North American robotics companies received 38% fewer orders in the first half of 2006 than in the first half of 2005. The materials handling segment of that market was down even more, with orders dropping 44%, according to statistics released by the Robotic Industries Association (RIA).

Most of this year's losses—in materials handling and in overall robot sales—were the result of a drastic drop in orders from the automotive industry, where orders were down 52%. The drop in orders for packaging and palletizing robots was less severe, about 12%.

Robotics is a cyclical market, says RIA spokesman Jeff Burnstein, so these drops are not causing alarm in the industry. Robot sales and shipments reached all time highs in 2005, breaking records set in 1999, according to RIA statistics.

RIA executive vice president Donald Vincent says the decline in robot orders may continue as the auto industry digests large purchases made in recent years. "In addition, continued economic difficulties in the automotive industry are likely to slow their investment in new technologies, not just robotics," he says.

Robot sales actually grew in some segments of the market. Orders for assembly robots and material removal robots were each up 33%.

RIA estimates 162,000 robots are now installed in U.S. factories, placing the United States second only to Japan in robot use. Materials handling, says Burnstein, is emerging as the largest application area for robots.