The end of the boom that wasn't a boom - Calling America

00:00:00: Hi, Robert hier.

00:00:01: Dieser Podcast wird euch präsentiert von der Hannover Messe.

00:00:04: Wir sagen vielen herzlichen Dank an die Kollegen in Hannover und jetzt geht's los.

00:00:09: Robotik in der Industrie, der Podcast mit Helmut Schmidt und Robert Weber.

00:00:17: Hello, everybody and welcome to a new episode of our Robotics Podcast.

00:00:25: My name is Robert and it's a pleasure to talk to Helmut in Munich. Hello Helmut.

00:00:30: Hello, pleasure meeting you.

00:00:32: We are back with Calling America and our correspondent Stu Shepherd is back. Stu, welcome.

00:00:38: Thank you, it's great to be back. Nice to see you guys again.

00:00:41: How are you Stu? It's been a long time.

00:00:43: Doing well. Yeah, it's been a couple quarters it feels like, but I don't think it's been that long.

00:00:48: And it's winter time. Everything seems longer in the winter time.

00:00:52: Yeah, but a lot happened, right? So how's the US market doing?

00:00:56: Well, the US market is still troubled.

00:00:58: Since the elections a lot of people thought there would be a big upswing in business.

00:01:03: Jan Stream from the election and the placement of the Trump administration.

00:01:07: Somewhat like there was four years ago.

00:01:10: But actually the opposite is true. There's more indecision and more controversy

00:01:15: with his second term that's come in that's caused a lot of people to, you know,

00:01:20: maybe put their investments on the sidelines for a bit to see what happens.

00:01:24: If the smoke clears or, you know, what embargoes and what things will happen next.

00:01:29: But it's not a good situation for the robotics, right?

00:01:32: It's still very difficult. So the interesting thing is we've got more viable solutions that are proven.

00:01:39: We've got fantastic data about their performance, but people are scared to make changes.

00:01:45: So when they're fearful of change or fearful of their business, they tend to park their money on the sidelines.

00:01:52: Even though, frankly, robotic investments are some of the best returns in the market you can possibly get

00:01:58: and much lower risk than investing in the stock market or some of the other markets that are out there.

00:02:03: There was a boom in the last year. We talked a little bit.

00:02:06: You were skeptical about this boom. Is the boom over?

00:02:10: The boom really never got a lot of energy behind it.

00:02:13: Yeah, exactly.

00:02:14: Yeah, there was certainly an increase and the numbers were pretty good.

00:02:17: But year over year, the market in North America, particularly, was somewhat flat.

00:02:22: In other markets in the world, it was down even a little bit.

00:02:26: But the markets being flat were an interesting thing.

00:02:29: Automotive is typically a heavy driver of automation purchases in North America, particularly.

00:02:35: And last year, the automotive didn't invest that heavy.

00:02:38: They kind of waited because they backed off their investment in EV manufacturing to focus on just keeping the businesses going.

00:02:47: But material handling continued to grow in places like warehouse and food and beverage and other places where material handling is important.

00:02:57: And labor continues to be an issue.

00:02:59: You can compare the situation with Germany and Europe, right?

00:03:02: So it's nearly, I would say, the same situation.

00:03:05: I would say it's quite similar.

00:03:07: So, for example, if you see what are numbers on final universal robots, KUKA, but also ABB for robotic arms on the one hand side.

00:03:16: But on the other side, two weeks ago, we just had Lovimat.

00:03:19: This is exactly what you just mentioned on material handling, logistic processes.

00:03:25: So that the fair itself on the one hand side was heavily visited, had a lot of interesting, many new robotics, mobile robotics and material hands.

00:03:35: And pin picking applications were shown, including new robotic warehousing.

00:03:39: So I think there's a shift going to happen in robotics and automation.

00:03:43: And just the Promet was having in the US.

00:03:47: So therefore my question is to you.

00:03:49: You saw a similar change or let's say you said the situation in the US market is difficult.

00:03:57: But Promo is a fair show the different expectation or purchasing attitude or how was the feeling at the fair?

00:04:05: Well, there's a couple of things.

00:04:07: So one of the things about the market, by the way, before I go to Promet, just a quick point.

00:04:11: Not all robot companies report their data to the IFR or to the A3 over here in the US, North America.

00:04:19: So a lot of the growth that's occurred has been in robots companies that have not reported their data.

