Thoughts Post 2023 Automate With A3 President Jeff Burnstein 

On the heels of Automate 2023, the premier automation, robotics, and technology trade show, Jeff Burnstein, Automate’s long time president and one of the sectors leading advocates, joined Joe Giordono, Diversified Industrials, Automation, and Robotics Analyst.  

They discuss key themes from Automate 2023, how robotics technology has evolved, and advances like AI will impact the sector going forward. 

Press play to listen to the podcast.  

Transcript

Speaker 1:

Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Joe Giordano:

Hi, everyone. Thanks for listening. My name is Joe Giordano. I cover industrials, automation, and robotics here at TD Cowen. Really excited today to spend some time with Jeff Burnstein, president of A3. Jeff, appreciate the time, thanks for joining us. Look forward to the discussion.

Jeff Burnstein:

Yeah. Well, like I said, thanks for having me. I’m looking forward to it as well. It’s a exciting time to be in automation, Joe.

Joe Giordano:

It certainly is. I mean, I was just at Automate a couple weeks ago. It was a great time, and I’m looking forward to jumping in on some of the stuff that we learned there, but maybe just to kind of set the stage here before we dive into the event itself, maybe just tell us a little bit about A3, what the purpose is, where you kind of fit into the broader landscape.

Jeff Burnstein:

Well, A3 has been around for almost 50 years now. We started out as a robotics association. We celebrate our 50th anniversary next year. We have about 1200 member companies that are suppliers of robotics and automation, machine vision, motion control, AI, anything in the ecosystem, not just suppliers, integrators, end users, academic institutions. TD Cowen is a member, so we have 1200 members, which we believe makes us the largest robotics and automation association in the world. We have company members all over the world, Asia, Europe, the US, and our job is to educate companies on how to successfully apply automation.

Joe Giordano:

Yeah, and I think you guys also do an excellent job of educating people who are not directly working with automation too. I know when I was ramping up, you guys were a phenomenal resource to help me get smart on the industry for what we do on the research side. So firsthand knowledge that you guys are effective at what at do. How did you specifically get involved in this?

Jeff Burnstein:

Well, I was an English major in college, and my first job out of college was promoting downtown Detroit. That was with this business association, and I got the idea of what associations were. I’d never heard of an association before that, and then I went to work for the Society of Manufacturing Engineers, another type of association, individual member association, and they had a robotics activity. That robotics activity broke away. So it was called RIA back then. They broke away in 1983, or maybe they broke away in ’82, and I joined in ’83, but the point is that when they offered me a job, I went from an organization that had 300 people to one where I was employee number five, and I did it because I realized there’s going to be tremendous opportunities in robotics.

It was supposed to be the next industrial revolution. It was on this tremendous growth path. The projections from the financial community were like a hockey stick, and I wanted to be a part of it, and so I got involved in 1983, like I said, working exclusively for RIA at the time, and here we are 40 years later, still working for the association.

Joe Giordano:

Yeah. I mean, that’s an amazing 10 year. I know you don’t join a job and expect to be there for 40+ years, so congratulations on that. So I mentioned Automate. It’s your flagship event. We were there in Detroit a couple weeks ago. What’d you think of this year’s show?

Jeff Burnstein:

Well, from our standpoint, it was tremendous. It was the largest show we’ve ever had. We had over 750 exhibitors occupying over 300,000 net square feet. We had over 25,000 people at the show and over 30,000 registered, and I mean, it shows just how important automation is right now to every industry. This was a show that a little over a decade ago was left for dead, Joe. It was a 40,000 square foot show in Rosemont, Illinois, and people were saying, “You’re probably going to have to end this thing because there’s not enough people coming,” and it was held every other year, and we finally reimagined the show, turned it around, and were co-located ProMat for several years, and finally, both of our shows were growing so quickly we couldn’t be together anymore, so we split off and went on our own in 2022. It was originally supposed to be 2021. COVID had other ideas.

So we held the show in 2022. It was our most successful ever up till that point, and then we were already scheduled to hold it again in ’23, so we did that. So back to back years, there was some concern there about how would it go. Well, it went a lot better, and so now as a result of that, we’re an every year show, and we’re going to be in Chicago next year, May 6-9 at McCormick Place, and we expect it to grow again.

