The Business Opportunity in Refurbished Robotics
RobotWorx CEO, Keith Wannter, sits down with Robotics Trends contributing editor John Desmond to discuss the growing used robotics market including business advantages of purchasing refurbished machines, opportunities in the used robotics market, as well as industry trends in general.
Founded in 1992, RobotWorx is an industrial integrator of new and used robots. The company buys, sells, trades, integrates, and refurbishes robot systems. The company also offers robots, turnkey systems and parts from leading manufacturers, including Motoman, Fanuc, Panasonic and Nachi.
RobotWorx offers a variety of robot services. The company purchases used robots, reconditions them and offers them for sale a system or for parts. Each new or reconditioned robot systems comes with a warranty, training period and satisfaction guarantee. RobotWorx also offers training, including allow customer technicians to program and system and run part cycles. The company offers service for the life of the robot.
Before founding RobotWorx in 1992, RobotWorx President Keith Wanner worked at four different industrial robotics companies: GE Robotics, Advanced Robotics, Cybotec/Ramsberg, and Cybo Systems. RobotWorx was a robotics consulting company for the first five years before becoming an industrial robot integrator. Keith recently took some time to speak with John Desmond (), Robotics Trends contributing editor.
John Desmond (JD): What is the story of RoboWorx? How did the company come about?
Keith Wanner (KW): We started over 15 years ago. At first we were selling new robotics systems, and the new ones you could sell 15 years ago were all customized systems. They were not pre-engineered systems. So integrators could make money selling new robots. Then as robot manufacturers like Motoman and Fanuc became more sophisticated and larger, they began selling direct. That made it harder for integrators to survive by selling new systems. The margins were too low and we were competing with the manufacturer’s sales force.
Beginning five years ago, we determined that there was a market for used robots. Prior to that, say 10 years ago, you would not have wanted a used robot. But robots have become more refined and more standard. Today a used robot that is three years old is almost as good as a brand new robot. Also, there are advantages to selling used robots. For example, ff we sold used robots we had better control over margins better and we would not be competing with manufacturers.
(JD): Do customers save a lot of money buying used robots?
(KW): Yes. But some large customers want a used robot mainly because they have robots of the same vintage and they want to increase capacity. Honda for example, might have a line of robots that are eight years old and they want to add another robot. They are looking for the same robot because it’s easier to integrate and maintain. They don’t want a new robot. So that’s one market.
Then there are customers that have robots that are 10 years old and they are looking for parts. So sometimes, they buy a used robot just for parts.
Then there are customers looking to get into their first system and they want a lower cost robot. Usually, a used robot system is about half the price of a new system. And sometimes the delivery is quicker too… we might be able to ship a robot on the floor in one day. It sometimes takes weeks to get a new robot. So sometimes just delivery drives the decision.
(JD): How large is the used robot market in terms of revenue?
(KW): It is difficult to say, although it just continues to grow. Five years ago the market did not exist. I would say that 90% of the opportunity out there has not been tapped yet. Robot users today are the automotive companies and large companies that realize the advantage of automation. Small manufacturing companies are just starting to get into it. So there is a large untapped market out there.
(JD): How do people find out about RobotWorx?
(KW): The good old Internet. You cannot go to Wal-Mart or look in the Yellow Page for a robot. So everyone just searches on the Internet, and robots are a very good product for the Internet.
(JD): How is your relationship with the robot manufacturers?
(KW): Good. At first, they would rather have had us sell new robots. Now I think they realize we are a help to them. Many times they have a customer of that has a robot that might be five years old, and they do not want to carry the parts anymore. So they call us. Initially, they saw us as competition. Now they realize they have a company with a supply and inventory of older machines. When their customers go down, we can work with them to quickly get them back up and running. For example, it might take six weeks to get a part from Japan. Often, we can ship it in one day.