00:04:26: So they don't get picked up in the mainstream data to reflect the growth there.

00:04:30: So a lot of co-bots as an example and a lot of new robot companies that are emerging.

00:04:35: The other thing is AMR is automated.

00:04:38: Oh, really?

00:04:39: But still, what are new co-bot players on the US market?

00:04:43: Are these Chinese brands or who is new and not reporting numbers?

00:04:46: Sounds very interesting for me to hear this.

00:04:48: Well, even the bigger organizations that have been there historically have not reported their co-bot numbers.

00:04:53: So Universal traditionally has not in the past, although I understand that may be changing.

00:04:59: But certainly the other companies that are coming into North America in the co-bot world have not been reporting.

00:05:06: The big companies have been.

00:05:07: So the FANIX, the AVBs, Yaskawa, those kind of people, they do in fact report their robot numbers for co-bots.

00:05:14: They just don't break them out.

00:05:16: There's not a breakout for co-bots.

00:05:18: And that's a good thing, frankly, because co-bots are just another choice of robots.

00:05:23: But AMRs, as an example, there's no reporting of AMRs.

00:05:26: So the massive growth in AMRs doesn't get picked up, but clearly there's a huge market there.

00:05:32: So anyway, going back to the ProMAT thing, the ProMAT show in Chicago was very interesting.

00:05:37: The number of exhibitors, I think, appeared to be roughly the same,

00:05:42: although the exhibitors are showing much larger floor space in their booths to be able to demonstrate their equipment.

00:05:49: And the thing I would say that I noticed was that the sophistication and the installation experience

00:05:56: and the real world capabilities of the equipment has all significantly improved.

00:06:00: There's still a lot of development work to be done. Don't get me wrong.

00:06:03: But the stability and the speed and the performance in the business cases, most importantly, are certainly there.

00:06:11: And even with humanoids, Digit was on display with Julia Robotics and was a fantastic display

00:06:18: showing that humanoids are coming.

00:06:20: And there is, in fact, a business case there for businesses that are running at least two shifts.

00:06:25: It's definitely showing up.

00:06:26: Two shifts, you mentioned.

00:06:27: Were two shifts was a humanoid?

00:06:29: Yeah, they said that if you run your business on a two-shift basis at least five days a week,

00:06:33: that they're able to get payback by using the humanoid Digit as its name.

00:06:39: And the more shifts you run, the more days you run each week,

00:06:43: the higher the performance return on investment are.

00:06:47: And they have real-life data to support that.

00:06:49: Is it a wheel-based humanoid or is it a foot-based humanoid?

00:06:54: It's actually a walking robot. It's a pure quadruped.

00:06:58: And it's not a wheel-based robot.

00:06:59: And then with some of the wheel-based robots, the paybacks may be a little bit faster

00:07:04: if the cycle rate of packing boxes is faster.

00:07:07: But yes, it was quite impressive.

00:07:10: And it's the first time at a show like that, you saw the robots really untethered

00:07:15: and walking even on a little bit of a non-smooth surface.

00:07:18: It was certainly carpeted, but it's walking on cables and other things underneath the carpet.

00:07:23: It's just like people do.

00:07:24: And they were quite stable and ran pretty well.

00:07:27: It was a very interesting display.

00:07:29: So now you're a humanoid fan, boy?

00:07:32: Not completely.

00:07:33: So to me, for all automation, it's about form factor.

00:07:37: What's the right form factor to do the right job?

00:07:40: And when you get that form factor worked out, what's the return on investment?

00:07:44: Because at the end of the day, it doesn't matter how cool the technology is.

00:07:48: It matters if it makes money.

00:07:50: And a lot of companies have just missed the fact that even some fairly simple automation out there

00:07:55: can in fact make quite a bit of money and as much better investment than other investments

00:08:00: they could be making.

00:08:01: And return on investment has proven to be pretty rapid for systems that are properly engineered.

00:08:09: But you mentioned this whole political stuff.

00:08:13: And is that the only reason why companies not investing in automation as fast as expected?

00:08:19: No, I don't think it's the only reason.

00:08:21: I mean, it's a significant reason because there's so much distraction.

00:08:24: And a lot of companies are trying to perhaps redesign products to be able to deal with some of the changes.

00:08:31: Because some of the changes are certainly tariff based.

00:08:33: But there's even some ingredients and color dyes and other things that are being legislated about right now

00:08:40: that could in fact change the texture, the flavor of their food and beverage and things to working on.