Joe Giordano:

There’s almost certainly too many conferences in the world right now, but this has definitely become one of those that you have to go to if you’re in this world. I mean, whether that’s someone doing research like me, or whether that’s someone who’s a provider, this is kind of like the one that you circle on your calendar, and you go, and then there’s others that you go if you have time, but it’s been quite the journey. I’m just curious, as you kind of walk the floor and look at what’s there, and you compare that to when you were co-located, when you were with ProMat, how is the type of the technologies that are on display, how has that kind of evolved over the last couple years?

Jeff Burnstein:

Well, we have a lot more AMRs and logistics technology than we had a few years ago on our show, because when we were co-located with ProMat, most of that was in the ProMat side of the hall. We have a much bigger emphasis in the conference on industries like logistics and warehousing than we’ve had before, and now, of course, we’re adding a lot of emphasis on AI, particularly in the conference side, and a lot of talk about that at this year’s show. So what we try to position ourselves as is a show for anybody who’s looking to adopt automation, which basically is every industry. It’s not focused on welding, or packaging, or material handling, or assembly, any single type of application. It’s not focused on any industry.

So we have manufacturing, logistics, food, aerospace, agriculture, you name it, you can find solutions at Automate, and that’s been our sort of plan forever, and it’s finally starting to work out as every industry begins automating. A long time ago, it was just automotive and electronics, and now it’s hard to think of an industry that’s not automating now, and a lot of the people who come to Automate tell us it’s the only event they go to.

Joe Giordano:

You mentioned AI. It’s obviously the hottest topic there is at the moment. It’s at the core of most robotic applications. Were you surprised that there wasn’t as many strictly AI companies, like companies that were going there saying they are AI, or is it more kind of just understood that this technology is kind of based on that?

Jeff Burnstein:

Yeah. No, I wasn’t surprised by that at all, and the companies that were there that are straight AI companies told us they had a tremendous show, and I think we’ll see more of that type of company there in the future, but it’s so integrated now, like you said, into not just robots, but vision that it’s part of this story, but that’s a sign of the maturity of it. It’s not just somebody coming and saying, “Hey, we’re AI.” They can show you what that looks like in a solution.

Joe Giordano:

Yeah, it’s funny. I was talking to a CEO of a vision company about AI, and his response was, “Well, we’ve been doing AI for 30 years. It didn’t just get invented two weeks ago.” So I think it’s going to be interesting to see what happens where… I know everyone’s getting crazy about AI now, but if this is a new element, a new capability with generative, it’d be very interesting to see what that brings to the robotics industry in terms of new capabilities that kind of come about from that.

Jeff Burnstein:

It will be, and we had a really good panel discussion where that came up, and I think it’s just like everything else. It depends on what you need to get the job done. If AI is going to be an important element of it, and there’s ROI associated with using AI versus some other technique, then I think you’ll see more applications with it, but if not, you may not. It’s got to be a tool that gets the job done more efficiently than some other tool.

Joe Giordano:

So when you think about the totality of what’s on display, what technologies do you think are in the most demand right now, like newer stuff that is now kind of meeting new problems? What are you kind of seeing there on the cutting edge?

Jeff Burnstein:

That’s difficult for me to assess because I think it depends on the industry, and as I mentioned, Automate is trying to appeal to every industry. So in some of the cases, the improvements in grasping is really important, or the enabling technology of machine vision, or there’s new motion products being introduced. So I think it really depends on the industry. I would like to see, and I think we saw a little bit of it at Automate, more mirroring together traditional industrial robots or collaborative robots with autonomous mobile robots, and we saw a little bit of that at Automate. I think you’ll start to see more of that, and I think, again, you’ll see more use of AI where it makes sense. So I don’t know that it’s easy to say that there’s one thing that everybody is clamoring for, because every industry has its own needs, and it’s own way of measuring the effectiveness.

Joe Giordano:

Yeah, I know last year when we were there, we shot a video, and one of the takeaways that I had from walking the floor was that while the technology there is clearly fascinating and exciting in its own right, it is somewhat challenging for someone who’s not a roboticist to really understand the distinction between some of these, right? There’s a lot of companies who seem to be very similar if you just kind of walk by. From someone who’s been there for a long time, what kind of causes a company to jump out to you?

