In the second quarter, North American companies sharply cut orders for the high-tech machines, according to data compiled by the Association for Advancing Automation, an industry group.
The slowdown in orders began in late last year as rising interest rates and sluggish economic growth curbed appetites for new robots, the group said.
We wouldn't even consider buying a robot right now, said Nancy Kleitsch, chief financial officer of ICON Injection Molding, a maker of plastic components in Phoenix.
Like many producers, ICON's business shot up during the COVID-19 pandemic, with demand for its plastic tubes used in pandemic testing. But demand for the tubes and other parts of the company's business has now dropped to levels never seen in at least seven years, Kleitsch said.
Many other companies, including ICON, seem to share ICON's hesitation on robots. Factories and other industrial users, including e-commerce warehouses and medical testing companies, ordered 7,697 robots in the second quarter, down 37 per cent from a year ago. That followed a 21 per cent drop in the first quarter and 22 per cent drop in the fourth quarter of last year.
The pandemic grew, as makers scrambled to use the machines to churn out badly needed goods. In fact, 2022 marked a record year for orders, even with the slowdown that hit late last year.
But robots are just one type of equipment companies need, with other gauges of spending slightly better in the U.S. economy. Orders for non-defense capital goods, including aircraft - closely watched by economists to track trends in business spending - rose 0.1 per cent last month, according to the Commerce Department, indicating that investments in a wide variety of equipment could continue to grow after rebounding in the second quarter.
It's not that we've soured on automating, said Jeff Burnstein, president of A3, a Silicon Valley startup. But when people are concerned about inflation and the economy, it puts a damper on everything - they hold off. While some industries may have over-Invested in robots during the boom, others seem to have failed to invest in them. For example, E-commerce firms were rushing to build highly automated warehouses in response to continued torrid demand for goods. Another problem, Mr. Burnstein said, were companies that ordered too many robots as they feared supply-chain delays.
They were worried they wouldn't get what they needed, so they overbought, he said. A 3 expects the softness in robot orders to continue until the fourth quarter or early next year, he said.
The labor market was a key factor in driving robot sales over the past few years, which led to a tight labor market. The unemployment rate in July - at 3.5 percent - was near levels last seen more than 50 years ago. Another gauge measuring U.S. job openings dropped to the lowest level in July as the labor market slowed, the Labor Department said on Tuesday.
The robots are still working on an ever-evolving array of jobs. In the past, they were concentrated in auto factories and suppliers, who still account for a significant portion of all robot orders. But the A 3 data shows that robots have spread to everything from construction sites - where they are now used to do tasks like laying down lines on floors to guide crews on where to install walls - to hospitals and food-processing plants.
Aaron Anderson, the head of innovation at Swinerton, a major construction company based in Concord, California, said his company has started using a robot that drills holes in concrete ceilings, opening the way for plumbing and other mechanical systems to be installed by workers.
It's tough to justify the cost of buying one of the machines, he said. Because construction projects vary in size and complexity, there are spells when the robot isn't needed at all, he said.
Swinerton's answer: It leases the machine instead, which costs far less.