A Real Economy publication

2022 automotive industry outlook

Feb 08, 2022

Automotive industry outlook key takeaways

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While the automotive industry today has the highest robotic density compared to other manufacturing sectors, demand for automation is growing outside of the auto space.

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In 2020, U.S. non-automotive manufacturers’ robotics orders, led by the electronics industry with 23% growth, surpassed those of the auto industry for the first time, and we expect this trend to continue.

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The scope of possibilities for robotics can be overwhelming, but companies can look to the auto industry for guidance; implementing robots throughout the business can happen gradually over time.

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Economics Automotive

For manufacturers that have not yet embraced or begun planning for the integration of robotics into their manufacturing processes, a look at the automotive sector’s method of adoption, use cases and investment approach can provide insight into what’s possible.

Over the last 60 years, the automotive industry has demonstrated resolute adoption of robotics in its manufacturing processes. When General Motors installed the Unimate—arguably the first industrial robot—on its assembly line, the company saw robotics the way many non-automotive manufacturers see it today: as a potentially useful technology it wasn’t sure how to integrate. But that didn’t stop the company from taking the first step.

The Unimate’s job was simple—it used a robotic arm to remove and stack parts. In addition to reassigning a repetitive and dangerous task from humans, this also demonstrated that robots could be incorporated alongside the traditional assembly-line worker.

In the decades following the arrival of the Unimate, the automotive industry adopted and adapted to a flood of developing technologies and advanced manufacturing processes. The result is an industry that today uses robots to perform tasks ranging from assembly, welding, painting and real-time evaluation of part quality to the movement of parts throughout manufacturing facilities.

While the automotive industry today has the highest robotic density compared to other manufacturing sectors, demand for automation is growing outside of the auto space. In 2020, U.S. non-automotive manufacturers’ robotics orders, led by the electronics industry with 23% growth, surpassed those of the auto industry for the first time, and we expect this trend to continue.

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By the end of 2020, there were approximately 3 million industrial robots globally, marking an increase of 10% from the year prior, according to IFR. In the United States, robotic sales units increased by 7% in “general industry” in 2020 versus 2019. Life sciences saw a 72% increase, and other sectors with notable growth included food and consumer goods as well as plastics and rubber, with increases of 60% and 62%, respectively.

Taking the first steps

COVID-19 and resulting supply chain complications have made even clearer the need for manufacturers beyond the auto space to harness robotics to increase productivity, create greater flexibility and move toward the factory of the future. In the United States, automation and robotics can create an incentive to reshore certain critical aspects of production without sacrificing quality or cost.

To implement these technologies, manufacturers need to critically analyze their production processes to better understand where automation and robotics can be adopted. Applications that include welding, picking and packing, assembly, painting and materials handling are among the areas where robotics are most frequently incorporated.

As middle market companies consider robotic investments, they should think about how such investments align with their digital strategy and longer-term business model.

Manufacturers are also moving beyond these traditional areas and increasingly using robots in logistics and warehouses, laboratories, workshops and small production environments, according to IFR. The scope of possibilities for robotics can be overwhelming, but companies can again look to the auto industry for guidance; implementing robots throughout the business can happen gradually over time. What’s most important is that manufacturers take steps to begin this journey.

As middle market companies consider robotic investments, they should think about how such investments align with their digital strategy and longer-term business model. Robotics and technology investments will enable companies to achieve competitive advantages and create a business model relevant to today’s industrial needs, especially as the sector increasingly prioritizes speed and customization.

Middle market organizations might consider acquiring companies that have these advanced technologies in place or that would enable a pivot to a new digital business model. Companies need to think through their location strategy to consider where these investments need to be made and to what extent. In summary, whether robotic investments are made to solve labor challenges or expand capacity, they should also support the broader and longer-term business strategy.

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