Jeff Burnstein:

I think you’re right, and there’s a lot of companies that look similar to the uneducated, but also to the educated eye, because they’re doing similar things. So what differentiates them? I think the market that they’re after, because there are segments of the market even with similar looking technologies. I think the vision of the leaders of the company, the founders of the company, focusing on markets that make sense for their products, but also markets that have a big growth opportunity ahead, and I think that is usually the differentiator, and I think that’s what attracts investment. When you talk to companies that you can see their vision and you can see that their product is aligned with big potential markets, I think that will be the differentiator going forward.

Joe Giordano:

Yeah, and certainly logistics, which you mentioned earlier, ticks a lot of those boxes. It’s gotten significant growth over the last couple years. I mean, just published statistics and just the proliferation of companies at shows like yours is speaking to companies. COVID clearly was an accelerator of that. What do you think kind of unlocked that technology to that market?

Jeff Burnstein:

I think it was the explosion of e-commerce. As you said, COVID was an accelerator of that. Those companies were having difficulty in a normal year pre-COVID at holiday time finding enough people to fulfill all the orders that came in and get them shipped out on time. Now, after or during COVID, every day was like holiday time, and so there was no way they were going to be able to hire and keep enough people. A lot of those jobs, frankly, aren’t all that desirable, walking six miles a day or carrying heavy boxes, and so I think it became obvious that if you’re going to really get products out the door into the customer’s hands the next day or the same day, you’re going to need to automate that, and I think everybody realized that, and I think that’s what we’re seeing.

Joe Giordano:

If you were to go around and just talk to people in that space right now, everyone is very, very bullish, right? All the companies are seeing big demand. What I guess concerns me slightly is that a lot of these people expect their customers to spend consistently through a recession, and I don’t know, I feel like that hasn’t historically been the pattern. Maybe this is different, but what are your thoughts on something like that?

Jeff Burnstein:

Well, I might be with you on that one, Joe. I don’t know that whether it’s the AMR space, or the traditional industrial robots, or collaborative robots, I don’t know that these industries are recession proof. The fact is that interest rates are high. The cost of money is higher. I feel like we saw a slowdown in the first quarter of this year, and I wouldn’t be surprised to see it continue, frankly. Other than automotive, which is spending heavily because of the move to electric vehicles, I think every other industry was down in terms of orders that we track in the first quarter of the year, so can’t say I’m surprised if there’s going to be a slowdown.

Alan Beaulieu, who you know and many people follow, he thinks that the slowdown that is ahead will affect the automation industry less than some other industries, but still it’s going to have an impact. I mean, we’ve seen this throughout history. Nothing goes up forever, and at least from my perspective, you can’t get too locked into what’s happening from quarter to quarter. You have to kind of look at the long term trends here. I don’t think they’re changed by the current economic environment, but I think it’s reasonable to think that there will be a slowdown in this space.

Joe Giordano:

Yeah, I think that makes a lot of sense, and there’s this other theme, right? With this concept of reshoring and retooling the US manufacturing, and I agree with that concept. There’s also this kind of paradox, right? Because, well, if you just go around to manufacturing facilities in the country, we’re not even close to using the technology that we have now. I mean, there’s stuff installed that’s 30 years old, right? So I’m trying to square this desire to redo things, but we still haven’t… Like why haven’t we been doing that for the last 20 years? I mean, the technology has advanced significantly, but we’re still using something that’s super old. So I guess it’s a tough question to answer, but I’m just curious your thoughts on that, and does this kind of ignite a whole refresh of the manufacturing landscape in the country?

Jeff Burnstein:

Well, I think there’s a couple issues at play here now. In the manufacturing space, certainly you have the aging of the workforce, and as those current workers doing jobs that maybe the next generation of workers don’t want to do, I think that is going to require more automation. Now, the other thing though that’s kind of played out is the whole supply chain issue. Companies realized they couldn’t get product here quick enough during COVID, and still struggling a little bit there. So now there’s more discussion of the reshoring issue. So if you’re going to do that, you’re going to need automation to help you reshore, but the irony is that the shortage of workers who are skilled is actually a break on the ability to reshore.