00:08:45: So there's a lot of work going into that area.

00:08:48: But the other element that's occurring is there's a lot of mergers and acquisitions going on.

00:08:54: And if you're being acquired, the acquiring company doesn't want you to be spending money.

00:08:59: And the company that you're operating in doesn't want to spend money because they're trying to keep the books as clean as possible.

00:09:05: And if you're the acquiring company, money you might have used for a CapEx expenditure on robots

00:09:11: winds up becoming an investment and taking over another company.

00:09:14: And a lot of the investments that could go for robotic automation perhaps are being pushed towards things like ERP systems

00:09:21: or other types of office automation to be able to consolidate these operations.

00:09:25: So there's still money being spent, but not necessarily prioritized for robots and robotic automation.

00:09:33: And I feel that may be a problem because when you get done with the mergers and acquisitions,

00:09:38: you still got to deal with all the inefficiencies.

00:09:40: You still got to deal with the lack of manpower.

00:09:42: You still got to deal with the quality issues and trouplets and other things that robots can do to help stabilize and improve the performance of the business.

00:09:50: And what do the tariff discussions mean for robotics?

00:09:53: Will the systems become more expensive and nobody wants to invest anymore in robots?

00:09:58: So it depends on where the robots come from.

00:10:01: In the case of China, the answer is yes, robots coming into the US from China would have a higher tariff value on them potentially.

00:10:09: And then some of the equipment coming back and forth across the Mexican, Canadian border again, depending on the tariffs.

00:10:15: Because tariffs are not necessarily uniforming across the entire robotic ecosystem or what have you.

00:10:23: But there's lots of different ways to get things done.

00:10:25: And frankly, it's a great time for European automation companies to be working towards the US.

00:10:31: because the US dollar continues to be strong.

00:10:33: So there's a good exchange rate in euro.

00:10:36: The demand is strong and demand perhaps in Europe,

00:10:39: maybe not so strong.

00:10:40: So it's not a bad time for European companies,

00:10:43: particularly to try to make some change in the US.

00:10:46: - But we are also afraid when it comes to tariffs

00:10:48: in the moment.

00:10:50: - In some cases, yes.

00:10:51: And the tariffs are kind of fair.

00:10:53: There's always been some monetary tariffs in there,

00:10:56: but what's changing is the rate

00:10:58: or the value of those tariffs have changed.

00:11:01: And there's no real domestic robot manufacturer per se

00:11:05: in the United States.

00:11:06: Certainly Boston Dynamics and a couple of other smaller

00:11:09: companies are based in the US.

00:11:12: But a significant number of the robotic automation

00:11:15: in general is not produced in US

00:11:18: 'cause even companies like Adept and other companies

00:11:21: used to be US companies are now foreign owned.

00:11:25: In fact, Boston Dynamics is actually owned by Hyundai.

00:11:28: So it's now owned by the Koreans.

00:11:30: - Yeah, absolutely.

00:11:31: And how are robotics companies adapting

00:11:35: to this new situation, the end of the boom,

00:11:38: which never was there?

00:11:40: What do you see?

00:11:41: - So a lot of the companies are well-established.

00:11:43: So the Phoenix and the ABBs, Yaskawa's and others

00:11:47: are investing in inventory and investing in sales

00:11:50: to better promote their markets

00:11:53: and are working harder with their integrators

00:11:55: to help the integrators develop more robust,

00:11:58: more cost effective solutions.

00:12:00: 'Cause at the end of the day,

00:12:01: it's still an economics issue as much as anything else.

00:12:05: So there's a lot of focus on what can be done.

00:12:07: And there's always constraints,

00:12:09: there's always distractions,

00:12:11: but you have to get on message

00:12:12: and you have to really focus and get back to the basics.

00:12:16: And the basics is something that is not just

00:12:19: from a technology point of view,

00:12:21: but the basics of why are you selling robots

00:12:23: in the first place?

00:12:24: The basics are, is a good financial tool.

00:12:28: So a lot of companies need to shift from being focused

00:12:31: on the G-Wiz value of the technology

00:12:33: or the uniqueness of the technology

00:12:35: and focus on the fundamentals of it makes money.

00:12:38: It has a return on investment and that's a big change.

00:12:41: - But what you just mentioned, Stuus,

00:12:44: it's a good opportunity for Europeans going to the yes.

