John Amrhein and his team at Orka Automation LLC are seeing newfound levels of demand from current and potential clients looking to leverage technology to fill gaps left behind by labor shortages.
His Wyoming-based, full-service automation shop is not alone, either.
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Automation started to boom in the early and more restrictive stages of the COVID-19 pandemic. While the symptoms of the pandemic continue to linger — primarily in the form of weak supply chains and a dearth of available workers — the surge hasn’t slowed down.
“Our quoting volume has been through the roof and that’s what we’ve been hearing from a lot of our suppliers and a lot of our partners,” said Amrhein, who is executive vice president and partner at Orka Automation. “There is a tremendous desire right now to look to automate different elements of production.”
To quantify this surge in demand, Amrhein said if Orka were to win all of the business currently in its sales funnel, it would have enough work to cover two to three years at its current capacity.
While no automation company wins all of the business they’re vying for, even winning around 25 to 30 percent would keep the company busy for the next year.
Amrhein and his team have been fielding inquiries from two general types of clients: Those that have been actively investing in automation, and what he called “emerging automators,” which include companies that have been spurred on by the pains of COVID-19 to dip a toe in the automation water.
The companies that have already embraced automation are generally continuing to accelerate their efforts through the pandemic while those sitting on the fence are on the verge of being blocked out by the backlog.
“The segment where it’s just going gangbusters is the segment that has already committed to automation, has strategic priority, and has been funding it,” Amrhein said. “The other people that are going, ‘We’re interested but we’re not 100 percent sure,’ they’re having trouble finding people that will even quote their business.”
As interim regional director for the Michigan Manufacturing Technology Center-West, Terry Hossink routinely works with a wide range of small and mid-size manufacturers around West Michigan to find ways to grow and improve their businesses. Adopting advanced technology and automation is generally at the center of those efforts.
He has also sensed this growing backlog for automation services.
“The easiest way to put it is that I’ve never seen lead times as long as they are right now,” Hossink said.
The longer lead times for automators have been caused by both workforce shortages and the same supply chain issues that have challenged other companies.
“Automation takes chips just like everything else in our world today,” Hossink said. “A combination of that and (labor shortages) has created a very big bottleneck.”
The longer lead times are reaching a point where they could potentially compromise any tight deadlines that might be in play. However, Hossink said that the time could also be used wisely by companies waiting to implement automation within their operations.
“It gives you more time to plan what you’re going to do with your automation because you never jump into automation,” Hossink said. “You should have a larger plan for your facility that is not necessarily just a product line.”
Shared problems
The ability to source needed materials has been the primary challenge for Holland-based Paramount Tool Co. Inc., according to Joe Carlisle, the company’s director of sales.
Just like the companies they serve, automation shops need to remain collaborative with their clients and proactive in securing the needed materials, Carlisle said.
“We know there are certainly components we need to use even though every automation project is quite different — standard is a misnomer,” he said. “We try to buy those resources as much as possible so we can mitigate some of that risk. At the end of the day, we’re all kind of in that same boat.”
According to Carlisle, Paramount Tool hasn’t run into capacity issues because the shop is selective when taking on clients. Also, when assessing the laundry list of pain points its clients are facing, the company focuses on maximizing throughput and getting wins as quickly as possible.
“It would be great to automate everything … but we have to be selective and realistic,” Carlisle said.
Expansion underway
Holland-based Mission Design & Automation LLC has maintained a robust pipeline of clients, talent and resources, according to Ryan Lillibridge, the company’s director of business development.
Over the summer, Mission added a 50,000-square-foot facility to its operation as part of a $5 million expansion in Holland Township. The growth is expected to add 109 new jobs.
Expansion projects among automation companies have been prevalent, highlighting their need for additional capacity to handle the growing needs of both existing and new clients.
Holland-based Koops Automation Systems and St. Joseph-based Edgewater Automation LLC have both completed expansion projects within the last year. Also, Amrhein said that Orka is in the process of doubling the size of its space in Wyoming. JRR Automation Technologies LLC, headquartered in Holland Township, recently opened a 147,000-squarefoot facility in the city of Holland.
Lillibridge said companies are facing a variety of hurdles that are hindering the adoption of automation, and it’s not all centered on supply chain issues and talent shortages.
“There are a couple crunches taking place — some of them don’t have the labor but the cash flow is different than it used to be,” Lillibridge said. “(A company’s) justification for automation is harder. … If you can’t run lines and produce product, you can’t sell product and produce cash flow. It’s kind of a chicken and the egg thing.”
Nevertheless, as the workforce shortage begins to look more like a permanent workforce shrinkage, the automation industry should continue to boom.
“(Automation) is not going to be a luxury anymore,” Hossink said. “We’ve recognized that the workforce is shrinking. … It’s just going to get smaller, so we need to find better and smarter ways to do things.”
