According to the Chinese zodiac calendar, 2021 is the Year of the Ox. Often depicted as a bull, the hope is that 2021 will usher in a much-needed era of market strength and
resilience. Based on the dismal business conditions created by Covid-19 in 2020, it’s hard to imagine that there’s anywhere to go but up.
While the Year of the Ox offers a symbolic depiction of what the remainder of the year might have in store, the reality is that there are still challenges ahead. To get an accurate picture of what’s happening in the market, the team at FAB Shop Magazine asked some of the biggest players in the industry their perspective on optimism in the marketplace and if we are, indeed, on the road to recovery.
Basing a forecast off of these anecdotal observations, the future looks bright. Fabrication equipment manufacturers are seeing their customers return to the buyer’s table after taking a pandemic hiatus, but they’re also generating new business with customers that previously hadn’t placed enough stock on the role that automation and modern machinery play. Regardless of the individual motivators, the signs are pointing in the same direction: a return to normalcy.
But is the rebound actually happening? According to the companies that FAB Shop Magazine spoke to, the answer is yes. Robert St. Aubin, president at Bystronic Inc., says, “This is exactly what’s happening. We’ve seen a surge in orders since the last months of 2020.”
It’s important to note, however, that 2020 affected businesses across the manufacturing spectrum differently. While some companies were shutting their doors, others were ramping up production of essential goods.
“Some customers were cautious at the start of the pandemic, but we also had a number of customers that were considered essential and they continued to order new robots,” says Mark Scherler, general manager, materials joining, new domestics and body shop segments, Fanuc America Corp. “Other companies that were initially closed because they weren’t considered essential have seen the need to add automation for a variety of reasons. We’ve seen an increase in orders from these companies and expect this trend to continue for the foreseeable future as companies continue to look at using robots as a way to be more productive.”
The toll Covid-19 took on the manufacturing industry has varied, and the speed in which they recover will vary, too. But across the board, the sentiment is the same. Business is back.
“We had several customers give us the soft green light to move forward in purchasing our equipment in 2020, but ultimately held back until they felt that the pandemic, for the most part, was behind them,” says John Tutino, sales manager for the Americas for HGG Group. “We started strong in January and are confident this will continue for the next several months to come.”
Elizabeth Victor, vice president of sales and marketing at LVD North America, relayed a similar outlook. If the theme of 2020 was wait and see, today, higher levels of interest and activity are taking center stage.
“The pandemic put some capital equipment purchases on the back burner and many fabricators were in a holding pattern, waiting to see what would happen next,” Victor explains. “Now, the feeling is that the pandemic might be turning the corner, and as the demand for their goods and services increases, there is more interest in new equipment and an increased urgency in getting the quotation and order process moving so that they can get equipment in place to be ready for full production.
“Some companies are moving ahead quickly and making equipment decisions based on what’s available in inventory because they either need equipment now or don’t want to be without it once they return to pre-pandemic levels of manufacturing,” she adds.
While there is a return to the buyer’s table for existing customers, new business is being generated, as well. Doug Burnside, vice president of sales and marketing at Yaskawa America Inc., describes the factors that are bringing in new customers.
“We are seeing an increase in activity with existing customers, but also with organizations that realize they need to automate ahead of full economic recovery,” he says. “After almost every crisis, history has shown economies bouncing back. Recovery from Covid-19 looks to be strong, and we are already seeing activity supporting this expectation. History has also shown that businesses that prepare and invest to prepare for that bounce back do well. Investing in their company and in automation – especially as interests rates remain low – is a way for businesses to be prepared for the economic recovery.
“Soon, some organizations will be ‘too busy’ to make the investments that will help them scale,” he adds. “Everyone is aware that the timing of the economy recovering is tied to getting through Covid, and thankfully, Yaskawa and others see the light on the horizon.”
These insights are coming from companies that have a deep understanding of the manufacturing industry with deep experience from economic downturns in the past. But the insights wouldn’t be complete without having an intimate understanding of what their customers experienced during the past year.
Matt Garbarino, director of marketing communications at Cincinnati Inc., says that while the company is seeing an uptick that is higher than normal for this time of year, some customers are still working to gain their bearings.
“Many of our customers are, and have been, busy, but like us, they have staffing issues as it pertains to contact tracing, temporary closures, supplier delays, etc.,” he says. “Because of this, even if our customers are in a position to expand their machine inventory, many are still waiting to get their business to a normal and predictable place before making capital investments.”
In terms of new customer acquisition, equipment manufacturers are keeping their ears to the ground.
