North American Robotics Q3 2026: Automotive, Cobots and Manufacturing Growth

0:00 We're at a really interesting crossroads here. If you kind of have looked at the headlines in the last six months and have read a story, any story, about the US economy, it's really being captured in automation. It's impressive how well demand has held up for things like automotive and construction in the face of the current interest rate market, which is getting even tougher with the Fed raising rates.

0:21 20 years ago, you would see robots coming into factories that had a thousand plus employees, but then it became 500 employees, then it became 100, then it became 50. And now with the ease of use of covots, you're seeing it playing out in shops that might have 20 people or 10 people or just a couple person fab shop.

0:39 Obviously, you've got that Shenzhen model. Is something like that in the cards for US automotive versus a three-country spanning supply chain? That would be a ludicrous amount of investment.

0:50 Almost 11,000 robots sold this quarter. Over $723 million in revenue, up 24.8% on the unit side. Where do we even start?

1:01 You're seeing huge demand for construction, data centers all the way through. Is automation going to be able to make an impact in the coming years? Is it going to make a difference?

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1:32 This year's conference is November 3rd through the 5th. And for full disclosure, IRSC is an A3 event, and A3 is who I work for. See you in Detroit. Welcome to the business of automation. I'm Aaron Prater, Director of Market Intelligence here at A3, the Association for Advancing Automation. And this is where we cut through the hype and find the signal and the noise.

1:56 And we have a special edition today because the Q3 numbers from North America have just dropped. So as always, we have Alex Coleman, our principal analyst here at A3, joining me to go through these numbers. Alex, welcome to the show.

2:09 Hey Aaron, thanks for having me back on. Happy to be sharing this uh latest set of really exciting numbers with the audience.

2:15 Yeah, I mean, uh, let's just uh get in there because these these are some amazing numbers to say the least for Q3. I mean, what we're looking at is almost 11,000 robots sold this quarter, over $723 million in revenue, up 24.8% on the unit side. These are just amazing numbers, Alex. I mean, where do we even start?

2:39 There's a lot of area to talk about here, and I'm sure we'll get into it over the next couple minutes here. But I think the biggest takeaway for me was I was kind of interested to see coming off of the first half of the year where we saw great numbers outside of automotive, but a little bit of weakness there, what Q3 is going to look like.

2:54 And I think the story here is just really broad, strong growth across all the segments, auto included, which I think is good news for a lot of our audience. And it'll be interesting to see as we dig into the subsections here, what stands out to you?

3:06 Yeah, I mean, I think this is almost like are we almost firing on all cylinders right now? Because as you brought up, automotive appears to be back, and we're definitely going to talk about that. But it's also these continue, these some of these sectors like semiconductors that are just continuing to be on fire right now for the automation industry is just amazing.

3:28 Let's start with that one because it is the it seems like the chipmakers are the ones that are really driving it. What are you seeing when it comes to the semiconductor area?

3:37 Yeah, I think we're just seeing continued, continued investment. I mean, it all started back with kind of the CHIPS Act and some of the post-COVID investment efforts to bring chip production over here, you know, TSMC opening fabs, but all of the supporting industries and everything beyond the leading edge node, um, some of the latest advancements or latest implementations from Bosch with silicon carbide.

3:56 They're doing a new plant and just all of that money that I think has flown into the chips industry and all of the associated industries is continuing to bear fruit. Obviously, one of the biggest stories out there being AI and the ensuing demand for chips. But even beyond kind of those headline chips that are ending up in the data centers, it's chips all across the board.

4:16 It's semiconductors all across the board. It's investments in a lot of like the uh power transmission and transformer technologies that are increasingly powered by solid-state electronics. And so there's really just story after story all across the board where you're seeing this come into play. And it's a lot of the supporting industries too for automation.

4:37 It's the autonomous vehicles to help move the wafers across the factories. It's everything really. And so I don't see this slowing down anytime soon. There's just going to be more and more investment plowing into this area and more and more need for automation to help stand up that U.S. workforce for chips to make all this possible.

