximately $100 million with a higher profit margin profile than Zebra.

Osler, Hoskin & Harcourt LLP is serving as legal counsel and UBS Investment Bank is serving as financial advisor to Zebra. Stikeman Elliott LLP is acting as legal counsel and Evercore is acting as financial advisor to Matrox Imaging.  

Poor Product Documentation Costs Enterprises

I was hired early in my career to solve the problem of providing product information to all the departments that needed it in the form and quantity they needed for doing their jobs. Fifty years later, looks like it’s still a problem looking for better solutions. I’ve written recently about companies solving the complexity issue. This company tackles product information from a visual perspective using the customer’s 3D CAD models.

Canvas GFX, Inc, a provider of visual communication and collaboration solutions to the manufacturing and technical industries, published new research showing the damaging commercial impact of inefficient and ineffective product documentation workflows and processes at manufacturing companies.

Here are some quick read bullet points:

• 73% of manufacturing industry professionals surveyed said inefficiency in current documentation workflows risks undermining gains made through other process and technology initiatives

• 97% of respondents said products or projects had been hit by errors or delays as a result of documentation being late, inaccurate or unclear

• 41% said outdated documentation had led to delayed or missed sales opportunities

Based on a survey of over 500 manufacturing industry professionals, the research shows how documentation that is routinely late, inaccurate, and outdated is causing downstream damage to the organization.

Note: I think I would have been fired for that.

My daughter who is a psychologist would love this (not). The report describes a new disorder—Product Communication Disorder. OK, that may be a little over the top.

Almost three-quarters of respondents (73%) felt that inefficiencies in their product communication processes could be undermining gains made through other technology initiatives.

“What this research shows is that challenges which might only be understood as departmental workflow issues are actually intricately connected to the success of the entire organization,” said Patricia Hume, CEO of Canvas GFX. “How product communication content – from engineering through to sales –  is created, collaborated on, and consumed underpins company performance. Where these processes are malfunctioning, the result is self-inflicted damage. Product Communication Disorder is a systemic problem which must be viewed and addressed as such.”

Click for the full report and methodology.