By Kenneth Rapoza, CPA Industry Analyst
Member feature: SK International is one of the unsung heroes of the modern American supply chain. We need more companies like this one in Michigan created by Kishen Kavikondala.
Kishen Kavikondala, born in the crowded Indian city of Hyderabad, now an American citizen for the past 30 years is CEO of SK International in Farmington Hills, Michigan. His company makes special purpose machines and end-of-arm tooling that robots need to get the job done.
“As an industry, it’s a bit Star Wars-esque, really,” said Kavikondala. If we look out into the not-so-distant future, his company – SK International – will be designing and building machine tools for robots that walk and communicate like an R2D2 beep as they go off to make your battery powered car. What’s interesting about this industry is that at least 80 percent of the end-of-arm tooling used in industrial robotics is actually made in the USA.
“We make tools that are used to hold parts or manipulate parts to perform various functions. They’re used with robots. Full-on, big, industrial robots,” he said.
He got into this business back in 2008, but then the rug got pulled out from under him in the Great Recession, and in 2015, SK International was made official. They moved out of the garage and finally got their record deals.
Covid made 2020 a challenging year, but with the US government’s focus on Buying American and other related initiatives, “2021 looks to be better and projections are upbeat for 2022 and beyond,” he said.
SK are the initials of Kishen and his wife, Sunita. Their business is both manufacturing and engineering, and engineering consulting. “It’s exciting to be partnering with my wife on this,” said Kavikondala, an engineering and MBA alumn from Purdue University.
SK International builds end-of-arm tooling for robots used to make cars and airplanes and no one needs to think too hard about what happened to those two sectors in 2020. Also, like everyone else, Kavikondala is looking to export to new markets beyond the US in order to diversify and grow his business.
“We are thinking more about working with Indian car companies now as they look towards EV,” he said. “If we can get in there as an automation integration solutions provider, that would be great.” Currently, SK International’s biggest non-US market is Mexico.
However, the domestic market is what matters most to them. They are building for automotive, white goods, defense contractors, and medical and pharma assembly line needs. For machine tool aficionados out there, that’s pick and place, packaging, conveyors and carrying systems, metal die and mold making for medical and surgical products, as well as other custom-made machines for automated assembly lines.
“We live in the world of automation. That’s our manufacturing core business,” he said.
Increasingly, automation technology is being made elsewhere while the US seems more interested in design and collecting fees on intellectual property. “There are not any US industrial robotic manufacturers that I know of and surely none that I make tools for,” he said.
As we automate and replace workers, it would be best for labor and social inclusion if at least the robots that replaced them were made here in the US.
“They’re definitely not. I’m pretty sure of it,” he said. “In fact, a lot of the big equipment makers that import China tooling, for example, get those tools repaired in local shops. These local shops are making a living for themselves just retooling the China tools. That’s become an industry in itself,” he said, half laughing at how ridiculous it sounds.
American robotics and tooling companies have been getting gobbled up by China for years. HTI Cybernetics from Michigan was bought by Chongqing Nanshang Investment for $50 million in 2017.
Paslin Company was bought by robotics firm Zhejiang Wanfeng Technology Development in 2016.
Valiant, a Canadian firm, is owned by a consortium of Chinese investors as of 2015.
Kuka, famously known as German, is now owned by China.
JR Automation…is still Japanese. ABB is still Swedish.
“The industrial robot is built outside of the US. So we are just doing the end of the arm tooling, something those companies still consider to be low value,” he said. “The Japanese multinationals are mainly making industrial robots in China anyway. What doesn’t China make? They make everything. They have set their goals on robotics and are starting to corner those markets and the tooling systems that the robots depend on.”
The new beautiful Ford Bronco’s entire assembly line is located in Michigan, but its assembly line might as well be powered by Chinese labor because it’s all Kuka robots.
Kavikondala said that SK International will survive the future and Asia (read: China) commodification of mostly everything it makes. But a lot of that will depend on whether Washington recognizes that American prosperity depends on “new technology and how self-reliant we are in manufacturing those technologies. If we are going to depend on foreign supply for most of what we do, and China in particular, then we will lose our place in the world. The reason people wanted to come to the US, myself included, is because of the innovation that happens here,” he said. “If we don’t continue to do that, and make it so companies can survive, then China overtakes us as they are doing now with robotics, artificial intelligence and machine learning. My thinking is that there is no chance for anything of common sense to happen under China’s world leadership. So hopefully, our side still leads into the future,” he said.