Germany robotics sector is optimising and redefining manufacturing speed
Business as usual has changed for US and European apparel brands and retailers, according to McKinsey in research published in October. 1 Consumer demand is becoming ever more difficult to predict, with trends now set by individual influencers rather than corporate marketing departments. In fact, McKinsey’s 2017 Chief Procurement Officer survey shows that most US apparel executives rate speed to market and in-season reactivity, rather than cost, as the top two priorities.
Speed now beats marginal cost advantage, and the need for basic compliance in working conditions has evolved into consumer and investor demands for full sustainability strategy. Those trends open the way for Germany’s expertise in robotics to come to the fore, asthe largest robot market in Europe and the fifth-largest in the world, according to the International Federation of Robotics.
Those trends open the way for Germany’s expertise in robotics to come to the fore, asthe largest robot market in Europe and the fifth-largest in the world, according to the International Federation of Robotics.
Companies such as Oechsler Motion located in Ansbach, Germany, have already become world famous. Oechsler partnered with Adidas to design, build and program robot-driven the SpeedFactory concept – an automated approach to a production assembly line. The SpeedFactory is also more sustainable than a traditional factory, serving consumers closer to the facility, thereby lowering transport costs and carbon emissions associated with sportswear manufacturing in Asia. Oechsler already has a SpeedFactory in Germany, and the new SpeedFactory in Georgia, US will employ about 140 people by this winter.
The robot-driven SpeedFactoryprocess maximises agility and steals a march on traditional manufacturing. Responding to a new trend or consumer specification can take as little as a few hours: in the old world, the road from conception to finished footwear might be as long as 19 months. Morgan Stanleyhas estimated that 20 per cent of Nike and Adidas shoes will come out of automated factories by 2023.
The implications are not restricted to apparel, as investors have already noted. Since being launched in 2013, the ROBO Global Robotics & Automation Index has outperformed significantly. Over the last five years it has returned a compound annual 19 per cent, far above other benchmarks. Germany has the third-largest weighting in the index, and the largest of any country in Europe. Investors in industrial equities looking for a pure German play could consider company, Krones, which provides machinery and systems for bottling, packaging and beverage production. Krones has positioned itself in the international markets with especially high rates of beverage consumption growth, such as Africa and the Middle East. As of the end of March, Krones was one of the top ten holdings in the ROBO Global Robotics & Automation Index.
German robots are also changing the face of medicine.
German robots are also changing the face of medicine. This year KUKA Deutschland’s “LBR Med”, a collaborative robot assistant for medicine and research, was recognised as it was named one of three winners in the annual Innovation and Entrepreneurship in Robotics and Automation (IERA) awards. KUKA’s robots are used in laboratories, clinics and operating theatres during medical interventions, treatments or scientific test procedures. The lightweight robots can be integrated into medical devices worldwide and have been certified to international safety standards – a world first. KUKA was snapped up by China’s Midea in a $5 billion deal in 2016 signalling that further deals with German robotics leaders can be expected to follow.
Across a range of industries, human intelligence combined with the speed of robots will be the keys to success.
Across a range of industries, human intelligence combined with the speed of robots will be the keys to success. The secular trend towards higher sustainability criteria underlines the new reality. McKinsey points out that nearshoring and automation can enable sustainability and support the adaptation of a circular economy. 2 Manufacturing in many industries will indeed be coming home to be produced locally, sustainably and through automation. Companies that don’t adapt to that step-change will be left behind, but the winners of the future are likely to have German robots as their unsung partners.
1 McKinsey, Is apparel manufacturing coming home? Nearshoring, automation, and sustainability – establishing a demand focused apparel value chain. [October 2018]
2 McKinsey, op cit, p5.