4:57 So it's it's just going to continue. It's it's a strong quarter, but I think it's just going to continue there.

5:02 The semiconductor area, I just think is just going to be so much on fire going forward. It's it's really interesting. And what you just pointed out, I think it's just how much more gas do we have in this tank? And I I just don't see it running out. So there some of the other ones, before we talk about automotive, let's talk about like plastics and rubbers up 67.7%.

5:22 Uh looking over the report, life sciences is up 38.7%. I mean, you have a real special liking on the on the life sciences area and you've been doing a lot of research in this. Talk talk, let's talk about life sciences for a second.

5:35 Yeah, it's it's funny to kind of see a snapshot of all of the big stories in the US economy, whether it be chips or GLP ones and the ensuing life sciences investments, all kind of being captured in this set of Q3 numbers. If you kind of have looked at the headlines in the last year or the last six months and have read a story, any story about the US economy, it's really being captured in automation here.

5:57 And I think that's kind of an interesting way of seeing something that we've been saying for a little while here at A3, which is how essential automation is to the actual economy. And across all of the applications, we're just seeing a great product market fit for automation providers, finding those customers, showing them the power of automation and the customers really responding to it.

6:19 And life science is a great example. We've seen a lot of investments in kind of this aseptic fill finish and life science is manufacturing across the various applications that is playing out in our numbers, but is also playing out in the bigger investment narratives in the US, standing up new plants, looking to capitalize on the regulatory requirements that are coming in that are saying, you know, hey, how can we make the drug supply chain safer, more traceable, more trackable?

6:47 Automation is playing a key role in that. So there's a lot of narratives that I've kind of explored in this upcoming research piece on the life sciences industry. I'd encourage anybody interested to check it out when it drops because it does look to explore all of these various segments and see where the automation opportunities are arriving now and where they're kind of poised to arrive in the coming years here.

7:08 And that report will be dropping for our MI Plus subscribers. So if you're not an MI Plus subscriber right now, make sure you are so you can uh read this report. It's gonna be an excellent report. And it's really gonna paint a really solid picture of if you're interested in getting into life sciences as a seller or as any type of business, it's gonna point some uh you know in some great directions.

7:29 So, Alex, let's move on to automotive because this has been the biggest dragging part of the group. So for our audience, we split here at A3 automotive OEMs into one category and the automotive component teams into the other side of the house. So here we've known that the automotive component guys have been, they've been showing some incredible growth.

7:51 This quarter, they really crushed it up 90.4%. Amazing growth right there. But now the automotive OEMs actually had a great quarter as well. And looking at their numbers, 7.5%, up 7.5%. So automotive appears to be back. And again, Alex, you've been looking at this. You've mentioned some factory announcements.

8:12 Is this what's really driving this? Are we starting to see some really big announcements out there that are driving these numbers up?

8:18 Yeah, automotive can be really, really project driven. And if you have, you know, a big shift in automotive investment, a big plant, either announced or unfortunately, you know, canceled or delayed, that can really shape the numbers landscape that we're seeing in terms of robots. It can be, it can be feast or famine.

8:35 But I think this goes back to something that I highlighted a little earlier in the year during a talk at Automate, where I was taking a look at some of these numbers and I saw that, you know, with automotive OEM kind of being down or flat throughout the first half of the year, I was kind of worried that that would put some weight, put some pressure on the automotive components side, which we oftentimes see as kind of basically an uh automotive OEM serving as a leading indicator for automotive components by a quarter or two.

9:00 But in this case, this really just was throwing that rule right out. This this was a great quarter for automotive components, and it was still a really strong quarter from auto OEM, showing kind of a little bit of staunching of that uh drop that we were seeing throughout the first half of the year. So I think there's a variety of factors there.

9:17 I think autocomponents, I think one of the big things is really going to be this push to reshore and kind of build up some domestic through the US lens, trade certainty. We're seeing a little bit of a curtailment in some foreign direct investment into Mexico off of the back of uncertainty off of USMCA.

