The Automation Gap

Robotic process automation (RPA) has struggled to expand into small and medium-sized enterprises (SMEs) in the west. This untapped market is now a battleground, with new competitors racing to seize the opportunity. An acute shortage of skilled labor, rising costs, and disruptions in global supply chains are squeezing manufacturing in the West, while offshoring is becoming less viable with rising geopolitical risks, shipping and overseas labor cost.

Caught in this squeeze, companies should be deploying more automation than ever and bring production back home. Yet, robot deployments in Europe have stagnated. The focus of automation remains on large factories with specialized staff and hefty capital investments, while SMEs are left behind. This has attracted new competitors promising more affordable, flexible, and intelligent automation solutions that can finally reach SMEs and support re-shoring efforts.

Slow Incumbents

The traditional automation industry is dominated by a few major players who have dug deep moats around their market positions. They rely on proprietary programming languages, development environments, and custom integrations. These lock-in mechanism includes expensive training, certifications, and add-on technology packages that are neither generalizable nor transferable. These strategies do not bother large corporations but fail to meet the needs of the smaller businesses that are the backbone of manufacturing in Central Europe.

New Players

Recently, the traditional automation industry has been targeted by a wave of startups and venture capitalists eager to disrupt the status quo. These new entrants aim to spread automation far beyond its current reach, offering more flexible, intelligent, and affordable solutions. Their innovations span hardware, software, and platforms, and they’re set to change how and where automation is deployed.

On the hardware front, the cost of robotic arms has been driven down steadily by companies targeting gaps left by traditional players. Universal Robots, for instance, challenged the market almost two decades ago with smaller, human-friendly collaborative robots, moving away from the bulky, dangerous robotic arms of the time. Now, they themselves face competition from companies like UFactory, which began as a Kickstarter project and now offers a 5kg payload cobot arm at €9,500and with competitive precision —a fraction of comparable KUKA, ABB, andUniversal Robots arms.

Another example is the Igus ReBel, a robotic arm made primarily from plastic components and produced in a highly automated facility in Cologne, Germany. It competes directly with cheap Chinese robots on low-cost automation projects worldwide.While these smaller robots aren’t about to replace the massive and hyper precise robots from the car and electronics industries, they show that SMEs can now access affordable, flexible automation.

The Software Race

The real challengers however are coming from software. Startups are scrambling to become the go-to, manufacturer-agnostic industrial robot programming platform, with large investments from venture capitalists and companies from Silicon Valley.

Take Intrinsic, a spin-off from Alphabet’s moonshot factory X, which is developing a unified platform for sensors and robots with plug-and-play AI solutions. Or Wandelbots from Dresden, backed by Microsoft, aiming to become the "Windows OS of robots." They’ve partnered with OpenAI and are deeply integrated with Nvidia’s Omniverse. Covariant is another player to watch, offering software that allows robots to pick and place any item without needing to be taught. Using reinforcement learning, Covariant’s software models combine visual inputs with robotic movements, taking automation out of today’s hyper-controlled environments to messy factory floors.

These new platforms rely on modern, open programming languages, making them a significant upgrade from the outdated, proprietary languages currently used by traditional OEMs.

Key Software Players

·      Covariant – $222 million raised

·      Wandelbots – $123 million raised

·      Intrinsic – Undisclosed funding, Google X spinout

A Market Poised for Change

The automation industry is on the brink of a major shakeup. While many of these new challengers are still pre-launch or in beta testing, the significant talent and capital behind them suggest that they’re here to stay. For the manufacturing sector, these developments could help overcome the complexity and specialization that have held back automation adoption for decades. The combination of low-cost hardware and robot-agnostic, AI-driven software will make automation accessible to a much broader range of processes, from simple pick-and-place tasks to complex multi-robot assemblies. This new wave of smart automation can let Europe’s manufacturing ecosystem thrive again, bringing production back home.

Conclusion: Time to Act

With these changes on the horizon, now is the time for SMEs to explore the potential productivity gains that these technologies can offer. Integrating such advancements into strategic planning will be crucial for staying competitive in the decade ahead. The global economy may be uncertain, but this coming disruption offers a unique opportunity to rethink and reinvent manufacturing in Europe. If automation was never viable for your business, now could be the moment for that to change.

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