ROBO Global and Universal Robots celebrated the ETF’s birthday with panels about the robotics industry and ringing the closing bell at the NYSE.
NEW YORK — Yesterday, ROBO Global LLC celebrated its fifth year with a historic gathering here on Wall Street. After panel discussions about investment in the growing robotics industry, a UR5e collaborative robot rung the closing bell at the New York Stock Exchange.
ROBO Global rides the robotics wave
ROBO Global began in 2013 with a comprehensive investment strategy across the robotics, automation, and artificial intelligence (RAAI) ecosystem, explained Travis Briggs, CEO of ROBO Global. It has a presence in 11 countries and is trading on nine exchanges.
“We live in a period of massive innovation,” said Bill Studebaker, president of ROBO Global. “Robotics is not just a niche. It’s serving a broad spectrum, including agriculture, defense, healthcare, and exploration.”
“We’re an index advisory and research firm, and our mission is to create access to growth in automation for our investors,” said Chris Buck, head of capital markets and sales at ROBO Global. “We advise 45,000 intermediaries, each of whom can have 8,000 households, and each person has his or her own investment philosophy.”
“Our ETF [exchange-traded fund] has a first-mover advantage, and we focus on returns,” he said. “Other robotics-themed ETFs are not as diversified, and they overly weight just a few companies on their lists.”
“Our top 10 out of 87 companies represent only 15% to 18% of investment,” Buck added. “We try not to pick winners, and we cast a wide net over the ecosystem. We want to ride the megatrend wave.”
Universal Robots a bellwether
Odense, Denmark-based Universal Robots A/S, whose collaborative robot arm rung the NYSE closing bell, has experienced the sort of growth that ROBO Global has been watching.
“With the e-Series, we’ve added more automation to assembly of our own robots,” said Stuart Shepherd, regional director of sales, Americas, at Universal Robots. “Our tier suppliers are also using our robots. The UR+ community is focused on automation and helping us maintain market leadership.”
Shepherd previously worked at General Motors, GM FANUC, KUKA, and Güdel. He has also served as chairman of the Association for Advancing Automation (A3), the parent organization of the Robot Industries Association (RIA).
“Cobots were initially viewed as a fad, but UR founder Esben Østergaard envisioned them as No. 1 easy to use,” Shepherd told Robotics Business Review. “No. 2, they have to be cost-effective, and No. 3, robots should be able to work alongside people.”
“The ‘e’ in our e-Series is for ease of purchasing, ease of use, ease of ownership, and ease of maintenance,” he said. “We got lots of user feedback on our previous [cobot] series.”
“For instance, joints were hard to repair,” Shepherd explained. “Now, in the e-Series, you can replace one in eight minutes.”
“If you can use a smartphone, you can learn to set up a UR arm,” he said. “At IMTS [the International Manufacturing Technology Show in Chicago] last month, 4,150 people were able to learn to use our robots in 15 minutes.”
“In June, we went to full-volume production of the e-Series, and we can ship to anywhere in the world in five to seven days,” Shepherd said. “With a faster payback and lower TCO [total cost of ownership] and capex [capital expenditure], we’re seeing greater adoption by small and midsize companies.”
SMEs take cobots seriously
Cobots have benefited from the ISO 10218.6 safety standard, as well as from increasing interest from small and midsize enterprises (SMEs), said Henrik Christensen, a professor at the University of California, San Diego, and editor of the U.S. Robotics Roadmap.
“Ninety percent of U.S. manufacturers are SMEs,” he noted. “They’re responsible for 60% of exports.”
Although collaborative robots are currently a small portion of the overall industrial automation market, their share will grow tenfold to 34% of total sales by 2025, predicts the International Federation of Robotics (IFR).
“The biggest challenge is educating the market, but as automation spreads with record-low unemployment, there’s nowhere to go but up,” said Shepherd. “Sales among smaller manufacturers in the Northeast [U.S.] are surprisingly strong.”
“SMEs are interested in fundamental analysis; they’re moving beyond kicking the tires,” said Buck. “It’s not a skills gap — it’s an awareness gap. There are hundreds of shops that can use these robots.”
“Banks and lenders are starting to understand applications,” said Buck. “We’ve seen ‘aha moments’ with plant managers and doctors, so general awareness is coming.”
Application prospects
An invitation-only panel entitled “Meet the Minds Behind the First Robotics ETF” included speakers from ROBO Global’s advisory board. They discussed how robotics technology has developed.
“We’ve gone from Unimate in 1961 to 30 million industrial robots by 2020,” observed Daniela Rus, director of the Computer Science and AI Laboratory (CSAIL) at the Massachusetts Institute of Technology (MIT).
Current manufacturing applications for automation include automotive at 42%, electronics at 21%, and metals at 10%, explained Christensen.
“We’re moving from mass manufacturing to mass customization,” he said. “An Audi has 4 million possible configurations, and phones have a lifespan of 11 months.”
“A key bottleneck for robotics was robustness and reliability,” said Raffaello D’Andrea, a professor at ETH Zurich and co-founder of Kiva Systems (now Amazon Robotics) and Verity Studios AG, which focuses on drones in entertainment.
“Neural networks died in the 1970s and 1990s before being revived and advancing,” he added. “The lesson is that investments must be diversified and that the theme of RAAI is promising in the long term.”
“We’re working on improving robot brains, bodies, and human-machine interactions,” said Rus. “With computational design and fabrication, we can automate the creation of robots and democratize their use.”
Rus cited examples of random objects that were scanned into tessellated images, 3D printed, and then turned into simple robots. She also noted that 3,500 people accidentally ingest button batteries each year, but robots made of digestible materials that could remove them and patch wounds.
Global environment
“We’re putting robots in Mexico and India, where wages are lower than in the U.S., but they’re still cost-effective,” said Universal Robots’ Shepherd. “Esben has been promoting ‘Industry 5.0,’ where automation productivity plus human creativity is ideal for high-mix, low-volume manufacturing.”
“In Japan, nobody asks about unemployment from AI or industrial automation,” said Studebaker. “Instead of robot taxes, there are subsidies.”
The panelists agreed that a country’s regulatory environment also has significant implications for the advancement and adoption of robotics.
“Switzerland is open to drone research,” D’Andrea said. “Countries that aren’t are at risk of falling behind.”
“For progress, we need regulations to ensure consumer safety and confidence,” Rus said. “CSAIL has announced a group focusing on policy. There needs to be explainability, provability of data provenance, and measurement of risk.”
Shepherd and Buck agreed that while regional robotics hubs are helpful for educating workforces and potential customers, encouraging innovation and reassuring the public can be difficult.
“Robotics is just a tool, and it often replaces other automation,” Shepherd said.
Briggs acknowledged that activity around automation has dipped in recent months after strong growth in the past few years. One reason is reduced demand from Apple after its latest iPhone models were released.
Challenge from China
Another cause of the recent slowdown in robotics investment has been trade tensions between the U.S. and China.
“At different conferences, we’ve heard that China has very negative expectations on the outcome of the trade dispute,” Studebaker said. “However, I think this is just a speed bump.”
China’s relatively low robot density of 87 robots per 10,000 human workers means that it will continue to be a major market for robotics, said Christensen. According to the IFR, robot density is 116 in South Korea, the worldwide average is 110, and it’s 100 in the U.S. Last year, 130,000 robots were sold in China.
However, as a producer of advanced automation, China still lags behind Japan, South Korea, the U.S., and Europe, Christensen said.
“While it’s making 5x bigger investments, it’s not necessarily on par,” he said. “Tencent, Alibaba, and Huawei are trying to build the infrastructure and ecosystem.”
In addition, 30% of all automotive production is for the Chinese market, so the country will be focused on funding its Made in China 2025 strategy rather than other applications, Christensen said.
