Transcribed from AI, rev.com
Hi, I'm Casey Flanagan, associate editor with PMMI Media Group. I'm here with my colleague, Sean Riley, editor in chief of OEM Magazine. Welcome to a quick sneak peek overview of the results of our Packaging World Reader Survey on automation and robotics trends for 2026. Our editorial staff recently completed the production of Packaging World's 2026 Annual Outlook report. It's the second report of its kind, and it spans the packaging universe. The subjects we investigated included healthcare packaging, contract packaging, e-commerce, D2C packaging, sustainable packaging, digital transformation, workforce, and automation and robotics. This video homes in on automation and robotics issues as Sean led the way on our automation and robotics survey.
The full report is available at the SHORTY link you see on your screen: it's TW go.to/9052, and all the links to the full report should be available on whatever channel you're viewing this on, including our website, LinkedIn, YouTube, et cetera. Give that link a click to access the full report. And with the business end out of the way, Sean, let's jump into your research on automation and robotics. So welcome to this episode.
Sean Riley:
Sounds good. Let's do it.
Casey Flanagan:
Great. Alright. So the first question I have for you here is, you did the annual outlook report on automation and robotics in 2025 as well. So what was the main takeaway or running theme in this year's report, and how does it compare to last year?
Sean Riley:
I did, and it's funny, when I did the written part of this for Packaging World, I was talking to our colleague Matt Reynolds, and I told him I actually could have just said “ditto” and submitted that as the report because so many of the issues are the same as last year. Now there's a caveat to that where they've all increased to varying degrees, but just consistently across the board, it's the same issues. For instance, just off the top of my head, adoption for automation and robotics rose from 65 to about 70%. I'm going to use that number just because that kind of serves as a theme that's sort of running throughout the report, which is that, and I sort of stole this from one of the CPGs that I interviewed, but it's kind of this “cautious but decisive” approach, where usage is increasing a little bit.
Everything in the report has minor but steady growth. So getting back on track a little bit, like I said, the growth really isn't explosive. It's kind of deliberate. The companies are investing in automation and robotics, but they're sort of scrutinizing every dollar. These are all things that we saw last year, but the biggest thing that we saw last year was that adoption is still happening, and it's happening at a pretty sustained rate, and it's happening for the same reasons, but there's not a huge spike, and I think there's not a huge spike for two main reasons. The past year was a tough one for planned capital expenditures. Say that three times fast. For my day job with OEM, I had to learn way too much about tariffs. It was not something I ever thought I would have to learn about, but I've covered them pretty extensively this year.
The biggest thing that seemed to come out of it was that it put a huge strain on capital spending, given that companies weren't sure what was happening with the economy or what would happen. So they kept waiting and seeing and waiting and seeing and waiting and seeing, and then the next thing they knew, 2025 was over, and you're into 2026. So they kept putting things off, and the big reason was they weren't sure what they were going to pay with tariffs. That kind of limited some of the automation and kept it at sustained growth rather than explosive growth. The second reason why it was kind of a slower, more sustained growth versus a huge growth was that a lot of the larger companies are much further down the automation path than the small to medium-sized companies. So if you're a larger CPG, you've already done a lot of this automation, and you're just adding incrementally, versus large-scale, big investments. And we'll probably touch on this later when we talk about where automation is happening on the line, but for now, they're kind of the two main reasons why it's incremental growth versus a huge spike.
Casey Flanagan:
Okay, great. So that's interesting. So adoption is increasing just like last year, and those are some interesting macro level of reasons, factors that might be going into why that might be happening. So, looking at what some of the major facility-level reasons for that increase are, according to your research, was there any one factor that really contributed to the increase that might be happening at the plant level?
Sean Riley:
The biggest thing is labor, and this goes back to last year as well. Actually, I'm wondering if this is why they paired us together for these interviews, because you did some wonderful research for our workforce survey. I can't say labor enough for the influence it's having on automation. Just like last year, labor's the main driver. It's also one of the hurdles, but we can talk about that later. But anyway, the lack of labor, the cost of labor when there is labor available, and the skill level of the labor not being high enough to maintain and operate the machinery that's out there. The cost of labor is also something that they're now taking to the C-suite and finding the cost of labor to be so much of a detriment that they're able to justify using automation and robotics quicker because the return on investment for robotics and automation is so much faster than it is to find and maintain labor.
And that just goes against the whole idea that automation is so expensive and for years it was coming to replace labor. It’s just not the case. What they're proving, or at least what this research is proving is that they're finding the return on investment on labor and automation to actually be less cost prohibitive than it is to hire and then have to rehire and then maintain labor. So that's kind of a little bit of a tweak from 25 to 26. Labor is the issue, but in this year's survey, the adoptees are now quantifying ROI more aggressively to kind of get that internal buy-in from the C-suite by showing, “Hey, it's cheaper than labor in the long run for us to utilize this automation.”
Casey Flanagan:
That's really interesting. I think that makes a lot of sense. It does also come to labor is one thing, but then having chronically unfilled positions is its own challenge that's expensive and disruptive. So kind of showing that to the C-suite and saying, “Hey, here's this automated solution, might be helpful.”
Sean Riley:
And having to raise the salaries to more than you would typically pay an operator on the plant floor to attract talent. That's why we were so confused about why these jobs aren't filled, because it can be a great career-filling position. But I'm getting off track; back to your question. Sorry.
Casey Flanagan:
No worries. That is really interesting. So my next question here is, I took a look at your write-up from this report beforehand, and if I'm not mistaken, wasn't ROI the number one hurdle to automation and robotics? So it seems contradictory to say that ROI is both the top driver and the top hurdle. So how's that happening? How can it be both?