00:12:49: I just saw, especially smaller companies,

00:12:54: German European startups, try to move to the US.

00:12:58: First of all, because maybe it's good for getting funding

00:13:01: on the one hand side,

00:13:02: but also to present the newest technology.

00:13:06: Do you have the feeling this is valid

00:13:08: and it's the right move for European smaller companies

00:13:13: startup to benefit from the US market?

00:13:15: Or you say there's so many startups in the US itself,

00:13:19: that's just a price fight.

00:13:21: - That's good question.

00:13:22: So there's two aspects to it that we can explore.

00:13:24: One is, is it the right time for them to come to North America?

00:13:28: If they're struggling with supporting their market

00:13:30: and they're a startup in somewhat fragile in Europe,

00:13:33: it's not gonna get any easier for them to come to the US.

00:13:36: 'Cause they do have to differentiate

00:13:38: against all the other noise

00:13:39: of all the other startups that are out there.

00:13:41: So there's so much startup activity

00:13:45: and there's so much noise about new companies

00:13:47: that it distracts the customer.

00:13:50: It's harder for the customer to make a decision.

00:13:53: The other side of it is, is that in a down economy

00:13:56: or a weekend economy,

00:13:58: and when people are getting back to the fundamentals,

00:14:01: you may find that some of the companies

00:14:02: that could invest in startup companies

00:14:04: from a purchasing and deploying the product

00:14:07: inside their operations,

00:14:09: may be reluctant to do so

00:14:10: because they're wanting a sure thing, so to speak.

00:14:13: They want a safe investment

00:14:16: to get their return on investment.

00:14:18: And sometimes small startup companies are struggling.

00:14:21: Sometimes they struggle with support or delivery

00:14:24: or maybe the solution needs to be finalized

00:14:26: a little bit better.

00:14:28: So in an economy like today,

00:14:30: companies are gonna go with more of the safe bet,

00:14:34: so to speak, solutions that are proven

00:14:36: that have real life data.

00:14:38: So the other side of that is if the startup

00:14:41: does in fact have good accurate data that's repeatable

00:14:45: and they can demonstrate that they're there,

00:14:47: then they may be able to find companies

00:14:49: that are willing to invest.

00:14:51: But they've gotta have their story done

00:14:53: and they've gotta be able to say,

00:14:54: we can support you in the US,

00:14:56: 'cause the US customer doesn't necessarily want to deal

00:15:00: with a six hour time delay from Europe

00:15:03: or the getting people stuck at the airport

00:15:06: 'cause they can't get into country

00:15:08: because their paperwork is not correct

00:15:10: because there's been a big crack down on immigration papers

00:15:13: and work permits and everything else like that.

00:15:16: So it's somewhat like COVID,

00:15:19: companies had to source more domestically

00:15:21: to avoid issues of travel with COVID

00:15:24: and we're somewhat into that now.

00:15:26: So I see that logistics and travel

00:15:30: being a big additive risk.

00:15:32: So perhaps for a startup company,

00:15:34: maybe they need to double down

00:15:35: and make sure they have their home market under control

00:15:39: before they stretch out their supply line

00:15:41: and their support line to come to a sophisticated market

00:15:44: like the North American market.

00:15:46: - So you're also not a political guy,

00:15:48: but you are at the AAA organization, right?

00:15:52: - Yeah, the A&E Association for Advancing Automation.

00:15:54: - Yeah, exactly.

00:15:55: Do you talk with your senators,

00:15:58: with your member of the house,

00:16:01: talking about the whole topic

00:16:03: when it comes to travel restrictions,

00:16:06: when it comes to tariffs,

00:16:07: what do you hear from them?

00:16:09: - Well, we hear that if everybody has their paperwork

00:16:12: and order and they're planned

00:16:14: and they don't do crazy things by breaking stuff,

00:16:17: they shouldn't enter the country or whatever,

00:16:19: generally most people are getting around fine.

00:16:22: The challenge is the news media will find the places

00:16:25: where there's been problems

00:16:27: and amplify the noise about those problems.

00:16:30: But generally speaking, it's not a big deal.

00:16:32: I live very close to the Canadian border,

00:16:34: only about 50 kilometers.

00:16:36: And I go into Canada on a frequent basis

00:16:39: to conduct business over there

00:16:40: with our colleagues in Canada and vice versa.

00:16:44: You know, the trade back and forth between the US

00:16:47: and Canada is significant.

