“Manufacturers and businesses of all types must always be ready to pivot, whether it means dealing with tariffs and geopolitical strife, labor shortage, supply chain issues, or other disruptions, everyone must be ready to pivot. Indeed, it’s a dance.”

When tariffs were first announced, many businesses, including systems integration company Creative Automation, already had containers full of parts and equipment on the water making their way to headquarters. While this presents significant challenges, businesses must react in stride while preparing themselves for a constantly evolving world landscape. In this episode of the Manufacturing Matters podcast, Gerd Walter, President and CEO of Creative Automation joined TECH B2B Marketing’s Jimmy Carroll and Aaron Hand at Automate 2025 to discuss a range of topics, including the immediate and long-term impact of tariffs. Additional topics include the latest in systems integration, ranging from machine tending and part handling to marking systems and machine vision, a new engineering services division, cybersecurity, and more.

Jimmy Carroll: [00:08:34] Hi everybody. My name is Jimmy Carroll. I’m the vice president of operations at Tech B2B Marketing. And welcome to this episode of the Manufacturing Matters podcast. I have the pleasure of being joined by my colleague Aaron Hand and Gerd Walter, who is the president and COO of Creative Automation. Thank you so much for taking the time. I really appreciate it.

 

Gerd Walter: [00:08:50] Thanks, Jimmy. I appreciate being here.

 

Jimmy Carroll: [00:08:53] Yeah. So for those who don’t know, tell us a little bit about Creative Automation and what you guys do.

 

Gerd Walter: [00:08:57] So Creative Automation — we’re a Michigan-based systems integrator. We’ve been around 31 years. Was founded by my father, Bernie Walter. I’ve been with it 30 years. So we originally started out doing gantries, and then we got into conveyor systems and then into articulated robots, your standard industrials, primarily FANUC ASI, and then we’ve also added machine vision, laser marking, and some additional systems. We do assembly systems, machine tending, material transfer, some palletizing and depalletizing. Like I said, vision systems, marking systems, and whatever else the customer wants to come up to us with. Oh, and dispense and deburr are big ones as well.

 

Jimmy Carroll: [00:09:48] So we’re here at Automate, day three. It’s just the morning, but thus far, what have been your impressions? What are you excited about? Any particular applications people are asking about a lot or anything notable in general?

 

Gerd Walter: [00:09:59] Well, some very good traffic. We’ve had a lot of people with some interesting applications. Some of it is our standard customers. Like we do a lot with the automotive, and they’re talking to us. But then we also got a lot of smaller shops, factories, also asking us about stuff. And then from other industries. So it’s actually a very good smattering of different business segments.

 

Jimmy Carroll: [00:10:25] Great.

 

Aaron Hand: [00:10:26] So as a system integrator, you have such a view on so many goings-on in the industry. Can you talk a bit about some of the key trends you’re seeing?

 

Gerd Walter: [00:10:36] So, unfortunately I haven’t seen all the new technology yet because I’ve been busy in the booth, which is also good.

 

Jimmy Carroll: [00:10:42] That’s a good thing.

 

Gerd Walter: [00:10:43] But overall, I do see major trends. AMRs are still a big trend. I’m excited to see a little bit more about the humanoids. I talked to several people about that. AI is also a big thing. So there are a number of good trends going on. Cybersecurity is a big trend. Continue handling all the data coming off the automation is another big trend. So we’ve been keeping an eye on that. And I’m excited to do that because we interface with a lot of factory information systems and are uploading the data. And every sensor, everything, the systems are just throwing off more and more data. Some gets processed right there on the factory floor for immediate usage. Other gets fed back to the cloud for analysis, like overall product quality and stuff like that, depending on what the customer’s needs are.

 

Aaron Hand: [00:11:46] Right. Of course, all that data goes hand in hand with the cybersecurity issues too. Are you being asked by your customers to get more deeply involved in the cybersecurity aspects?

 

Gerd Walter: [00:11:58] It’s coming. It’s something that’s going to have to be addressed. There’s a new requirement out of the EU that people have to have cybersecurity on the controls. Or I should say that the EU mandates that all control devices that can connect to the internet have some sort of cybersecurity. So you see, for example, the FANUC, the new R-50 controls, have built in cybersecurity. So there is a base layer. So there is going to be a lot more talk between IT and OT. But that’s going to be a good long journey.

