Currently, the primary effect of COVID-19 has been the halting of China’s manufacturing economy during 1Q 2020. The industrial robotics market relies on China for at least 30 per cent of its shipments.
Following a slowdown in demand in 2019, one can expect the major industrial robot vendors to struggle again during 1H 2020. The recent quarantine of Northern Italy, one of Europe’s key automotive manufacturing centres, will put further pressure on large robot-related expenditures.
The virus has been a good opportunity for companies to display robots for public applications. One of the more popular has been deploying mobile unmanned platforms with Ultraviolet (UV) light to disinfect facilities.
Danish company UVD Robots is reaping the benefits of this opportunity and is scaling up deployments of robots to disinfect hospitals. The company has deployed robots in 45 countries but has only recently been able to enter the Chinese market, as a result of increased demand.
US-based Germ Falcon is offering a similar UV disinfection solution for aircraft, while Chinese TMiRob is deploying disinfection robots in Wuhan. Automating disinfection is a key part of maintaining health and safety and could be one of the major bright spots in response to COVID-19.
Another use case is material handling and delivery. Chinese Pudu Technology is using mobile robots to deliver medical supplies and food to patients within hospitals. This will likely be tested outside of China, with mobile robot developer Aethon well-placed to see an uptake in robot shipments for indoor logistics in medical facilities. The automated material handling market for health will reach US$ 4.2 billion in 2030, up from US$ 178 million in 2019.
Inspection, monitoring, and detection are all key aspects of containing the pandemic, and Soft- Bank-backed CloudMinds has deployed a handful of mobile robots to measure temperatures in Hubei province.
Drones have also been deployed to enforce curfews and surveil areas for security purposes. This represents a big opportunity for aerospace and drone companies to increase sales to government agencies. ABI Research expects the small drone delivery market to reach US$10.4 billion by 2030.
Robots are only a small part of the response to COVID-19 and are more supplementary to the relief efforts that are currently on the way.
There will be a precipitous drop in robot shipments in East Asia, and particularly in China. This will be extended because, even as Chinese plants come back online, demand from Europe and America will slump.
This likely means another poor year for industrial robot vendors. Mobile robot developers and drone companies are somewhat less affected due to their more adaptable business model, smaller footprint, and the opportunities provided by the virus to deploy novel solutions in challenging environments.
It is quite possible the sliding stock market will mean less venture capital and private investment for mobile robots and driverless cars, and the economic shock will accelerate consolidation as the weaker developers go under or are acquired by those vendors better prepared to sit out 6 to 12 months of economic stagnation.
The quarantining of Lombardy and Northern Italy, and its 16 million residents, has turned into a full-blown lockdown of the Italian peninsula. To enforce this, the government will need to increase its security apparatuses, as well as the productivity of its medical agencies. Robots will be key to achieving that through disinfection, monitoring, and surveillance.
Onlookers can expect some robot companies like UVD Robotics to gain acclaim and attention during the crisis.
New applications like automated disinfection and delivery will see an increase in attention as well. The shutting down of households and even ships represents a chance for robot delivery companies (for both land and air) to display their worth.
The drone delivery market, in particular, could take its experience with transporting supplies in the developing world and scale up their operations in the most affected countries.
Long-term, COVID-19 is leading to a significant reassessment of the global manufacturing supply chain. America’s dependence on Chinese imports for basic equipment and medicines is becoming a contentious issue, and government representatives are already interpreting the crisis as a chance to revitalise the campaign to restore more manufacturing capacity to the domestic market.
The US Government, with the support of senators, is drafting an executive order to create ‘Buy American’ regulations for masks and medical supplies, in the hope of restoring the supply chain. If this translates into more significant measures by governments to diversify or restore the manufacturing of key goods, this could bode very well for the robotics industry, as such changes would require big increases in CAPEX and productivity improvements within developed countries.
The situation is currently very fluid, but if the drastic measures displayed in China, South Korea, and Italy are eventually adopted in Western Europe and the US, there will be considerably more deployments of robots for emergency applications; so much so that they will be incorporated into government operations for future contingencies.
Crises shift perceptions of what is possible regarding investment and transformative action on the part of both private and government actors. By the time the COVID-19 pandemic has passed, robots will be mainstreamed across a range of applications and markets.
Summary And Recommendations
For some robotics vendors, particularly larger actors in the industrial space, COVID-19 is going to add further stress to a difficult market and could force significant cutbacks in staff and expenditures, severely impeding automation.
On the flip side, the crisis has highlighted the potential value of automating industrial processes to a greater degree to mitigate disruptions in the supply chain and workforce.
For the fledgeling companies developing mobile robots for disinfection, delivery, security, and more, the crisis presents an opportunity to show their worth.
Across the developed world, healthcare services and security agencies are likely to have their resources tested, and if novel deployments of robots for the aforementioned applications can prove their value, this could represent a test case for robotics to show their worth for challenging applications in health, security, and government.
In summary, COVID-19 represents a disaster for robotics vendors building solutions for developed markets in manufacturing, industry, and the supply chain. But for vendors targeting markets closer to government, such as health, security, and defence, it represents a big opportunity.
ABI Research recommends that industrial players develop customised solutions for non-manufacturing use cases, or look to build comprehensive solutions for enabling a scale-up in medical supply manufacturing.
For mobile robotics vendors and software companies targeting more nascent markets, this represents a big chance to highlight the importance of robotics for dealing with national emergencies, as well as mitigating the economic shock.
A full analysis of the impact of COVID-19 on various industries is provided in ABI Research’s white paper, Taking Stock Of COVID-19.
Article by Stuart Carlaw, chief research officer, ABI Research.
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