North American companies buy over 31,000 robots in 2023, 30% lower than that recorded in 2022

Robot sales in America: North American companies witnessed a 30 per cent drop in the purchase of robots, marking the first downturn in five years as concerns over a cooling economy and rising interest rates dampened the enthusiasm for investing in advanced automation technology.

According to the Association for Advancing Automation (A3), a leading industry group tracking robot orders, a total of 31,159 robots were ordered last year, reflecting a substantial decrease of 30 per cent compared to the previous year. This decline represents the largest drop in percentage terms since 2006 and the largest decrease ever recorded in net units.

Jeff Burnstein, president of A3, attributed this decline to the economic uncertainty prevailing in the market. "When the economy isn’t great, it’s easier to delay purchases," he commented, highlighting the impact of economic conditions on investment decisions.

The pullback in robot orders was particularly notable in automotive-related industries, which accounted for approximately half of the market in 2023, as well as in sectors such as food and metals manufacturing. In the fourth quarter alone, orders declined by 8 per cent compared to the same period in the previous year.

Despite some initiatives aimed at developing more advanced robot technology, including partnerships between robotics startups and major manufacturers like BMW and Tesla, many robot makers struggled to boost sales amidst concerns about a softening economy and excess inventories accumulated during the COVID-19 pandemic.

For instance, Danish robotics company Universal Robots reported a 7 per cent decline in revenue for the year 2023, amounting to $304 million. Kim Povlsen, president of Universal Robots, acknowledged the challenging economic environment faced by the company's core customers, with global industrial activity slowing down in the first half of the year.

The surge in robot sales during the COVID-19 pandemic, driven by the urgent need to compensate for labor shortages, culminated in a record year for orders in 2022. However, the subsequent decline underscores the impact of economic conditions on investment decisions, with companies exercising caution in their capital expenditure.

Despite the recent downturn, industry experts remain optimistic about the prospects for the robotics sector, anticipating a rebound in business during the latter half of the year. Dave Fox, president of CIM Systems Inc, noted that while some customers deferred orders due to economic concerns, there is now growing interest in updating quotes, signaling potential recovery in the coming months.

Joe Gemma, chief revenue officer of Wauseon Machine, emphasised the persistent labor shortage in the US as a driving force behind the continued demand for automation solutions. 

(With Reuters inputs.)