We have a working relationship with the manufacturers and we still compete with each other. We serve a segment in the industry the manufacturers really do not go after. For example, most robot manufacturers go after the large customers, those that might want to buy 50 robots in the next year. We go after a customer that might want to buy one robot in their whole life.
(JD): Can you provide an example of a company that bought a robot for the first time?
(KW): Quite a few of them are military-related. With the war in Iraq, companies might be contracted to build armor for the Hummer, for instance. It might be a good machine shop, and they might have an opportunity to build 1,000 armor protectors for the Hummer over the next year, but they have to do some welding and they are not expert at that. So they look at buying a robot system, but they don’t want to put a whole lot of money into it for that one contract. There are many customers that are in a similar situation. They want to get capital equipment inside their building to get these kinds of contracts, but for a minimal commitment.
In the automotive industry, there are many second and third tier suppliers. They might get an opportunity to help deliver a new line of car, and they might have a couple of robots now, but they want to increase capacity without buying a brand new system. They might lose that order two years from now.
There are also sophisticated customers. We have quite a number of them. They have enough robots and enough internal expertise to purchase a robot, even if it is five years old, and integrate it. They know what it is going to do. Industrial robots are mainly a manipulator that can move a welding gun around, for instance. So sometimes you can put new welding equipment on an older robot, and you basically have the same thing as a new system.
(JD): Geographically, where are your customers concentrated?
(KW): We are located in central Ohio and most of our business is within the auto industry. We focus on a 200 mile- radius around us, for the sake of support. But we do sell into Canada, Mexico, California, New Hampshire, all over the place.
(JD): Are you seeing interest from outside the U.S.?
(KW): We get leads from Colombia, Brazil, elsewhere in South America, and it might be because GM has decided to move a plant to one of those countries. They may take a whole robotic line that is five years old and move it to another country. And two years after they get it, the might require parts, and they cannot get parts from the manufacturers. So they call us.
We have not really pursued global marketing. But we had a customer in South Africa that wanted another robot just like the five they had. They were very persistent. They wire transferred the money, a tuck was here the next day to pick it up, and I have not heard from them since. I expect the global market to pick up.
(JD): Who is your competition?
(KW): Many companies sell used robots, but we sell a complete systems and we can customize those systems. We recondition the robots and apply the same warranty on it as a new robot has. That is rare in this industry.
(JD): You have some effective domain names, especially http://www.robots.com. How did you acquire your domain names?
(KW): About 10 years ago I thought about domain names. Then about eight years ago I was watching my boy search on the Internet, and I saw the keywords were important. So I just worked at acquiring solid keywords and a good domain name. A robot company that had robots.com went out of business and some guy in Germany bought it an auction and was sitting on it. I purchased the domain name and I think I paid for it than I did for my house. But it was worth it… it has paid for paid for itself over and over. We also have http://www.usedrobots.com and http://www.robotsforwelding.com.
(JD): Can you comment on any of your plans for the future?
(KW): Eventually I would like to sell new robots again, but we need to have some exclusivity. I could see us taking on a line and trying to promote it. But we do have a good niche right here in used robots.
(JD): What kind of expertise do you have on your own staff?
(KW): We have 35 people, and half a dozen are electrical robot engineers, who can integrate robotic peripherals. We need quite a few people with electrical and PLC (programmable logic controller) background. And we have four welding engineers from Ohio State that know the welding side of it.
(JD): Is the company privately held?
(KW): Yes, I have the whole thing. I started it out of my bedroom, then we started selling robots. The thing that has helped us more than anything is the Internet. Before that, trying to find someone with a robot for sale or someone trying to buy a robot, was very difficult. We paid a lot of money to display at conventions, to advertise and send out mailers, and hardly ever got results.
(JD): Is there anything you would like to add?
(KW): I would like to comment on robot buyers. Five or 10 years ago when someone wanted to buy a robot, they would go to a convention so they could see them. Now it is more like buying a machine tool. You just go out and buy one. We have found that only five percent of our customers come out to see us. They know what they want and they buy it. That is a major change from five years ago.
