Three tailwinds for robotics adoption in 2024 and beyond

As the world retools after the pandemic, more companies will soon be positioned to leverage robots, thanks to falling prices and AI advances.

For many executives, robotics presents disruptive use cases that nonetheless always seem off on the horizon, assuming that the technology is too nascent, that the required capital is too excessive and that the skills required to operate are too scarce. But thanks to improved economics, advances in AI and geopolitical trends, the barrier to entry in robotics has been falling — in fact, the adoption of robotics has doubled just in the past six years, and the stage is set for further acceleration.

As of 2021, at least 3.5 million industrial robots were operating in manufacturing factories around the world, and industrial robot installations hit an all-time high, according to a 2022 report by the International Federation of Robotics.¹ Investment in industrial robots has seen an upward trend since 2010, as manufacturers strive to reduce production costs.

But thanks to several recent developments, we believe the impact will soon be felt across a wider range of businesses. For instance, in the health sciences and wellness industry, robots are increasingly being used in operating rooms and clinical settings, as well as in research laboratories to automate manual, repetitive and high-volume tasks, so technicians and scientists can focus their attention on more strategic tasks. As technologies evolve, robots will function more autonomously, eventually performing certain tasks entirely on their own.

We see three accelerators in the market showing why robotics deserves a place on the C-suite agenda as a key differentiator — today.

1. Post-pandemic economic pressures

Technology is often a great deflationary force, and inflation has become historically intense in the wake of the pandemic: since 2022, levels have significantly surpassed the highs seen over the past 10 years across the world’s most advanced economies. In late 2022, for example, US core inflation reached 40-year highs.² A historically tight labor market is at least part of the story, and supply chain disruptions are also compelling firms to seek more cost-efficient solutions for their production and distribution.

But because of high capex and retraining costs, the efficiencies gained by automation through robotics have been out of reach for all but the largest companies. That will still be the case for some SMEs but may not be for long. The average price of an industrial robot has halved over the past decade, to about US$23,000 in 2022 from US$47,000 in 2011, according to ARK Invest, which predicts that costs will fall a further 50% to 60% by 2025.

Additionally, new as-a-service business models are making robots more accessible by eliminating or reducing upfront capex costs — through lease agreements — for small-and medium-size enterprises and new sectors. For example, one robotics player offers autonomous mobile robots to be used in a warehouse through a pay-as-you-go model tied to the robots’ productivity in real time. There are no upfront fees, and the company covers all maintenance, repairs and other costs.

2. Reshoring and a return to manufacturing

Over the last five years, the COVID-19 pandemic and geopolitical tensions have highlighted the fragility of many globalized supply chains. This is a major challenge for businesses worldwide, particularly for those who rely on complex and critical components, such as semiconductors.

In this environment, up to 74% of European businesses and 70% of US businesses plan to reshore or nearshore their operations, according to a survey by ABB Robotics in 2022 — with 75% and 62%, respectively, planning to invest in robotic automation in the next three years.³ Additionally, landmark legislation such as the US CHIPS and Science Act and Inflation Reduction Act, are clear signifiers of this trend toward reshoring manufacturing, either incentivized or mandated.

And with widely reported labor shortages, particularly in sectors such as manufacturing, this presents a clear opportunity for automation and robotics. You can already see the impact in China, which has been aggressively pursuing robotics in the past decade and, in 2021, overtook the US in adoption of the technology.⁴