I was talking to Harry Moser about this, and he said, “We don’t have the skilled workforce that’s needed to quickly reshore. It’s still we’re at record numbers of reshored jobs, but it’s still a trickle compared to what it could be, and what it might end up being.” We need to handle all these issues. We need to have a better trained workforce with the skills to actually adopt and implement robotics and automation. I mean, there’s a lot of issues that need to be addressed here.

Joe Giordano:

So when I think about what could be kind of the next kind of logistics market, the next market that we’re not talking about a ton right now, that ultimately becomes very large in a couple years, what do you think are a few good candidates for something like that?

Jeff Burnstein:

Well, we’re Focused on three or four. We’re looking at construction, that we think there’s a big opportunity, therefore, again, labor shortages may be one of the drivers, the main driver there. We’re looking at food, companies like Tyson Foods. They certainly are looking at how to automate. Agriculture, another one, and it’s another one where labor plays a factor, because as we tighten our immigration laws there may be fewer workers in the fields, and then healthcare in general. There’s lots of applications in hospitals and many other parts of the healthcare world that could be automated. So those are the four that we’re sort of focused on right now.

Joe Giordano:

Is there a common bond that makes them logical answers to that question?

Jeff Burnstein:

No, they haven’t automated a lot. That’s one of them, but the workforce issue is another one. A lot of those jobs aren’t all that desirable in construction or agriculture, so I think certainly working on a food line, handling chickens all day, that’s probably not the greatest job. So as people think about what they want to do for a living, that’s a common denominator between some of those, and as more companies look at how are they going to continue to be leaders in their space, can automation help, this is now every industry. I mean, retail, hospitality, every industry, restaurants is looking at how do we continue on successfully in a world in which getting people is difficult, and is there an automated solution, and oftentimes the answer is, “Yes, there is.”

Joe Giordano:

Yeah, we’re doing some work now on the agriculture side, and when you look through some of the demographic shifts globally, and kind of what needs to happen, and scarcity of key resources, it’s clear you need stuff like this, right? But it’s also you’re trying to automate an unstructured outdoor type application, very challenging, so the tech needed here is it’s a high bar, but it’s extremely interesting. Along those same lines, as we think about where these growth, where these these upstart companies are going to focus, how do you think about consolidation in the industry? Do you think that we’ll see kind of more concentrated plays by whether it’s the Cats and the Deeres in the ag space or the big automation companies? Are they going to buy integrators? How do you think it will happen, and what do you think is the healthiest option for the industry?

Jeff Burnstein:

There’s always consolidation that takes place, and the Cats and the Deeres are already buying up companies, I believe, and so I think you’ll continue to see that. How much consolidation, that’s hard to say right now, but a lot depends on how much venture capital there is going to be too, because when I got started 40 years ago, everybody was all, “Oh, we’re going to throw all this money into robotics,” and then when they stopped, it was decades before anybody wanted to invest in hardware again. It was always, “Well, we’re not going to do that.” Then things have gotten hot in the past several years, maybe it’s slowing now, but I think that’ll have a factor on what happens in terms of consolidation. Is it healthy? Could be. Where will it be, which companies? That’s harder for me to say. You mentioned integrators.

I know a couple years ago my phone was ringing off the hook from companies saying, “Hey, do you know any integrators we can buy?” That seems to have slowed down a little bit, at least from my perspective, but maybe companies… I know that there’s been some announced recently, certainly, some integrators that were acquired. So I think that’ll continue, but is it going to be such a huge shrinkage that most of these companies are going to go away? I doubt it. Yeah, I think there’s plenty of room for innovative companies today, and more and more have started.

Joe Giordano:

And we’ll see what happens over the next months here. I know that there’s been a period where it’s been tougher for private companies to get funding. Rounds that were easy to fund a year ago are much more challenging now, and even holding flat valuations is challenging. Yeah, it’s interesting because there is a lot of programs for these things. Like I said, we’re doing some work on agriculture now, and the USDA has a variety of different funding mechanisms for specifically for development of cool technology into this area, and then you talk to the companies in the space, and they say, “Yes, but it takes too long. The pace of innovation on the private side is well in excess of the government’s ability to fund it.” So there are these options there, but they can’t really tap them and still have to focus on the private markets, which until maybe now have been kind of tightening. Is there a mechanism that can loosen up government funding into this? Is this a role that organizations, trade organizations can help kind of grease wheels there and kind of make that easier?

