SMEs to form huge markets for robotics

Small and medium sized enterprises and consumer markets such as food and beverage and pharmaceuticals, hold huge potential for robotics in materials handling, reports Frost and Sullivan.

Small and medium sized enterprises (SMEs) and consumer markets such as food and beverage and pharmaceuticals, hold huge potential for robotics in materials handling.

These traditionally conservative industries anticipate that robots will reduce labour costs and manage product line changes along with fluctuating volumes.

Frost and Sullivan finds that European Robotics for Materials Handling Markets earned revenue of US$762.3 million in 2004 and estimates to reach US$1.28 billion in 2012.

The booming packaging industry specifically in respect to the consumer markets offers immense potential for robotics.

Changing product types and varying product volumes necessitate flexible automation solutions.

Manufacturers in consumer markets are opening up to the idea of investing in robots to reduce costs and maintain quality, thereby boosting sales of robotics in the packaging market.

"However, with the slump in demand from automotive OEMs, increasing number of robotics manufacturers will look to the food and beverage and life sciences sector for growth opportunities, which results in intense competition," said Frost and Sullivan research analyst Kashyap Chandrasekar.

Most SMEs cannot afford huge investments in flexible automation, and the need for flexibility is greatest among SMEs that have to constantly cope with changing demands of end users.

In the short run, the success of robot manufacturers depends on their efforts to offer reliable and inexpensive robotic solutions to SMEs.

Given the decreasing demand from automotive OEMs in 2003 and 2004 robot manufacturers have to stop depending on this sector for consistent revenues.

Niche market participants should take a more generalist approach and look to developing markets for regaining profits.

"The automotive sector has traditionally been the biggest user of flexible automation in manufacturing, and hence most robot manufacturers have a presence in this sector," said Chandrasekar.

"Intense competition and price pressures from OEMs and the slump in demand are making a niche automotive approach highly unfavourable." Niche participants have immense technical know-how, successful pricing strategies and experience in competing globally with the generalist participants in the automotive sector.

Widening their end-user spectrum will be profitable in the near future and a necessity in the long run.

Generalist participants should focus their efforts on taking robotic materials handling solution to the high potential SMEs market.

* About Frost and Sullivan - Frost and Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years.

The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities.

Frost and Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.

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