Zurich-Based ABB to Build Shanghai Robotics Plant

While China continues to gobble up robotics firms overseas, a Swedish-Swiss power and automation giant has bucked the trend, deciding to spend $150 million to set up a facility in Shanghai to produce robots for the local market.

In a statement Saturday, ABB Ltd. said the plant will be its single largest robotics facility in the world, and that production is slated to start by the end of 2020.

The Zurich-based group was ranked 341st in the Fortune Global 500, a list of the world’s largest companies by revenue, on which it has placed for 24 years.

The company’s statement didn’t specify the plant’s production capacity and what kind of robots it will produce. But Bloomberg News cited an interview with CEO Ulrich Spiesshofer in Shanghai on Saturday in which he said the company aims to annually churn out 100,000 robots — from small payload robots to large ones that can lift a car — or about one quarter of its global demand last year.

China has been on a robotics-buying binge in recent years as it looks to take the lead in the field as part of the government’s “Made in China 2025” initiative, its grand plan to upgrade the economy to produce more-advanced technologies. It bought about 137,900 industrial robots in 2017, about as many as the combined purchases from the next four largest buying countries — Japan, South Korea, the U.S. and Germany — according to data from the International Federation of Robotics.

Jiangsu Hagong Intelligent Robot Co. Ltd. last week announced that its board had given it the go-ahead to acquire Germany’s Nimak GmBH and relevant units for $100 million. In 2016, appliance-maker Midea Group Co. Ltd. spent over $5 billion to acquire Kuka AG, Germany’s biggest robotics company.

China’s push into automation is being driven by the need to boost productivity as its population ages, costs rise and economic growth stalls, according to Nathan Chow, a Hong-Kong-based senior economist with DBS Bank.

“An aging population and domination by state enterprises are a recipe for weak productivity growth. … Against this backdrop, automation is key to reviving productivity,” he wrote in a report in April.

ABB said the new Shanghai factory will complement its two other sites, one of which is on its home turf in Västerås, Sweden, and the other in the Detroit, Michigan, suburb of Auburn Hills. The Michigan plant makes ABB the only global robot supplier with a U.S. manufacturing footprint.

The Swedish conglomerate is looking to China, which bought one of every three robots produced worldwide last year, to offset slower demand growth from the Middle East and the U.K. Operations in China have now become its second-largest market, with annual sales at $6 billion, according to Bloomberg News.

Contact reporter Jason Tan (jasontan@caixin.com)