Faced with some of the highest labor costs in the world in its home market, Switzerland’s ABB Ltd. expects companies to increasingly invest in automation and robots.
The engineering company based in Zurich is betting on growing demand for digital technology that can improve production efficiency. Swiss manufacturers in particular are struggling with higher costs due to a strengthening of the local currency over the past year after the Swiss National Bank removed a cap on the franc.
“The only way for Switzerland to stay competitive in the global market in the long-term is to invest significantly in automation, to make sure we have a high level of productivity despite high labor costs,” ABB Chief Executive Officer Ulrich Spiesshofer said in a telephone interview. “The removal of the cap on the Swiss franc by the central bank has also triggered more interest from Swiss companies in automation and robotics.”
ABB, Japan’s Fanuc Corp. and Germany’s Kuka AG are the biggest robot makers in the world and would stand to benefit from what is being called the fourth industrial revolution, or Industry 4.0, when factories are further automated. The market for industrial robots and services was worth about $32 billion in 2014 with sales expanding by about 15 percent annually, according to the International Federation of Robotics.
ABB is developing machines that do everything from reducing maintenance by monitoring their own health to industrial robots programmed by moving their arms rather than by coding, executives said.
The company’s two-armed YuMi robot, which costs about $40,000, is aimed at electronics manufacturers and can be used to assemble small components in watches and tablets. ABB expects users will soon not only be setting annual productivity goals for human employees, but also for their robots.
“With people, we assume their productivity should increase every year and soon the same will apply to robots as well,” Chief Technology Officer Bazmi Husain said in a separate interview last week in Davos. “Intelligence within a machine will lead to more productivity gains.”
ABB’s spending on research and development was at an all time high of four percent of revenue last year compared with 3.4 percent five years earlier. The company also has a goal of expanding its venture capital arm to invest in cutting edge technology.
“We are close to 4 percent of turnover and that’s about right,” Spiesshofer said. The company is aiming to save $1 billion in administration costs by the end of 2017 and some of the proceeds will go into R&D, he said.