The European robotics sector for materials handling earned revenue of US$762.3m in 2004 and is set to reach US$1.28 billion in 2012, Frost & Sullivan forecasted.
Cost reduction is often cited as the major reason for investment in robotics - and also the biggest perceived barrier due to difficulties in calculating a good return.
Such a traditionally conservative industry anticipates that the investments will reduce labour costs and help them manage product line changes and fluctuating volumes, the consultancy said in a new report on the European market for robotics used for materials handling.
Most small and medium sized enterprises (SMEs) cannot afford huge investments in flexible automation. Yet these are the very businesses that need the greatest flexibility to respond to consumers' changing demands quicker than their rivals.
In the short run, the success of robot manufacturers depends on their efforts to offer reliable and inexpensive robotic solutions to such SMEs, the consultant said in a forecast of the market.
Such a price drop could occur. With the slump in demand from automotive original equipment manufacturers, increasing number of robotics manufacturers will look to the food and beverage and life sciences sector for growth opportunities, which results in intense competition, said Kashyap Chandrasekar, a Frost & Sullivan research analyst.
In particular Chandrasekar points to the booming packaging industry, which offers immense potential for robotics.
"Changing product types and varying product volumes necessitate flexible automation solutions," he said in his report. "Manufacturers in consumer markets are opening up to the idea of investing in robots to reduce costs and maintain quality, thereby boosting sales of robotics in the packaging market."
Niche market providers of robotics should take a more generalist approach and look to developing markets for regaining profits.
"Niche participants have immense technical know-how, successful pricing strategies and experience in competing globally with the generalist participants in the automotive sector," he said. "Widening their end-user spectrum will be profitable in the near future and a necessity in the long run. Generalist participants should focus their efforts on taking robotic materials handling solution to the high potential SMEs market."
A recent survey of UK processors found that the sector fails to exploit automation and robotics handling, mainly due to concerns about the costs, return on investment and a shortage of trained engineers.
The industry survey set out to explore why - despite being the UK's largest manufacturing sector - the food industry invests comparatively little in automation compared to its counterparts in other industries.
Cost reduction was seen by the survey respondents as the major reason for investment - and also the biggest perceived barrier due to difficulties in calculating a good return.