“Most of our customers are busy,” says Mike Albrecht, sales manager at Scotchman Industries. “And, from what Scotchman is hearing, welding supply dealers are staying extremely busy, delivering supplies. So that tells us that [potential] customers are busy, too.”
After having to hold off on machine purchases for so long, customers are eager for their orders to be processed quickly to get the equipment installed and up and running. To do so, equipment manufacturers have put various strategies in place to alleviate the concerns of backlogs and Covid-19-related delays.
“We’re adding to our stock machine inventory to be in a position to meet our customers’ needs,” Bystronic’s St. Aubin says.
To do so, many equipment manufacturers are working to identify which equipment can be classified as “stock” and are ramping up inventory to keep backlogs low.
“Our delivery times are similar to what they were before the pandemic,” Garbarino says. “We don’t build many machines to ‘stock.’ Most are built to order so a 90-day lead time is pretty typical. That said, we’re placing certain machines in the build schedule so we have more ‘stock inventory’ in anticipation that some customers will want quick delivery, which may be a key decision in their buying process.”
LVD’s Victor agrees, explaining that the company is closely monitoring and planning inventory “with the anticipation that machine orders will be returning to pre-pandemic levels as the industry gets back to a more normalized state of manufacturing.”
For some companies, however, increasing the inventories of stock machinery is a bit more challenging.
“Most of our 3-D profiling equipment is tailor-made for customer requirements,” HGG’s Tutino says. “We’ve looked at our offering and determined which machinery has about 90 percent of what a customer would like to have and created stock machines for immediate delivery. So far, this has been well-received and we’re enthusiastic with this path to move forward. We would have never wished for the pandemic to have happened, but it has taught us to be creative.”
In addition to focusing on inventory levels, leading equipment manufacturers are also relying on input from customers, integrators and distributors. Pandemic or no pandemic, effective communication is always critical.
“Yaskawa is working closely with our customers to learn their plans and taking steps to meet their deliveries,” Burnside says. “We’ve increased inventory levels and taken advantage during Covid to optimize internal processes to improve delivery and ensure quality. We’ve also improved ease of deployment to help speed implementation for our integration and distribution partners. Like any relationship and meeting expectations, communication is key, so working with our customers and potential customers helps us align resources to meet and exceed expectations.”
Fanuc, too, places serious emphasis on the voice of its customers. The company is able to offer recommendations for products that can be installed in a quicker fashion, if the customer requires it.
“Fanuc America maintains a large inventory of robots and spare parts at our headquarters in Michigan and at our regional offices around North and South America,” Scherler says. “When we work with our customers to find the best robot for their application, we can usually find a robot that will have a short lead time. This also allows us to look for trends in the type of robots that are needed so we can maintain the correct inventory. When we receive an order for a robot that’s in stock, our manufacturing team can quickly make any custom retrofits required by the customer.”
While many equipment manufacturers were able to provide installations in 2020 with little disruption, there were still hurdles to overcome. Logistics that used to seem trivial, like jumping on a plane, were suddenly throwing wrenches into the operation.
“In the early days of the pandemic, this was more of an issue,” Cincinnati’s Garbarino says. “Now, companies have protocols for handling visitors – just like Cincinnati does. There are often questionnaires, temp checks at check-in and, of course, PPE protocols when on-site. We have more pre-planning to do before service or sales visits, so that adds a new element to the process.
“And, if a company has many of their staff out, we may hold off on making a visit unless it’s a machine-down scenario,” he adds. “If it’s something that can be scheduled later, we work with customers to plan something mutually acceptable. The actual installation time is not any longer unless we’re waiting for a part that might have delays due to the pandemic that is out of our control.”
For companies selling machines worldwide, travel restrictions hampered installations to a greater degree, but usually, creativity won the day. HGG’s Tutino describes some of the steps that his company has taken to ensure that customers were able to get up and running and soon as possible.
“We implemented a virtual installation program for some customers,” he says, “where we sent out a hard hat with a camera to the customer for their lead person in charge of the installation to wear. Now, we can see the jobsite in real time and guide this person step by step on how to set up the machine. We’ve also used this same method for training the operator on how to use the machine.”
As Tutino indicated, once an installation has been completed, the job isn’t done. Post-install can include a wide range of training, service and support, often based on a customer’s needs. For LVD, among others, pre-existing technology is being embraced to an even greater degree.
“After the installation, we’ve found that remote service support is becoming more common,” says Mathieu Vanbraekel, vice president of service at LVD North America. “We’ve realized that working remotely can be every bit as effective as an in-person visit. As both equipment suppliers and customers come to this conclusion, it will change how we work in the future and, I think, it will make things easier and more efficient for both parties. For instance, we’re using video conferencing to meet with customers more frequently. This not only saves the time and expense of travel, but it also allows us to be in touch with customers more often.