 

Jimmy Carroll: [00:12:46] Fair enough. Gerd, a few weeks back, you had the graciousness to join us for a tariff discussion. And I say “graciousness” because it’s a sensitive topic, and a lot of folks really weren’t willing to go on the record. But you gave some really great insights, and I thought it would be good to ask a couple of those questions again here. What’s been the impact of the tariff discussions thus far for you, and where do you think that’s headed?

 

Gerd Walter: [00:13:09] Well obviously I’m starting to see the tariffs on products coming in. I just had a couple of containers coming in from Europe. And I just got the bills. And this stuff left before the tariffs got announced, and now it’s 10% higher. So that’s no fun. Plus, you’re starting to see some surcharges or price increases from various vendors and manufacturers. Others are trying to eat it. But there’s also a lot of hope that, from various people, that some work will be coming back to the US, as people try to source stuff back in the US and avoid the tariffs. Now the overall discussions, I don’t know, but I see a base, at least for the next few years, a base 10% tariff.

 

Jimmy Carroll: [00:14:06] We mentioned COVID earlier, and now tariffs, and there’s been a number of disruptions over the years, whether it’s supply chain issues or labor woes and so on. What are some ways that manufacturers can protect themselves against these disruptions now and in the future?

 

Gerd Walter: [00:14:26] To protect against the disruptions, the main thing is flexibility, both operationally and on the back end, which I mean financially. You got to make sure you stay financially sound so you can ride. And like I said, stay flexible, stay nimble. My wife was talking with some of her friends, and there was a comment that sometimes you just got to pivot. And of course, one of the friends retorted, “Well, we’ve been pivoting a lot lately.”

 

Jimmy Carroll: [00:15:05] I’m sick of the pivoting.

 

Gerd Walter: [00:15:06] Yep. But that’s life. We got to pivot when we need to. Sometimes you just keep pivoting, sometimes you pivot back, but you just got to be prepared for that. But that also speaks to the bigger issue, for the tariffs and for a lot of manufacturers, has been the sheer uncertainty. Businesses like certainty. Obviously, if you’re planning a big factory, even a small factory, it can take two to three years to come online. To do a fairly significant manufacturing line, even for an automotive supplier, you plan it out. You source it. It takes two, two and a half years before it’s up and running. Job shops – you can do it fairly quick. Six months. A big auto factory — you’re talking a five-year investment plan. And of course, one way or the other, you’ve got a four-year presidential term and congressional cycles that are even shorter. So is policy going to stay stable the next few years? And then, of course, it’s also what the policies are going to be overseas and in other nations, because it’s not static. It’s very dynamic. Hence the pivoting. It’s a dance.

 

Aaron Hand: [00:16:33] I was thinking about one of the struggles that manufacturers have so much is with labor. I think it really came to the fore during COVID, but it’s not like it wasn’t an issue already. So I did want to bring up, in particular on that subject, that Creative Automation had launched your automation engineering services. I feel is probably driven at least in part by labor issues. Can you talk a bit about  the launch of that and what you’re trying to achieve and kind of what the drivers were.

 

Gerd Walter: [00:17:07] So over the years, especially during COVID and since, we were gaining a number of calls from various customers and even some people who are new to us, looking for control support, engineering support. Mostly they had  installations of robots or other automation installations, and they just needed help maintaining them, getting them going. In some cases they were repurposing, retooling them for new jobs. We’ve worked with several automotive suppliers — just give them a guy for three or four months, help get up some old lines and retool them so they can get these lines back in production, which especially right now is very popular because you can do that relatively quickly as opposed to two or three years to source a whole new line. And I do see there is a good potential where a lot of companies are looking to maximize their existing capital investments, their existing equipment, repurpose them, keep it running while they figure out what the long-term game plan is going to be. But also it’s just, controls engineers are expensive. They’re scarce, a relatively scarce resource. In some areas, like Detroit, they’re fairly common, but even here they can be a little scarce. Other parts of the country, they’re pretty rare. So it is good. And a lot of these companies they got one or two for maintenance, but then they get a big project, they need additional help. So it’s competitive. And sometimes we even contract them to fellow integrators. We’re not trying to horn in. They need support. They got a big contract. You know, I’ve used contractors because demand fluctuates up and down. Or you need somebody who has a special skill set of an item that you don’t normally deal with. So it’s good. And it’s one way to address some of the labor shortages.  With labor shortages, obviously automation can help. We’re maximizing productivity, increasing productivity. We do a lot of work where some of the smaller factories, we can automate four or five machining centers. Instead of having five guys — one guy in front of each machining center — you have one guy just kind of making a steady circuit, or even a lady making a steady circuit, just running that. So you’ve got a nice increase. One of the applications I had approached yesterday. Somebody was getting stuff off a machine, a furnace. It took a while, but they had to have somebody standing there. And there was a lot of idle time, and so they’re just looking for ways to maximize, just free up that labor so they can do other things with the labor. It’s not that they’re looking to get rid of it. They’re looking to free it up to do other stuff because they can’t find other people. I even have the problem. I’m looking around for new shop guys because my shop is getting old. On the other hand, my controls group is young.

