Regarded as one of the most influential German writers, Johann Wolfgang von Goethe wrote across art, science, religion, and literature. His works are still quoted and applied today because of their lasting insight. A quote commonly attributed to Goethe is, “If I know how you spend your time, then I know what might become of you.” It means that where someone invests their scarcest resource – time – is a leading indicator of success or failure.
Building on Goethe’s framework, the way a manufacturer allocates its spending for capital equipment is a strong indicator of future business opportunities. As technologies advance and the growing need for employees goes unfilled, a shop that neglects to invest in automation will be left behind any competitor that does. The growing demand for automation has become a dominant force in the manufacturing technology market. Utilizing the data collected by the U.S. Manufacturing Technology Orders (USMTO) Report published by AMT – The Association For Manufacturing Technology, we can begin to quantify this demand and its impact on the industry.
‘The Hardest Thing To See Is What Is in Front of Your Eyes’
Most attempts to measure the demand for automation involve counting discrete components: the number of robots installed, the number of points connected by conveyors, or the square footage in automated storage and retrieval systems. This is a great approximation, but it neglects to account for quality improvements in newer machinery, additional features that make processes more efficient, or swapping from one machine type to another to improve cycle times.
To account for all these types of automation and others, a dollar-value-based approach to measuring automation can be more informative than counting individual machines. To construct this model, we can compare the average order value of new machinery, as measured by USMTO, with the producer price index for metal cutting machinery, measured by the U.S. Bureau of Labor Statistics. This shows whether increased spending results from greater demand for automation rather than general price increases in response to market conditions. By indexing these series to the same period and then measuring the gap between them, we can infer that the difference represents the amount of automation or additional features the market demands. Utilizing this methodology, the demand for automation over time can be tracked.
‘Thinking Is More Interesting Than Knowing, but Less Interesting Than Looking’
There are clear points in time when the average order value moves above inflation, then gradually returns to a correlated trend. This shows the changing nature of what is considered automation and how the difficulty in defining it underlies the fault with counting discrete components. What is considered added automation today becomes a ubiquitous feature of manufacturing technology tomorrow. As that feature becomes more popular, economies of scale reduce costs, enabling greater adoption of the once-optional feature.
The most compelling part of this measure is both the magnitude and duration of the increased demand for automation following the 2020 COVID-19 recession. By quantifying the deviation between average order value and the rate of inflation, we can estimate that demand for automation in 2025 is more than four times as high as in 2018. This calculation can be supported by an anecdotal observation of the equipment available at IMTS – The International Manufacturing Technology Show over time. In fact, the amount of automation and robotics at IMTS 2018 was staggering – yet each subsequent IMTS has outdone it.
‘…Unite and Lead, Is Watchword of the Wise’
The ways a shop deploys its capital budget will determine its capability, level of productivity, and eventual profitability. This trend has been confirmed year after year by the results of Gardner Business Media’s Top Shops Survey. Manufacturers who invest in more productive technologies tend to achieve better outcomes, including more business won, lower scrap rates, and increased profitability.
As we rapidly approach the opening of IMTS 2026, understanding not only the level of demand for automation but the economic forces driving it will help steer customers to the right solution for their business. Reach out to AMT’s research team to help answer both your and your customers’ questions about the changing market conditions and growing demand for automation.
To read the rest of the State of Automation Issue of MT Magazine, click here.