00:16:48: They're our largest trading partner.

00:16:51: Although the emotions are a little bit different

00:16:53: because there's a lot of harsh feelings

00:16:55: about what's going on in Washington DC at the moment.

00:16:57: So the key is like anything else,

00:17:00: a successful company has to learn how to adapt.

00:17:04: And you have to find a way to get things done

00:17:06: 'cause you just can't go on the sidelines,

00:17:07: you'll starve to death.

00:17:09: So what, again, going back to the basics,

00:17:11: what are the economics that drive a decision

00:17:14: and how do you address those economics

00:17:16: and minimize the risk for the customer

00:17:19: by having your, as they say, tease, cross,

00:17:22: deny, is dotted and all your information properly prepared.

00:17:26: - How do you see the coming months, Stu?

00:17:28: - So I think the coming months,

00:17:31: people will be sorting out the confusion and the indecision.

00:17:34: And I think that like a lot of others,

00:17:37: we believe that the third and fourth quarter

00:17:39: look pretty good.

00:17:40: Demand is still there, the problems are still there,

00:17:43: labor costs are still going up

00:17:45: and labor availability is still difficult.

00:17:47: People still need to consume

00:17:49: and companies still need to be competitive.

00:17:51: So a lot of us think that the uncertainty

00:17:54: will kind of sort itself out in the next couple of months

00:17:57: and people will kind of get back to it.

00:17:59: Also has to do a lot with their new products.

00:18:01: If their products have been re-engineered

00:18:04: to deal with the changes,

00:18:06: whether it be ingredients or technology,

00:18:09: those redesigns will drive purchases

00:18:11: and changes in equipment to be able to get to market

00:18:14: 'cause at the end of the day

00:18:14: we still gotta go get a job done.

00:18:17: - But you also just mentioned at Proma,

00:18:19: you saw many humanoids going or be ready for production.

00:18:24: BMW is ready with figure of Mercedes-Benz invested

00:18:29: in agility, but besides humanoids,

00:18:34: what was the most impressive, let's say technology

00:18:38: or solution you saw at Proma to you?

00:18:42: Is it just standard robotics

00:18:44: or were there anything outstanding besides humanoids?

00:18:47: - So humanoids was a small part of it.

00:18:49: We'll continue to be a small part for the coming years.

00:18:52: And you talk about big companies like BMW,

00:18:55: Volkswagen or others,

00:18:57: they're gonna be the early adopters,

00:18:58: they have the money to do so.

00:18:59: But the general population's not too much interested

00:19:02: in humanoids yet.

00:19:03: AMRs are certainly coming of age.

00:19:05: I mean, you couldn't go from one booth to the next

00:19:07: without falling over another AMR manufacturer.

00:19:11: So they're certainly out there.

00:19:12: I think the thing that I noticed is the software

00:19:15: to control systems and the interface between ERP systems

00:19:20: and warehouse management systems and the floor

00:19:23: have become much more sophisticated.

00:19:26: Barcode scanning and QR code scanning

00:19:28: and other types of vision enabling technologies

00:19:31: are certainly there.

00:19:32: And AI, especially related to vision

00:19:37: in creating large language models

00:19:39: or large functional models of products.

00:19:42: AI has definitely improved the robustness

00:19:44: and performance and speed of vision systems.

00:19:48: So I think AI is a reality.

00:19:51: I think AI modified software is becoming a reality.

00:19:56: It still takes, there's a lot of work to be done

00:19:58: 'cause not all software is easily written out there

00:20:01: using AI.

00:20:03: But certainly the thought pattern

00:20:05: of how do you use computing technologies

00:20:09: to push automation forward faster and easier

00:20:12: is definitely there.

00:20:13: So I think ease of use has significantly improved

00:20:17: and also the experience of the companies

00:20:20: have certainly improved, which should make risk

00:20:23: for the end user much less and the speed of deployment

00:20:27: and adoption much easier.

00:20:28: - Stu, it was a pleasure.

00:20:29: Thanks for your insight when it comes

00:20:31: to the robotics market in USA.

00:20:34: All the best for you, your company

00:20:37: and your customers, greetings to the USA.

00:20:39: - Thanks, it's great to talk to you guys again.

00:20:41: - Thanks, I'm Wood, bye-bye.

00:20:43: - Stu, pleasure talking to you.

00:20:45: Thank you.

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00:21:00: Thanks for watching.