 

Aaron Hand: [00:20:24] Yeah, certainly with that little bit of labor, you can’t have them just standing around waiting for the next time they need to do something with the machine.

 

Gerd Walter: [00:20:33] Yeah. And it’s a big issue for a lot of companies.

 

Jimmy Carroll: [00:20:38] I wanted to ask about something. We talked a little bit about some of the applications. But in watching Automate Live and having discussions with different folks about some of the hot-topic applications, or industries I guess, you know, farming, agriculture, food inspection. Are you seeing any notable trends in certain areas that you find interesting? Or is it just kind of a wide swath of applications and industries for you guys?

 

Gerd Walter: [00:21:03] There is a wide swath of applications, and integrators like me, we can’t address all the different swaths. We all got our niches, all our expertise zones. So yeah, I see some very interesting case studies with agriculture. But I don’t touch that. Food, though, is growing, because, well, we all like to eat. I got the seafood diet: I see food, I eat it. But yeah, automotive’s been dominant for automation for a long time. You see the robot charge to automotive has been like 50% or more. In the last few years, it’s been right there. Sometimes general industry, everybody else, has been a bit bigger than automotive. Sometimes automotive surges back. But I think the long-term trend is everybody else is slowly going to get bigger than automotive. And it’s not that automotive is shrinking. It’s just for everybody else, the applications for automation are just growing. And especially you got the AMRs, which have exploded in the warehouse space. They’re starting to penetrate into the factories even more. You’ve got other applications. Vision systems are obviously coming in very big. The cobots have also increased the range of applications. They’re not always the right tool, but they’re great for conversation starters. But sometimes the cobot is the right application, the right tool for the job. And that’s a good way to think about things. We’ve always said you got to get the right tool for the right job, and that’s why you got such a range of robots, such a range of techniques, because every job requires a different set of tools and you got to fit it so you got the right tool.

 

Aaron Hand: [00:23:08] You have such a strong background in the automotive industry, and it has been such an adopter early on of robotics. And I would imagine you’re used to working with some pretty big players out there. How is automation looking for the small and medium manufacturers out there? Is it catching on more further down the stream in terms of size?

 

Gerd Walter: [00:23:35] It’s a mix. I would say the medium manufacturers definitely are getting more and more involved, just because, again, back to that labor shortage, and then also looking to maximize and keep themselves flexible. And that’s one big trend also for automation. It’s gotten a lot more flexible over the 30 years that I’ve been in the industry. Even on the automotive side, when I started, if it could handle two part types, it was flexible. Now I got systems that are doing hundreds of part types, handling them.

 

Aaron Hand: [00:24:10] That changes how you need to make the automation work. What are some examples of what it means to be flexible?

 

Gerd Walter: [00:24:18] Well, it means you got to be able to do relatively quick tooling changes, sometimes just a push on the HMI screen or the controller. You can go very flexible, or now, some of the really newer ones you’re getting with the AI or the cameras, and they can go, “Oh, oh, that’s part A, not part B.” And then they know what to do. Or, “It’s part G. Okay, we’ll do a different sequence for that one.” But that’s the really new stuff. But even still, being flexible, being able to handle, going to more of a batch production instead of continuous production applications, because everybody’s headed to batch.

 

Aaron Hand: [00:25:05] Why?