Sean Riley:
It's wild. Again, when I look at the research, I feel the same way. I talked about this last year when we did this report, and I was surprised, and I think I remain surprised. I think we get this belief that automation, or not even a belief, but more of a way of thinking among the industry, is becoming more affordable and accessible to everyone. It's becoming more cost-effective. The prices are going down is a simpler way of putting it. And you hear that, and you think, okay, well then more people should be automating because it's not as cost-prohibitive as it used to be. But the cost of automation and the weak return on investment was the number one hurdle with a bullet. It wasn't even close. 73% of people who aren't adopting automation this year said this is the number one reason.
The number one reason is weak return on investment. And that's up almost a quarter, 23% from last year. And I think a lot of that has to do with the fact that respondents have a diverse makeup. There's this belief that a lot of our readers for Packaging World are all the big CPGs, the huge beverage companies, the huge food companies, but a lot of the readers are in the small to midsize range, where they perceive automation to be cost-prohibitive. So maybe it's not the case, but that's still the way they see it from their balance sheets. Where are we going to get this money upfront to pay for all this? But I also think, as I mentioned earlier, I think the economic uncertainty remains at play when people aren't sure about the economy. Projects go on hold and long-term spending goes on hold. They don't want to make that big investment until they kind of nail down the uncertainty of trade. So it is, it's a hurdle. But like you said, how is it both? And I find with this research, with this study that there's sort of a paradox with all of the hurdles where a lot of the reasons for are also the reasons against
Casey Flanagan:
Interesting. And that is a strange dynamic that we're seeing happening there
Casey Flanagan:
And so I was going to ask about other hurdles. So you're saying that they're similar to the motivations for increasing automation as well, that same kind of thing is happening?
Sean Riley:
Yeah. I mean, to some degree, yes. I mean, the lack of floor space is the number two hurdle behind return on investment. And I mean that makes sense. If you don't have room in your plant to add automation, you don't have room in your plant. That's going to be prohibitive to building a whole new facility if you're a small to medium size operation. But all the other significant hurdles, lack of skilled technicians, and the complexity of the programming all point back to labor. They all point back to workforce issues. So the automation and robotics aspect of this is so tied to the workforce and just again, for years, we always heard, “the robots are coming, they're going to replace people and they're going to take away your jobs.” And it's so a case of there's not a workforce to run this automation, and that's really what the issue is. So the workforce is the number one reason companies are automating, but in turn, it's some of the main reasons why they can't, or I should say they aren't automating or can't automate because of the workforce.
Casey Flanagan:
Right. Absolutely. And I think you're right. When you said earlier why we're paired up together, there's so much crossover happening between workforce and automation. So you mentioned winning buy-in from the C-suite earlier. So I have to think that would be a hurdle of sorts when it comes to obtaining automation or at least one of the obstacles towards it. So is that the case? Is that what seems to be happening?
Sean Riley:
Yeah, 100%. But it's just getting better. It's improving. I kind of went too far in depth in describing earlier where I think the C-suite is starting to see the numbers and recognizing that the long-term benefits of automation outweigh the initial costs. And this, again, I hate to keep saying it, but there's no other way to do it. That's where the labor comes in, hiring, retaining, and raising salaries to get people to come. They're finding that to be even more expensive than it is to make that initial investment and get that relatively quick ROI on automation and robotics.
Obviously, at least to me, it's obvious, plant operations, engineering, they're going to be all for it. It's going to increase throughput and speed. For the 20 years I've been doing this, that's always been the number one thing. “We want to make things faster. We want to get things out quicker. We want to produce more.” So the operators, the engineers, the people on the operations floor, they're always going to be for automation. It's helping their case, but the C-suite is coming around as long as they're provided a kind of rock-solid case for how automation can help. They and procurement are slowly starting to buy into how that investment upfront is worth it.
Casey Flanagan:
Right. Okay. That makes a lot of sense. So I think we were pretty established on the forces for and against automation, but how about the actual automation itself? So when companies do adopt automation, where is it going on the packaging line?
Sean Riley:
Just like last year, robotics deployment is skewing heavily towards the end of the line. 61% is end of line, and 59% say they're adding that in secondary packaging, which is coming right before end of line. Those are both up from about 40 and 33%, respectively. So it's up pretty significantly that people are investing in end of line and secondary packaging. That's kind of the pattern. It's kind of unmistakable. They're automating labor-intensive, ergonomically challenging, high ROI tasks first. It's eliminating the four Ds that we always talk about of industry, especially when we talk about robotics, the dirty jobs, the dangerous jobs, the difficult jobs, the dull, even now they call them demeaning jobs. But the other reason is it's also much easier, and I use easier in quotes to add end-of-line and secondary packaging; it's not as disruptive to your line to integrate mature cobot stacks or vision and safety aspects.
All those things at the end of the line are pretty easy to do versus primary packaging where you're kind of shutting down the whole line and sort of injecting it into the middle. And a case could also be made that, as I kind of talked about earlier, there are sort of two groups. There's the larger CPGs and then there's the small to midsize and the larger CPGs. A lot of the larger CPGs have already handled primary packaging when it comes to automation. That's the first area for those, the big spenders to automate. That may have happened in years past. So whether you're a larger company or a smaller to mid-size, CPG, end of the line and secondary packaging are the areas that are being fulfilled with automation the most right now.
Casey Flanagan:
Okay. That's interesting. A couple different factors leading to that end of line secondary packaging. So that's great. So thanks for giving us this overview, Sean. This was a really helpful conversation to hear. I thought this was great. So if you'd like to learn more, be sure to check out the full Packaging World 2026 annual outlook report at packworld.com. Thanks everyone for listening.
