By John Revill

ZURICH (Reuters) – ABB is expanding its main US robot factory as its customers there in the automotive, packaging and machinery industries confront a tight labour market as they bring production back home.

The Swiss engineering company, which competes with Japan’s FANUC and Germany’s Kuka, is spending $20 million boosting capacity at its Auburn Hills site in Michigan to meet demand spurred by the Biden administration’s massive industrial stimulus package.

The United States is the third largest in the global robotics market, which is worth around $50 billion per year according to estimates by ABB and the International Federation of Robotics (IFR).

Rapid growth is expected as US companies bring production closer to home to avoid logistic log jams which have gummed up supply chains since the global pandemic.

“After the most intense shocks to the industry, including COVID, the semi conductor shortage, and then the Ukraine war, businesses all want to become more resilient,” said Sami Atiya, the head of ABB’s Robotics and Discrete Automation division.

“In terms of critical parts of long supply chains, the more production you can bring closer to your home, the more resilient you become,” he told Reuters in an interview.

A survey by ABB last year showed 70% of North American businesses suffered supply chain disruptions in the last year.

As a result 37% of businesses wanted to bring their businesses back to the United States, while 33% were looking at near shoring – bringing it closer to the country.

A tight labour market and rising wages make robots more attractive.

“There is a huge shortage of skilled labour in the U.S,” said Atiya. “With an aging population, that gap is widening.”

Robots were now easier to use, making them attractive to smaller and medium sized business like bakeries, he added.

The IFR expects the numbers of industrial robots installed each year in the Americas to expand by an average of 8% per year over the next three years, much faster than Europe which will see growth at 1%.

China and Japan, the two biggest markets for robots, will grow at around 8%, IFR said.

“The U.S. market is particularly interesting because it is more open to foreign businesses because it does not have its own domestic brands,” said IFR general secretary Susanne Bieller.

“That’s different to China where they are trying to develop their own and Japan which is dominated by its own players.”

The Biden Administration’s $430 billion Inflation Reduction Act, which includes major provisions to cut carbon emission, boost domestic production and manufacturing, was not a direct factor behind ABB’s investment, the executive said.

Still, the act, along with the $52 billion semiconductor manufacturing program, could boost demand.

Companies like Siemens and Audi have spoken about large investments in the United States on the back of the Biden stimulus, while chip manufacturers like IBM Corp and Micron have also announced new production sites.

“The potential for growth in the industrial robots market is huge,” Atiya said. “We see double digit growth for the U.S. market over the next few years and don’t see any reason why this will change.”