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Robotics 1991National Security Assessment of the U.S. Robotics Industry
This assessment was conducted by BXA's Office of Industrial Resource Administration when industry sources advised the Commerce Department that the U.S. robotics industry was rapidly losing market share to foreign competitors and in danger of falling behind in many areas of the technology. The assessment analyzes the industry's historical performance and examines both the national security and commercial importance of the U.S. robotics industry within the context of international competitiveness.
Robotics is critical to U.S. national security. Robotics was identified by the 1990 Department of Defense Critical Technologies Plan as vital to long-term U.S. defense capabilities. Robotics is incorporated in current weapons systems and will play a larger role in future systems. While defense and commercial development follow largely separate paths, a strong domestic industry is essential to maintaining U.S. involvement in the continuing overall development of robotics technology.
Robots have wide-ranging commercial implications. Robots are used extensively in the automotive industry, primarily for welding, painting and material handling applications. The electronics, aerospace, metalworking and consumer goods industries are also major robot users. Integrated factory automation systems, to which robot technology is key, affect nearly all types of manufacturing. In the near future, productivity and competitiveness in these industries will depend in large part on flexible automation through robotics.
U.S. robot manufacturers have lost market share throughout the 1980s. U.S. manufactured robot shipments fell 33 percent from $225.5 million in 1984 to less than $150.6 million in 1989. Despite the weakening of the dollar against other major currencies after 1985, imports during this period rose from $88.4 million to $181.4 million, a gain of more than 105 percent. Import penetration grew to at least 62.7 percent by 1989, and to an estimated 75 percent if account is taken of "reshipments" of imported robots. Although third calendar quarter new orders rose from 672 units in 1989 to 1,236 in 1990, actual U.S. production failed to rise correspondingly as over 80 percent of these orders were filled by imports.
Low profitability has forced many U.S. producers from the industry. The robotics industry as a whole reported losses four out of five years from 1985 to 19S9. A return of 2.3 percent was reported for 1986. U.S. manufacturers have been unable to produce the high volumes necessary to realize economies of scale and generate revenues to cover their high costs. Many large firms, such as Westinghouse and Cincinnati Milacron, faced with low profitability, have exited the industry.
Investment has been inadequate to maintain robot production capacity in the United States. Total investment by U.S. robot producers peaked in 1986 at $22 million and fell to $6.5 million in 1989. Investment by individual firms varies a great deal. One large firm's investment in buildings alone greatly inflated the first three years' figures. Those firms most dependent on the auto industry saw their investment decline with the drop in motor vehicle orders after 1986.
Total employment for the surviving robotics companies fell 6.8 percent. The number of employees in the U.S. robot industry dropped from 1,440 in 1985 to 1,345 in 1989. Within occupational groupings, the number of production workers dropped 11.8 percent during the same period. In 1989, the proportion of production workers to total employment was only 18.8 percent, down from 19.9 percent in 1985, which is far below the norm for the manufacturing sector. This is indicative of the declining amount of manufacturing that actually occurs in the United States.
Productivity in the domestic robotics industry has declined. Sales per employee were down from $138 thousand in 1986 to $103 thousand in 1989. In recent years, capacity utilization has been low, which tends to drive productivity down. For instance, in 1989, capacity utilization was an average of only 54 percent of production capability.
The U.S. robotics industry is at a disadvantage in funding for Research and Development (R&D). U.S. industry investment in Research and Development, an average of over nine percent of sales, is comparable with percentage investment by foreign industry. However, in aggregate dollars, it is dwarfed by foreign investment and inadequate to undertake all the projects needed to maintain competitiveness. It is at a further disadvantage compared to Japanese and Western European robotics industries which have received substantial government assistance. In the United States, the largest amount of Government assistance in robots supports R&D for often unique space and military projects which, while important in their own right, have little direct commercial application. We estimate less than five percent of the world's total commercially related R&D in robots is funded in the United States.
Strategic miscalculations have hurt the development of the U.S. robot industry. Early U.S.-produced robots were often too complicated, with unrealistically high productivity gains expected from them, causing major U.S. end-users to shift to foreign suppliers. One major user-turned-producer pursued hydraulic robots when the market moved decisively to electric robots.
The United States is nearly out of the industrial robot business. A major reason has been the slow development of the factory automation market in the United States. Currently, only a few small firms exist on the edges of robotics technology surviving in application-specific niches. Most produce accessories, peripherals or sensors for end-effectors that are added to imported robot arms and bodies. Many industry observers believe it is too late to restore a viable domestic industry.
The absence of a domestic robotics industry will slow future applications development. The absence of U.S. robotics producers will force U.S. factory systems integrators, both commercial and defense, to focus automation alternatives on the available foreign made robots, rather than develop new robots to provide optimal solutions for U.S. manufacturers. In many cases, this will bring less than desired results, especially for small- and medium-sized firms that lack the leverage of larger firms. Also, foreign sales and support offices are no substitute for the complete technical support a domestic robotics manufacturer could provide.
Historically, U.S. manufacturing firms have been slower to install robots in their plants than some of our major trading partners. A major reason was related to the lower capability level of earlier robots, which were developed and used in labor shortage countries (Japan, Sweden, and West Germany) as labor substitutes. The United States had an abundance of unskilled and semi-skilled labor that was less costly to manufacturers than robots. Further, labor unions have historically had an anti-automation bias. In addition, older vintage machinery in many American factories is less robot compatible, inhibiting manufacturers from purchasing and integrating robots.
In trying to develop recommendations which would be useful for policy officials at the Department of Defense, the Office of Science and Technology Policy, NASA and other concerned agencies, we were confronted with some major unanswered questions regarding the extent to which the domestic robotics industry's viability affects defense concerns. These questions were beyond the scope of our study. Nevertheless, we were able to develop some specific recommendations that may assist the industry in limited areas: