Can Japanese Industrial Robots Ride on the Tailwind of the Industry 4.0 Era?
Growing Demand for Industrial Robots in Japan and Overseas
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The Japanese government has positioned the Fourth Industrial Revolution as one of the featured themes of its growth strategy. The key players in realizing this scheme are robots. In particular, industrial robots are attracting attention as an essential factor in realizing innovation in manufacturing through the internet of things (IoT) and in boosting production capabilities of small and medium enterprises (SMEs). Also in overseas markets, especially in China, the robot industry has remained strong. Despite sources of concern such as exchange rate fluctuations and fiercer competition, major robot companies are aiming to reach even greater heights by riding the tailwind of increasing demands across the globe and government assistance.
Total shipment amount set to reach record high this year
“Demand is continuing to expand without any significant impact from fluctuations in the economy,” states Yoshiharu Inaba, Chairman of the Japan Robot Association (JARA) and CEO of Fanuc Corporation. In May, JARA made an upward revision to the annual total shipment value target for 2016 to 750 billion yen (an increase of 9.7% YOY), a record high figure. At JARA's general meeting, Mr. Inaba stressed that they will strive earnestly towards the realization of a robot revolution.
Robot companies are focusing on China as a promising market where robot sales are increasing rapidly. When a slowdown in the Chinese economy surfaced in 2015, there were some industry players who temporarily voiced concerns that robot demand would also stagnate. However, despite a decline in orders seen by some manufacturers at the end of 2015, current demands from China remain more or less strong, as expressed by one industry participant who commented that demands have recovered since the Spring Festival in February (Lunar New Year) and returned to favorable conditions.
Factory automation is advancing in China due to increased labor costs combined with labor shortages. Although investments in industrial machinery overall has stagnated in China, the country still has a voracious appetite for investing in robots. The labor shortage problem in the manufacturing industry is not foreign to advanced countries like the U.S. and European countries. Mr. Inaba states that, although demand is not as strong as in China, “[exports to] the U.S. and European countries are also growing steadily”.
Currency Exchange rate is a concern
A source of concern is the impact of exchange rate fluctuations. Yaskawa Electric Corporation plans to increase the sales volume of robots in FY2016 by about 5% YOY, but they expect the revenue to remain more or less the same as the previous year due to the impacts of a stronger yen. Kawasaki Heavy Industries (KHI) similarly expects loss on revenue from an appreciated yen. Although Yasuhiko Hashimoto, Executive Officer of KHI, makes the bold forecast that KHI will increase sales volume by 20% YOY, he also states the possibility that revenue will settle at around an increase of 10% YOY.
Chinese companies are also emerging as conspicuous market players. Based on expectations that the market will expand further, China’s largest consumer electronics manufacturer, Midea Group, announced that they will increase capital contribution ratio to KUKA AG--one of the moves showing Midea Group's increasing appetite for companies other than robot manufacturers. However, many view that the negative impacts of fiercer competition are limited. Mr. Inaba states that “the current speed of growth of the market is incredibly fast”.
The Japanese and Chinese governments have incorporated robots into their growth strategies, and in the U.S. and Europe, an industrial revolution driven by IoT and robots is being conceived. The challenge of each company is to figure out how to build a robust business model and link that to permanent development amid the tailwind blowing in the industry.
Rapid developments realized through IoT and AI
While the industrial robot market is continuing to grow, competition is steadily beginning to revolve around a different axis. The point at question is how new technologies like IoT and artificial intelligence (AI) can be incorporated into the market and linked to further growth. One way to do so is to collaborate with IT companies.
In April, Fanuc Corporation, which boasts one of the world’s top shares in the robot market, launched a new IoT project. They formed an alliance with Preferred Networks (PFN; based in Bunkyo Ward, Tokyo), US-based Cisco Systems, and US-based Rockwell Automation with the plan to further develop FA equipment such as robots through IoT. They aim to leverage the AI technology of PFN and networking technology of Cisco Systems to simplify programming and to accurately predict when machine components will break down.
Other manufacturers, like Yaskawa and KHI, are also striving to realize an evolution of robots through IoT. Masahiro Ogawa, Corporate Vice President of Yaskawa, which partners with IBM Japan in the area of AI, predicts that ""robots will be able to work even more accurately if IoT makes it possible to receive information in real-time”. Yasuhiko Hashimoto, Executive Officer of KHI, states that the company aims to realize robots that “function as a ‘sensor of the entire production line’ by gathering operational data of peripheral equipment to the robot controller”.
The integration of IoT and AI surfaced amid the belief that industrial robots will not evolve any further. The format of industrial articulated robots had already been established to a certain extent and the user base was also more or less fixed. Furthermore, the operation precision and speed of robots had already come close to reaching extremely high levels.
Significant changes in user base
A factor that has greatly impacted the integration of information in robots has been the change in end-user base. Although companies purchasing robots were mainly in the automotive and electronics industries in the past, the implementation of these robots are beginning to spread to other sectors like machinery and household goods in recent years.
However, new users are not familiar with using the robots, and tasks related to programming and failure response tend to become barriers to implementation. The utilization of IoT and other technologies will make robots easier to use and will therefore boost the expansion of the user base. The integration of IT with robots will most likely create new competitive strength in the robot market.
Efforts made by each company are still in their initial stages and many areas still remain unknown in terms of future development. Nonetheless, an evolved robot that is even smarter than the previous is essential to the Fourth Industrial Revolution that is being conceived across the globe. The ability of each company will be tested towards the realization of this revolution.