US robotmaking industry prepares for a big leap
Detroit — When robot inventor George Devol tried to drum up interest in his labor-saving device in the 1950s, he got the cold shoulder from big business.
''They said, 'Who needs it?' '' recalled the white-haired grandfather of the robot industry.
And for almost 30 years corporate giants continued to act as if robot manufacturing should be left to small companies which presumably had nothing better to do. As a result, the largest factor in the US robot industry has been Unimation Inc., which had 1981 sales of around $57 million.
But now the heavy hitters of American industry have changed their minds about the robot's prospects. While 1981 robot sales were a tiny $151 million, robot industry revenues are projected to grow at a 35 percent annual rate through 1990 . Much of the factory equipment for the 1980s and 1990s is expected to be built around robots.
International Business Machines Corporation provides perhaps the most convincing sign that robots now appeal to corporate titans. A few days ago the world's largest computer company unveiled its first two entries in the robot derby. IBM is hot on the heels of other sizable newcomers to robotmaking, including Westinghouse Electric Corporation, General Electric Company, and Bendix Corporation.
''We are making robot companies faster than we are creating business for them ,'' quipped Joseph F. Engelberger, president of Unimation Inc.
Potential competitors expect IBM and its billion-dollar cohorts to have a profound impact on the nature of competition in robots and in some cases are realigning corporate strategies as a result. ''In the past year we have been forced to take a close look at the market. We don't want to compete with IBM,'' admits Walter K. Weisel, vice-president of Prab Robots Inc. Prab had 1981 sales of $17.5 million.
The influx of huge companies into the robot industry has significance far beyond the competitive challenge it poses to established robotmakers like Prab and Unimation Inc. Perhaps most important, the major sales effort these corporate heavyweights will mount should help increase robot use in the US and narrow Japan's lead in placing robots in factories. Increased robot use should also help make US firms more effective competitors in international markets.
''In the short term the biggest impact is that more companies will be beating on the marketplace, tending to open it up,'' says Bache Halsey Stuart Shields Inc. analyst Laura Conigliaro.
A stepped-up sales pace is needed since to date most potential US robot users outside the automobile industry have taken a wait-and-see attiude toward the devices. By contrast, Japanese companies have actively embraced robots.
''Our record of 4,000 robots in 20 years is a rotten record. Japan in half the time has installed 16,000,'' admits John J. DiPonio, a Ford Motor Company executive who serves as president of the robotics arm of the Society of Manufacturing Engineers. The society sponsored a major conference on robotics here this week.
Mr. Diponio worries that Japan's greater use of robots will cut the costs of that nation's companies significantly, increasing their ability to compete in international markets. For example, Unimation figures a $50,000 robot costs General Motors Corporation about $6 an hour to operate against the $19-an-hour cost for human labor. Thus, in general, the more robots US industry installs, the lower its production costs would be.
The cost savings robots bring should become even more pronounced as heightened competition forces robot prices down. The competition will come not only from multibillion dollar firms with household names but also from smaller recent entrants into the robot market, like Advanced Robotics Corporation, Hodges Robotics International Corporation, Thermwood Corporation, and United States Robots.
Signs of price pressure already are appearing. Recently, Asea Inc., the US subsidiary of the Swedish firm Asea AB, cut the price of its robots 25 percent in what analysts view as a bid to gain market share. Once the primary vendor in arc-welding robots, Asea competes for that business with Automatix, Advanced Robotics Corporation, Cincinnati Milacron, Unimation, and Cyclomatic Industries Inc., among others.
Price cuts also are likely to come as robotmakers are prompted by competition to continually update their technology. For instance, Prab recently cut the price of its robots by $10,000 as a result of circuit board improvements.
Meanwhile, Unimation is in the midst of building a new robot factory where robots will help build new robots, thus trimming production costs.
The huge new companies in the field are especially well equipped to compete both in robot technology and advanced production methods. For example, the General Electric Company research and development center has ''over 650 scientists and engineers,'' trained in various disciplines, notes John P. Wilkinson, a manager at the center. ''We are able to put these varied strengths together into uniquely broad and deep multidisciplinary efforts.''
Ironically, though, most of the billion-dollar companies entering the market have licensed technology for their initial prodcts from Japanese companies. IBM's model 7535 is being built by Sanyo Seiki Manufacturing Company of Japan; General Electric is licensing technology from Hitachi Ltd.; and Westinghouse is reaching agreements with Komatsu Ltd. and Mitsubishi Electric Company.
''Developing a complete robot is not done overnight,'' explains Jules A. Mirabal, general manager of GE's automation systems division. Licensing technology allows the major companies to make a fast entry into the robot market. But eventually GE and the other giants will field robots based on technology developed in house.
As the technology battle forces prices down, robots will become cost effective for an even wider variety of applications and industries. The automobile industry has accounted for the majority of robot applications where the machines handle spot welding and material handling chores. ''There are lots of opportunities outside the auto industry,'' says Clifford R. Meyer, Cincinnati Milacron president.
The machine-tool executive expects robot use to pick up in the aerospace business where significant exerimentation with the machines has already taken place. Robotized arc welding of seams in heavy equipment is also likely to grow rapidly. Another promising application is the use of robots to perform various assembly chores.
The major entrants in robotics have the financial muscle to speed growth of new markets by offering attractive financing to customers. Appealing leasing deals have been a major force in boosting robot use in Japan. A lease can make it easier for a small company to install a robot. The firm only has to come up with a monthly payment instead of the machine's total price, which may be from $ 25,000 to $125,000.
''It will be interesting to see the extent to which they use their financial power to do leasing,'' notes Paul H. Aron, executive vice-president of Daiwa Securities America Inc. To date, no new entrant offers special leasing packages.
One area where the robot giant's financial prowess will be especially useful is in deepening the US robot industry's penetration of foreign markets. ''A number of the firms which have recently entered (the market) have important marketing presence abroad,'' notes Bache analyst Conigliaro.
Increased robot exports will help offset the influx of robots from Japan and Western Europe. Robot imports now account for 2 to 3 percent of the US market and are expected to claim a 15 percent share by 1985.
Larger foreign sales are especially useful when the domestic market enters a temporary slump, as it recently has. Robot sales are still expected to hit $215 million in 1982. But the pace of sales has been slowed by the recession in the auto and appliance industries, robotmakers' two key customers.
''We have more (production) capacity than we know what to do with,'' says Prab executive Weisel. Prab is not alone. Unimation recently laid off 45 of its 800 workers.
Industry experts diasagree on how many of the 50 or more robotmakers will perish in the battle for market share.
Most small and medium-sized entrants in the robot market contend they can compete with the corprate giants.
''IBM will sell a lot of robots. There is no question about it,'' admits Dennis E. Wisnosky, a vice-president of GCA Corporation in Bedford, Mass. GCA recently acquired one domestic robot company and last month signed a licensing agreement for robots with Dainichi Kiko of Japan.
''We see this as a long-term business. A few companies are a couple of hundred yards down the road. But this is a mile race.''
Robot business takes off Sales revenues Units (millions of dollars) 1979 $60 1,000 1980 $100 1,450 1981 $155 2,100 1982 $215* 3,100* 1983 $280* 4,100* 1984 $395* 5,900* 1985 $540* 8,100* *Estimates Source: Bache Halsey Stuart Shields Inc.