9:35 But for you know, domestic US suppliers, it's an opportunity to make those investments and you know produce here. It's definitely a little bit of a mixed bag there. It's resulted in great numbers for automotive components overall. And it'll be something that I'll be curious to see how it plays out going forward.

9:51 Is this a singular event driven by trade uncertainty, or is it going to kind of be a more lasting presence where if you know these supply chains can be tightened up and there can be greater certainty in terms of having things sourced, you know, right down the street, is there value there? Obviously, you've got kind of that Shenzhen model where, you know, everything to build an iPhone sits on one block.

10:14 Is something like that in the cards for 20 years from now for U.S. automotive versus, you know, a three country spanning supply chain? That would be a ludicrous amount of investment to see play out and a massive change in the way business is done. And I don't think that's the case now, but I think some of those factors are spurring a little bit of, you know, automotive component investment.

10:34 I mean, 90 plus percent speaks for itself there in terms of the degree of confidence that people are having in making those automotive component investments. And auto OEM is, you know, kind of following suit. One of the factory uh announcements is, you know, more expanded production for Toyota in San Antonio for the Tacoma, a great truck there.

10:53 So it'll be interesting to see, you know, in the coming quarters, because, like I mentioned, this rule that we kind of had here at A3 with, you know, components being a lagging indicator of auto OEM investment, it really hasn't played out this quarter. And I'll be interested to see now going forward, is that something that we're going to have to kind of reevaluate internally when we look at these numbers?

11:13 Excellent point. Yeah, and we also had the announcement this past week of Audi is going to open their first U.S. plant here in the uh United States. So, of course, there's gonna be several robots going to that facility. So that'll be interesting to see as those numbers start coming in. So the only laggard we had, so and this is what probably is holding the whole excitement fully back, is we had one lagging industry, and that was food and consumer goods.

11:37 They were down 23.7.

11:39 No, God! No, God, please, no, no, no.

11:47 Is there something in any worry here, or are we looking at a cyclical issue here, Alex?

11:52 I think it might be a little bit of um, a little bit of cyclicality, a little bit of project-driven announcements here, where it's it's a definitely a smaller share of our total robot number that we report. And so when you start to slice into some of these segments, one of them might have just had a slower quarter and not seen as big of an set of announcements, you know, that maybe they had last quarter.

12:13 And so that's kind of the challenge when you're looking at quarter to quarter or even half over half, is, you know, if it's one or two big projects that, you know, landed a little earlier in the year and you know, advanced that pipeline. I don't think there's any signs to worry there. On the food and consumer goods side, the US consumer sentiment, while not as as amazing as it could be given the some of the economic headwinds, I think really still points to a picture where people are going to be buying and consuming and you know needing that level of production that's enabled by automation.

12:44 I think it might just be something where we see that number perk up in the coming quarters here.

12:49 Great numbers overall, highly impressive. I mean, we're looking at some of the some of the historic high numbers. Definitely the best quarter so far of the year. So let's move into some other details. One thing we've here at A3 we have been starting to track has been collaborative robots, and the numbers continue to be looking really good.

13:08 1,831 cobots sold in Q3 of this year, so great number. Up 56% from last year's numbers. Again, collaborative robots, I think, are finally finding their home in this market. I think they're finally finding the right use cases to go after. Are you seeing anything different in that area?

13:31 I think that hits the nail on the head. Uh, one thing that I would point out, and this was a trend that we saw across automate on the show floor, is kind of the broadening scope and use of cobots. You know, maybe when they first started, it was a little bit of, you know, okay, we've got this specific application in mind for them, but now through a number of technological advances, they're finding broader and broader scope to be used in.

13:55 And that really is fortuitous timing with what we're seeing across the robotics automation space is, you know, growth in non-automotive, a return to growth in automotive. And so combined, I think they're just really well positioned to capitalize on some of these trends, this expansion in some of the arc welding applications, some of the uses in life sciences.

