Rick Lazio and Myron Moser on closing America’s small-manufacturer automation gap

The robotics gap

China dominates global robotics deployment through sheer scale. It installed 295,000 industrial robots in 2024, and accounted for 54 percent of global deployments, according to the latest figures from the International Federation of Robotics. China’s national robotics strategy has made automation central to its industrial future, giving its manufacturers a coordinated push the US has yet to match.

Leadership in robotics will require more than developing the best artificial intelligence. The advantage will belong to countries that manufacture the machines, supply their components and deploy them at scale.

China’s investment stands in sharp contrast to adoption among smaller US manufacturers. Small job shops, fabricators and component manufacturers face tighter investment constraints and often lack the in-house expertise needed to automate at the same pace.

The Advanced Robotics for Manufacturing Institute estimates that just eight percent of small manufacturers use robots today.

Why robotics is becoming necessary

America’s AI, energy and defense ambitions rely on smaller manufacturers to supply specialized components and equipment. Large project owners can turn to overseas suppliers, but doing so reduces control over delivery schedules and introduces supply-chain risk. Meanwhile, domestic capacity is already strained. Long lead times for transformers, switchgear and other critical electrical equipment are delaying projects and raising costs. US manufacturers must increase production before those bottlenecks become even more severe.

The workforce challenge adds urgency. US manufacturers may need to fill roughly 3.8 million jobs over the next decade, with many positions at risk of going unfilled, according to the Manufacturing Institute. Robotics can help by taking on repetitive or ‘dull, dirty, dangerous’ work while employees move into more technical roles.

The good news is that automation has become more approachable. Manufacturers don’t need to automate an entire plant at once. They can start with one bottleneck that is slowing production, straining workers or limiting growth.

One automation cell changes the math

Successful automation begins with choosing the right problem and examining the workflow around it. Rimeco Products, a family-owned machine shop outside Cleveland, Ohio, wanted to increase capacity but lacked the internal resources to manage an automation project alone. Company president John Ribic put the urgency plainly: “Automation is something we know we need to be doing in order to remain competitive in today’s manufacturing world.”

After evaluating several applications, Rimeco selected a repetitive machine-tending process. The resulting system loaded and unloaded parts automatically, reducing manual work and allowing employees to focus elsewhere on the production floor. Rimeco later purchased two additional robots for other machines.

We saw the importance of workflow redesign with another manufacturer whose employees moved heavy parts across several machines. Before installing a robot, the company eliminated an unnecessary production step. The change made the planned automation cell faster and more reliable while freeing employees from repetitive lifting.

The technical work behind projects like these may also be relevant when evaluating eligibility for the Research and Development (R&D) tax credit.

Where tax incentives fit

Manufacturers often evaluate automation based only on equipment cost, labor savings and expected output. That misses a major line item: tax strategy. Bonus depreciation, Section 174A treatment and federal and state R&D tax credits can lower ownership costs and make the return on automation easier to justify. Depending on the project, available incentives and the manufacturer’s tax position, these benefits can reduce the after-tax cost of a robotics installation by 30 percent to 40 percent.

Yet many manufacturers still assume R&D tax credits apply only to laboratories and science facilities. In manufacturing, research often occurs on the production floor. Automation-related work may qualify when it involves technical uncertainty and experimentation, including process redesign, custom fixtures, programming and integration with existing equipment.

Purchasing equipment does not itself generate qualified research expenses. However, eligible engineering, testing and process-development work surrounding implementation may qualify.

Automation also changes the workforce equation. The idea that robotics will simply erase manufacturing jobs misses the larger threat. New technology changes how people work and creates demand for different skills. Modern factories already need workers who can operate, program and maintain sophisticated equipment.

The greater employment threat is failing to modernize. A manufacturer that cannot match the productivity, pricing or delivery times of overseas competitors will eventually lose business. When contracts move abroad, the jobs supporting them often follow. Automation can preserve domestic production and the jobs that depend on it.

America’s ability to lead in AI, power infrastructure and defense production will depend on whether its smaller manufacturers can adapt. The tools to lower costs and improve investment returns already exist, but too few companies understand how to use them. Manufacturers need a clearer path from evaluating automation to putting it to work. Those that act now can strengthen their operations, create better jobs, and compete for the next generation of American industrial investment.