Jeff Burnstein:

Maybe, but I mean, historically, the companies in the robotic space for sure haven’t really depended a lot on government funding, and I mean, the programs that came out of DARPA, and the NSF programs, and some of the other smaller issues or programs, they’ve been good, and I just feel like though that it’s not the fastest or often the best solution, and I think it’s oftentimes a lot of paperwork.

Joe Giordano:

Yes, yes.

Jeff Burnstein:

They used to be involved in a group that they said they wanted to get new companies. They were tired of having the same old people getting the grants and awards. Well, the reason the same old people got the grants and awards is because nobody could figure out how to fill out the paperwork.

Joe Giordano:

Yeah, that doesn’t shock me when you talk about government applications for things. So I know we’re getting close to the end of the time here, so just a couple more questions for you. Like we said in the beginning, you’ve been A3 almost 40 years, around 40 years now, so you’ve seen tons of success stories, and unfortunately, I’m sure several non-successful stories. Just looking, what would you say are some of the common characteristics of both sides of that?

Jeff Burnstein:

Yeah. Well, from the non-success stories, it’s usually when companies get fascinated by their own technology. They’ve created something that they think is fantastic, and it’s so cool, but it’s not clear that they understand what the market would be, or how they would even serve the market, or what the competitive technologies might be in that market. Those kinds of things usually don’t succeed. What usually succeeds is when the founders understand the market that they’re after. They talk to those customers, and then they build the technology that will be the solution that they think will meet the needs, and I think that sounds like it’s simple. That sounds like a really smart way to go, that everybody, of course, would do that, but that’s not the case. A lot of people start with the technology, and they get infatuated with it. So that’s what I’ve seen over the years.

Joe Giordano:

I mean, I could not agree with you more on the developing a tech and not understanding the competitive landscape. One of the things I mentioned specifically in the presentation that I gave, it’s kind of a pet peeve of mine. When I go talk to a company that has a cool technology that looks new, and I talk about, “So who are you competing against,” almost every time the answer is, “Oh, we don’t compete against anyone. We’re the only one in the world that does this.” And I’m like, “Ugh.” It’s the worst answer. Just have a sense of maybe there’s not someone doing exactly the same thing, but you are probably attacking an issue that someone on Earth has thought about one time in the past, so I agree with you completely. I think that’s a sense of where you stand in the grand scheme of things is something that a lot are missing, and the ones who have it I think stand out.

Jeff Burnstein:

Yeah, and sometimes even if you’re not competing with anyone, that’s a bad sign. That means that nobody else thinks it could be a successful approach to the problem, right?

Joe Giordano:

So just to wrap up here, as I think we’re all on the same page of trying to foster this next generation of automation and robotics, and from your standpoint, where do companies like TD Cowen fit into the equation, and when you choose who to partner with, what goes into those decisions?

Jeff Burnstein:

Well, I mean, I’m very impressed by the research that comes out of Cowen. We use it, and look at it, and gain more understanding about our own industry from it, and I’m sure the players in the industry do as well, and others looking at investing in the space too. I know my first exposure to Cowen was several years ago now when I moderated a panel that had Locus and IAM Robotics, and I think Fetch, and that was before this whole logistics space blew up, and it was really interesting, and I learned a lot from the people on that panel who all became very active in A3, but weren’t at that time. And so I think Cowen has been ahead on a lot of things too, and so I always appreciate the opportunity to work with you, and that’s the kind of thing we look for in any organization we partner with. We want to know that they understand the space, and that they’re connected, well-connected, and Cowen certainly is.

Joe Giordano:

Well, we appreciate that support and look forward to working with you again going forward. I know it’s a big focus for us internally and me specifically. So Jeff, we’ll leave it there, but thanks very much for taking the time, and it was great to talk to you.

Jeff Burnstein:

Great to talk to you.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

---