14:17 There's a number of applications or industries where cobots are well suited for the work and it just lines up well. And I think that's going to continue to drive momentum for that particular slice of the robotics market in the quarters to come, is those continued growth trends in these applications and industries that just line up well with cobots.

14:36 I definitely think we're going to continue to see strong numbers on this collaborative robot side, exactly as you said, because I think they're starting to find their home and where they can really have a huge impact and actually utilize why they're cobots to begin with. We're going to keep watching these numbers here at A3 on collaborative robots, but these these numbers are just getting better and better, it seems like.

15:00 So then let's talk about because as we've been talking about how it's very clear that manufacturers are starting to really automate their uh operations. Uh, we're seeing it across all these numbers here. And one thing that we put in our our our report from for this quarter from A3 is we are really seeing some connections between these numbers and the ISM data data numbers.

15:26 The manufacturing PMI was at 54.5. Would you like to explain to our listeners why we're starting to see this connection between our our analysis of where this the robots are being sold to and the manufacturing index?

15:42 Sure. So I think one of the things to keep in mind is as autumn as the applications for robotics expands beyond kind of a conventional automotive slice, you're seeing it, as I mentioned earlier in this chat, continue to represent the broader set of narratives that are playing out across the US economy.

16:00 You know, essentially, if you want to build something, you increasingly turn to robotics automation, automation in general, to augment your workforce to enable you to drive those costs down or deliver a higher quality product. And so it's really just kind of essentially becoming a proxy for the big, you know, narratives in the US economy.

16:22 If it's investments in chips, if it's, you know, investments in life sciences, if it's automotive production, if it's any of these applications, increasingly robots are helping play a role in getting that manufacturing done. And so when you look at that kind of generalized expansion index there and it's up and robots are up, it really kind of makes sense.

16:41 It's, you know, not a one-to-one correlation, obviously, but it's increasingly serving as a proxy for this automation and broader economic growth. It's something that I know that Jeff has talked about in a number of his uh presentations, you know, showing a great chart that, you know, when robots are up, unemployment is down, employment goes up.

17:01 It's increasingly serving as that proxy for US economic growth. And, you know, it's great to see that, you know, we're playing a role in helping enable that.

17:10 Is there anything that we've you think we've overlooked in this report for Q3? Because I mean, there's so much great stuff. Is there anything that's concerning to you or something that we're is still a positive that we just didn't look at?

17:25 I think one positive to dig into would be uh one of the biggest kind of growth stories when you slice into applications is on the arc welding side of things, uh, which saw, I believe, 142% year-over-year growth. Just really a huge number out of there, which fortunately lines up well with an upcoming report that I know you have coming out on the welding industry.

17:47 And I think it's one thing that kind of ties together a couple of the threads we're talking about. The first being the growth of cobots, where arc welding is an application that lines up well with it, where you're seeing a need to augment and expand a welding workforce that needs to get two jobs done with one person, kind of thing.

18:08 And so, you know, being able to train and show a cobalt how to do that job and, you know, get that task done faster is really something that I think the market is realizing offers a lot of value to these smaller manufacturers. One of the first stories that I highlighted uh when I actually joined A3 was some numbers showing just how good the diffusion of robotics has played out across these smaller and smaller manufacturing shops.

18:35 Basically, let's say 20 years ago, you would see robots mostly coming into factories that had a thousand plus employees, but then it became 500 employees, then it became a hundred, then it became 50. And now with the ease of use of cobots, the ease of programming with some of these latest approaches to programming a robot, you're seeing it playing out in shops that might have 20 people or 10 people or just a couple person fab shop is able to leverage robotic automation to deliver a product that's as good or better, cheaper, faster than maybe even some of the big guys that haven't been as quick to adopt automation.

19:11 And I think welding is one place where you're seeing that play out where there's that demand. The labor pool might not be able to, you know, completely fill it as it currently is. So robotics can step in and augment that labor force and you know, that's showing up in the numbers there, just huge growth numbers there.