“Salaries have increased by 150%, so it’s getting cheaper to manufacture goods in Mexico or Southeast Asia,” he added. “China will have to increase productivity to satisfy domestic demand and improve quality to catch up.”
Midea Group’s purchase of Germany’s KUKA AG could help China be more competitive, Christensen said.
Disruptions will require more, different training
“I recently flew on a 737, and airline pilots are only engaged for 17 minutes of a typical flight,” said Christensen. “We could completely automate freight flights today, but we need a framework from the FAA.”
“Also, truck drivers represent the biggest employment category in the U.S., so we need to figure out how to reskill these people.”
China’s demographics and focus on education make it a serious contender to lead RAAI, the panelists agreed.
“China has more people under the age of 10 than there are in the entire U.S.,” noted Christensen.
“Computer science is mandatory in China and elsewhere, and it has way more data to train AI,” said Rus. “We get contacted by people who want MIT’s computational compiler for their high schools.”
“Universities will be disrupted in the next 10 to 20 years,” asserted Christensen. “There must be continuing education for all ages, done through the workplace. We have to rethink technology literacy, and AI can help make it more accessible.”
“Salaries in RAAI are 10 to 20 times higher than at universities,” Rus said. “Part of the challenge is how to keep professors. We also need more R&D budgets and partnerships between academia and industry.”
Future prospects
“What is the tipping point for robotics acceptance by the general public?” Buck asked.
“I think it will be in about 10 years, with the massive retirements of baby boomers,” Shepherd replied.
Despite recent slowdowns, ROBO Global’s index expects 25% annual growth to continue, said Jeremie Capron, head of research at ROBO Global.
“There will be tremendous spillover from all the work on autonomous vehicles,” said Wyatt Newman, a professor of computer science at Case Western Reserve and a ROBO Global adviser. “Ultimately, we’ll see home robots with high flexibility.”
“I would like to see developments in battery technology,” said D’Andrea.
“The reality is that the future is hard to predict,” he added. “As MIT Technology Review noted about Rethink Robotics, it’s hard to be successful, even with a good idea.”
Rus predicted the convergence of soft materials with computation and sensing. She also described using EEGs [electro-encephalographs] to indicate to robots or drones if they’re doing something wrong. Experiments have shown that humans could mentally control swarms of robots.
“We need to rethink ‘What is a robot?’” Rus said. “In the last 60 years, we had constrained hard robots and industrial robots.”
“In the next 60 years, we’ll have adaptive soft robots, pervasive robots, and form diversity,” Rus said.
“What about AI?” asked Capron.
“AI will make transport safer and faster, and it will provide instantaneous translation and help in healthcare,” Rus replied. “But AI is not a magic bullet, and it not going to take down the world.”
Rus cited a Harvard University study that found that humans and machines working together to identify cancerous lymph cells were more effective than either working alone.
“AI is a piece of the picture, but we still need sensing, computation, and actuation,” said D’Andrea. “There’s a lot of speculation around AI; some of it will pan out, and some of it won’t.”
Living on the edge
Not only could robotics lead to reshoring of production, said Christensen, but it could also lead to moving manufacturing to the edge, as long as supply chains are also realigned.
He cited the example of Amazon printing books as close as possible to customers rather than filling warehouses and shipping them.
“Imagine printing a new hip that’s just a fit for you,” Christensen said.
“Robotics startups need clarity and focus on where the demand is,” Shepherd said. “The need something that should be automated and a sense of urgency about profitability.”
“The challenge of looking at lots of platforms is the scale game,” said Morten Paulsen, head of research and managing director at CLSA Japan. “Is management dedicating sufficient resources?”
“The litmus test for the success of mobile platforms will be if the supply of good ideas can match the need to generate demand,” Shepherd said. “Most companies are not innovating from scratch, but they’re adding a unique piece of technology.”
“Funds and investors can help connect the dots and provide something actionable,” said Buck.