Robotization is top of mind for European food producers

RaboResearch has conducted a survey on robotization among over 20 midsized Dutch food producers. Perhaps not surprisingly, robots were on the minds of all of the executives. The technology ambitions and concerns of these Dutch companies are likely not much different from those of their European peers. We believe the survey results give a good indication of where the industry is heading.

Due to the nature of the food industry – low margins, high-volume throughput, and often harsh production environments – robots have so far been relatively scarce on factory floors. Robots are expensive, tend to work better for lower-volume processes, and generally operate best in a clean environment. Market conditions are changing, though: Robots are getting less expensive and their capabilities are progressing quickly. However, the biggest driver for robotization in consumer foods is on the side of demand.

The prime reason the food producers we surveyed gave for investing in robots is addressing personnel shortages (see figure 1). Staff is scarce and, given the aging population, that issue is likely to persist. Most of the food producers are therefore turning to robots to raise labor productivity, retain employees, and work with underskilled staff where necessary. Other motives for robotization include lowering production costs by raising utilization rates or lowering energy usage, generating more consistent output quality, and providing a broader offering without jeopardizing economies of scale.

These investment considerations also provide an indication of where food producers expect to place new robots in the production process. The tasks that still require a substantial level of human intervention like raw material handling, internal logistics, and packaging are the obvious line positions to undergo robotization. Given that new-generation robots like automated guided vehicles (AGVs) and collaborative robots (cobots) are developed to work alongside humans, the range of possible applications on the factory floor is quickly increasing.

Robots may well seem the ideal solution for addressing staff shortages and increasing productivity, but food producers do have some important concerns. The biggest hurdle will be adjusting the production processes. Due to the high level of investment, robots require minimal production volumes in order to be cost effective. This may have consequences for the long tail in the product assortment and could limit producers’ flexibility to pursue commercial opportunities.

The typical payback period that food manufacturers apply for investments in robotization is about three to five years. For strategic projects, that payback period may even be extended. Given that the investment level typically is higher than general capex requirements, producers are more wary of the mismatch between the cash outlay and the duration of supply contracts with their clients. Longer commitments of customers, such as food retailers, and/or innovation subsidies by the government may help to overcome this anxiety.

Another factor causing food producers’ hesitation is the required skillset of their staff to operate the robots. Production labor may be in short supply, but digitally savvy personnel is even harder to find. A last consideration around investment in robots concerns physical constraints. In older buildings, space is often too limited to safely deploy robots. The investment in robotization then depends on the timing of broader new construction plans.

All food producers that we surveyed are looking into robotization in some shape or form. The emphasis of their technological ambitions is predominantly on the production process itself. However, there is more to robotization than cost savings and higher productivity.

Rather than using robots solely in the primary production process, robotizing safety inspections or cleaning tasks could improve employees’ work satisfaction levels and thereby increase the employer’s attractiveness for current staff and new hires.

On the basis of our survey, and the stress on the labor market we continue to see, we believe the theme of robotization is not going away. We expect food processors to look even more deeply into solutions that will help their business to become more resilient in production and more agile toward customer demands.