19:27 And so I think it'll be really interesting to see in that article the words from the people in the industry where they're seeing it play a role. What technologies have made that a new uh approach possible for automation in welding? Because welding was a huge segment of the market in the last couple decades, but kind of had lost out over the last couple of years to much faster growth in some of the other industries and some of the other applications.

19:55 But now we're kind of seeing a little bit of a resurgence there, I think partly driven by construction, partly driven by some of the you know efforts to reshore manufacturing. And so I think another really timely report there from A3. That's one that I'm excited to read and check out. I contributed a few graphs, but I'm interested to see the broader narrative, and I'd encourage the audience to check that out too, because that 142% number is uh definitely something to think about.

20:17 That will be in our next issue of Signal, our market intelligent magazine that we drop each month. So, and Alex did. He contributed some great graphs to that that are very, very interesting and actually show exactly what he just talked about. That issue of Signal should be dropping here soon. So check out A3's website to get a free copy to download.

20:38 On that topic now, where do we start to think Q4 is starting to line up? Where are the opportunities? Do we think we can maintain this growth? Or there's some headwinds we think that might start showing up. What's your initial thought, Alex?

20:54 You know, I'd like to think that all of the all the positive factors that we've discussed throughout this call here are are going to continue to play out. I think you're going to see, especially in the coming quarter, just continued investment in the semiconductor space, continued investment in life sciences.

21:08 It's impressive how well demand has held up for things like automotive and construction in the face of the current interest rate market, which is getting even tougher with the Fed raising rates. I could do this all day. And yet all of the other signs, the purchasing managers index, a lot of the broader economic roadmaps are pointing to just continued growth and continuing to fire on all cylinders, which, as we go back to with you know, robotic automation serving as a proxy for the broader market, I would expect to see continued growth.

21:42 I think, I think some of the big things to watch because of that proxy relationship are really kind of the broader economic concerns. Are we going to see higher energy costs off of the resumption of any kind of issues in the Middle East? Are we going to see a tougher interest rate environment continue to weigh on?

22:00 Uh, some of these new projects and new investments. As that rate just keeps climbing, is it going to just be tougher and tougher to justify? We haven't seen that play out yet so far throughout the year. I mean, it's really kind of shrugged off energy costs, it's shrugged off the interest rate environment.

22:15 And so I'm hopeful, I'm optimistic to see it continue to grow, but I think it'll be interesting come kind of basically about January for our time at business forum, where we stand in kind of the broader economy. Have we continued to muscle through some of these pressures? And if so, then I think that's going to be really positive numbers for Q4 because all those factors will, I think, continue to be present.

22:39 Everything that we've seen drive these great numbers in Q3 should continue to drive strong numbers in Q4.

22:44 I again, I mean, these headwinds, as you just laid out, are very strong. And it's just amazing of just seeing this kind of strength still. It's almost like if those headwinds didn't exist, where would we be? And that that that is something I'm I'm just fascinated about. I really think that we're setting up 2026 to be one of the top years for the industry.

23:07 And if these numbers continue, I mean, it could be one of the best years ever. We'll keep our eye on this. Uh, we our team here at Market Intelligence at A3 definitely is monitoring this. I know you're doing a great job of just trying to keep our members ahead of what you're seeing. So I think we're gonna have a very interesting year-end conversation when the Q4 numbers come in, because this is just an amazing quarter, and I just would love to see where we're we're going on this.

23:34 Yeah, it'd be great to see that resiliency hold up and and see some equally strong numbers for Q4. I know everybody would be uh celebrating a very happy new year if that was the case.

23:43 Absolutely. So what what is an area that you think should be the next thing that A3 starts looking at from a market intelligence as we look at more sectors like this? Where's a new sector you think might be forming for us?

