The Financial Times ran a nice interview with Ulrich Spiesshofer, the CEO of ABB.  In it, he talks about the entire ABB portfolio of operations – including power generation and transmissions.  But there are some great quotes on the robotics division, specifically co-bots.  5 years ago, ABB robots were pitched entirely at the automobile manufacturing sector.

Japanese car manufacturers largely produce their own robots as well – due their conglomerate style structures known as keiretsu, where firms are bound together with cross-shareholdings.  The Koreans have a similar system known as a chaebol.  So ABB could supply auto manufacturers in Europe and the USA.  However, developed market auto sales were slammed by the GFC.  Spiesshofer was under significant pressure from shareholders to divest from robotics.  “It was bleeding like hell.  A lot of people said ABB should dump robotics… We should get rid of it”.

ABB saw the future of robotics and has since attempted a pivot from car manufacturing to more generalized industrial robotics.  They have placed their bets and are working to secure their niche with collaborative robots (co-bots).  A co-bot is robot designed to work alongside a human – where the human does not require any additional safety equipment.  These robots can feel abnormal forces in their path and dissipate forces in case of an impact on a wide surface area.  There is obviously no exposed motors of mechanisms which could injure the human.

Co-bots like ABB’s are aimed at the higher end of the manufacturing value chain.  This suits ABB’s geographic location and customer base in Europe.  Recently, following the BREXIT vote, some industry analysts were calling for the adoption of co-bots to replace immigrant labor.  Being at the top of the pyramid, co-bots cost more ($50,000 for a base model), but they are smart.  They can read force in their joints which allows them to detect unusual forces should they be applied.  Should such an abnormal scenario occur, the co-bot to stop or reverse the operation to minimize damage potential.

ABB's share price has been range-bound for 5 years.

ABB’s share price has been range-bound for 5 years.

 

At $50,000, ABB’s entry level co-bots are an attractive option for European manufacturers looking to replace flesh and blood labor.  No sick days, no pension, no unions.  In fact, you don’t even need to turn the lights on in some cases.  Co-bots can quickly provide a return on investment considering you don’t need fencing, additional safety devices for human counterparts or changes to the production workflow inside the factory.

But ABB is by no means home-free in this highly competitive space.  Force limited co-bots are currently produced by a range of experienced and innovative players, including Universal Robots, KUKA AG, F&P Robotics, Fanuc and Rethink Robotics.  Can ABB use their size and portfolio diversity to generate an edge?