“We also use the remote tools at our disposal, such as our Teleservice system and a new augmented reality tool that we recently began using to help facilitate service calls,” he continues. “This new support tool is an app that customers can download. Our tech support team in the office uses the app as their ‘eyes’ to see what’s happening on-site and to help walk the customer step by step through a diagnostic process. What’s especially attractive to customers is this tool doesn’t require additional hardware to be connected to the machine or purchased by the customer – any camera-enabled smartphone or device will work.”
Overall, installations in 2021 and – to some degree – beyond, will happen according to what is now described as the new normal.
“Installations are similar to what people experience when going to the grocery store or other public places,” Yaskawa’s Burnside says. “We ensure our teams are feeling healthy, that temperatures are checked and that we socially distance and wear masks. We’ve been pleased to see our customers also take steps to ensure their employees and guests are screened. We also encourage Yaskawa team members when they are not feeling well to remain isolated. Safety is paramount, and we take these steps seriously to protect our team as well as our customers and their families.”
Fanuc’s Scherler echoes that sentiment and adds that while many protocols are now in place, there will be times when new approaches will be required.
“Covid-19 safety guidelines are still in place and will be for the foreseeable future,” he says. “Each worksite has their own safety protocol, so we have to review their procedures to make sure there is no conflict with our guidelines. Many work procedures had to be adjusted due to the guidelines, and, in some cases, the new procedures are less efficient. All of the installation work can still be completed, however, as long as the proper resource planning is in place.”
The road ahead
While it’s comforting to know that manufacturers are in a position to acquire new equipment again and that installations can go off without a hitch, a full economic recovery is still in the works. And, of course, it will be based on much more than the widespread distribution of the vaccine. In the United States, a new administration is at the helm, but has only been there a short time. In addition to a relief bill that is being debated and new policies that have yet to be fully fleshed out, supply chains are still experiencing issues.
“We feel that it will be an interesting few months,” Bystronic’s St. Aubin says. “The surge in orders we’ve seen is based significantly on the people who hesitated earlier in 2020 and have now come back on the market. Will this level of interest continue? We’re not sure, so I would suggest that we are ‘cautiously optimistic.’”
Cincinnati’s Garbarino agrees, adding that the road ahead will be easier now that the pandemic – and how to stay safe and healthy – is better understood.
“We’re all still learning how to navigate this pandemic, but we have found effective ways to work around it,” he says. “Many manufacturers have done well, depending on their products. Take manufacturers of boats, RVs, bikes and camping equipment, for instance. While I don’t see a slowdown to this anytime soon, we have restraints as it pertains to our suppliers and where they may be located. We’re a U.S. manufacturer, so how we do things might look much different than a foreign machine maker or importer.
“Being U.S.-built weighs more heavily now than in the past due to the pandemic, too,” he continues. “My only concerns are the ‘variants’ that creep up that might delay everything more. If that happens, we at least have learned how we can function under such conditions.”
LVD’s Victor has also seen some customers that fared well while others did not. She adds that the level of disruption customers experienced will dictate when they, too, will be back at the buyer’s table.
“Based on our interaction with manufacturers, we’ve found that there have been winners and losers during this pandemic,” she says. “For those who have weathered the storm well, their business continues to be good. For those who were more challenged and experienced a slowdown, there is a strong belief that they will return to normal levels later in 2021 and will start considering new capital equipment procurement in 2022.”
For some, however, there is no time to wait. Fanuc’s Scherler says that there is need coming from across the manufacturing spectrum.
“Customers are looking for ways to increase their productivity with automation,” he says. “In some cases, this is due to onshoring manufacturing from overseas, but we’ve also seen customers that need to add robots to their assembly line so they can spread out their workers to prevent a close-contact situation. In all cases, the demand for consumer goods remains high and automation is helping with the supply.”
In general, there is optimism for the future of manufacturing. Yaskawa’s Burnside also adds that manufacturers should feel a sense of pride for the work they accomplished during unimaginable circumstances.
“With interest rates remaining low, reshoring on the upswing, consumer product demand growing and the increase in robot sales during 2020 – in likely the toughest year most will experience in a lifetime – we expect a strong environment for growth in manufacturing across the Americas,” he says. “The creativity and evolution of manufacturers is amazing. It’s almost an artform to see how companies reinvent their products and processes to remain competitive, growing business over time. Being a robotic and motion automation company, Yaskawa is very thankful to be a part of manufacturing’s continuous evolution.”