23:58 I think one of the interesting ones to explore will kind of be construction. Well, as I mentioned, you know, if we're looking at kind of the big narratives throughout the broader economy, being, you know, the AI expansion, life sciences expansion. Construction is kind of one that I think has has maybe not gotten as much press, but I think is certainly a story that's playing out that'll be important because you're seeing huge demand for construction, whether it be, you know, data centers all the way through to domestic construction.

24:25 That's a topic that I'm sure is going to kind of dominate some of these midterms, is you know, housing affordability, construction affordability, the role that immigration plays in impacting the construction workforce. Is automation going to be able to make an impact in the coming years in the construction space, like they've made in so many other industries and applications?

24:45 Is it going to be where, you know, more ruggedized robots and AI and, you know, a lot of these approaches that have kind of been discussed and have kind of been on the periphery of the market for the last year or two here, are they going to really kind of land? Is it going to make a difference? And you're seeing it play out in some small ways with some specific applications, like, oh, okay, if you've got to drill, you know, anchors into concrete, there might be a robot for that.

25:08 If you've got to do some welding, there might be a robot application for that. But can we really break through and solve some of these, you know, bigger issues, making, you know, construction more affordable, making construction quicker. If automation can tackle that, that's a huge greenfield, I guess, market pun intended there for automation that I think hasn't gotten as much narrative play over the last couple of years after kind of, you know, it kind of came on a little early.

25:37 I think there was some mention of it and then tech just wasn't there. But now it's really looking like not only is the tech potentially there, but the demand is really there. And so that'll be one that I'll be interested to explore in the coming months. Here is can automation break through into the construction side of things and really make the same difference that we've seen it make across all these other industries and applications.

25:58 Yeah, I'm really intrigued by the construction industry and how they are trying to automate such a very important sector, but also a hesitant sector, to say the least. And I think it's gonna be really interesting because our show, Automate, next year, is out in Las Vegas, which is a builder's dream city, of they're always building that city up and down.

26:19 So I think it'd be great if we could actually have some of those companies at Automate to show off their stuff. So if you have not signed up for your automate booth, make sure you're counting our sales team as quickly as possible because those booths are going fast. But we would love to see some of these companies that are trying to solve automation in construction at Automate next year in Las Vegas.

26:39 So I'll just put that shout out there. Final thoughts, Alex. What is the big thing that you would you're gonna watch as we close out 2026?

26:47 Yeah, I think the big takeaway is going to be, you know, I think it's probably kind of two-pronged. The first is can this resiliency across the whole economy, even looking beyond automation, can it continue? You know, we mentioned some of those headwinds, but as those things kind of get resolved or potentially just continue as is, what will that impact be on automation?

27:07 Will automation continue to serve as this kind of proxy for the broader market and the broader economy? Are we going to see us either be a leading indicator if some investment gets curtailed in robotics, or are we going to see it be resilient even in the face of some of these challenges because of how essential automation is increasingly becoming to these operations?

27:30 And do you see, you know, cuts get made elsewhere before you cut an investment in a new robot? That'll be something that I'll be watching because I think we're at a really interesting crossroads here. We've had a great first three quarters of the year. If we can continue and finish out strong, I think it'll be great numbers.

27:46 And I think it'll be a really interesting check on how closely tied is automation to the broader economy and how vulnerable or how connected are we to some of these factors that we're watching, whether it be trade, reshoring, the interest rate environment. There's a lot of narratives playing out, and it'll be interesting to see how those impact our numbers and um, you know, where automation can really continue to land and land this end-of-the-year set of numbers here.

28:13 Thanks, Alex, for coming on the show. And for everyone, this has been the Business of Automation special edition on the Q3 numbers. But this show is just the beginning. We are going to put all of our data, all of our graphs out on our Substack. So make sure you subscribe to our Substack. It is free to join.

28:29 But this episode and all future episodes will be dropped automatically into your mailbox every time a new show drops. And that's where on our Substack we share even more information. So make sure you subscribe to that. This has been the Business of Automation for this week. I'm Aaron Prather, Director of Market Intelligence here at A3, the Association for Advancing Automation.

28:48 We'll see you next week.