 

Gerd Walter: [00:25:06] Well, I shouldn’t say everybody. But look at the varieties of cars you can get these days compared to what you could get 30 years ago. And the engineering also behind it is, okay, you can make so many variants. You got a common base, but then you can make so many variants on that common base to suit different applications. And so you can do different things. We’ve done work on engine lines, and they got big variants that are running down for the big pickups and SUVs that people like. But then they also got other variants that are modified, a little different camshafts and crankshafts and stuff. They’re not designed for torque. They’re designed for speed. So they’re going into sports cars. But it’s a common base. They just swap out a part here, swap out a part there. Sometimes it’s tuned very differently. But they can do it, because your dream car is not going to be the same as Jimmy’s.

 

Jimmy Carroll: [00:26:16] It’s interesting. When you mentioned AI, I know that flexibility means a number of different things. It’s not just within the context of AI, but for me — I guess I’m conditioned to it, maybe from this podcast or just reading or as a marketer or whatever. But a lot of times when I think of flexibility in factory automation, I’m thinking of AI. AI does things like allow logistics companies to handle thousands of SKUs from bulk or read barcodes that are askew or in different fonts that it hasn’t been trained on. And that adds a new layer of flexibility. And I’m curious from your perspective how companies are approaching AI adoption. We talked to someone a couple of days ago who is an AI company, to be fair, but they said that companies have been finding success using their product as a result of their business being mandated to use AI, which I thought was kind of an interesting concept. So do you have any thoughts on that and in general how are people approaching AI adoption?

 

Gerd Walter: [00:27:15] Well, I think we’re very much still in the experimentation stage with a lot of the AI. The older machine learning stuff is becoming fairly common, especially on the machine vision side, the newer language models. But to your point, where people are being mandated, it’s kind of like cobots a few years ago. The CEO and the board members see all this, and then they go, “Hey, we need that in the factories,” and then leave it to the engineers and the plant managers to figure out how they actually can use it. Or they buy a bunch of stuff and then tell them to go use it, which is not the most efficient way, but I think more it’s an experimentation phase, where there are use cases emerging for where AI is useful. It’s still early enough that people are learning. But I’m worried a little bit just keeping up on top of it. It’s a big area, and we’ve got to figure it out. I’m not going to say I have all the answers.

 

Aaron Hand: [00:28:30] You actually said something to me yesterday that just makes me think about that. You try to take on one project a year that kind of pushes the envelope for you. That is, it takes you out of your comfort zone so that you guys keep growing and learning. So I just thought that was very interesting. I don’t know if you want to share any examples of that.

 

Gerd Walter: [00:28:52] Well, that’s how we get into different segments. Like when we got into dispense or deburr, those were learning projects. And sometimes even the applications. We’ve been tinkering with assembly and getting more and more into that. We do one a year to limit our business risk. But we like to stretch. Well, one, we call ourselves Creative Automation. We want to be a little bit creative and gotta stretch our wings. I think I mentioned to you, I’ve seen a lot of companies just get comfortable in their niche, and then one day they wake up and their niche is here and the market’s over here. And then it’s very hard as a business to recover that gap. Pivot.

 

Jimmy Carroll: [00:29:47] Yeah.

 

Gerd Walter: [00:29:48] And also, I just think as engineers, as creative people, we like to have fun. But on the risk side, usually the first go-round you’re learning and that means dollars. You spend extra engineering time, spend extra programming time. You might have to redo some of your materials because, “Nope. We should have done it this way.” So usually those jobs are more break-even jobs. So that’s why we also limit the number we do. But like I said, we’ve gotten into assembly because of those experimentations. We’ve gotten into deburr, dispense. So it’s how we as a small company — and we are small. We’re only about 60 people. This is how we can actually learn and grow and develop new market segments. We’re not a big Fortune 500 company that can have a whole R&D division and teams. Our R&D, we need to find an application and get somebody to kind of pay for our R&D.

 

Jimmy Carroll: [00:31:12] Gerd, I want to be respectful of your time because it’s a very busy show and you’ve had a busy booth. But anything else that we haven’t covered today you want to talk about that you think it’s important to put out there?

 

Gerd Walter: [00:31:23] Not really, but this business just keeps growing. And I’m sure you’ve heard of it before, but the first time I came to the show, it was here.

 

Aaron Hand: [00:31:41] Oh, yeah.

 

Gerd Walter: [00:31:42] This was like ’94, ’93. It took up one hall. Now it’s in five halls, plus the basement.

 

Jimmy Carroll: [00:31:51] And the basement is not small either.

 

Gerd Walter: [00:31:53] Yeah. So I mean this show, the techniques — they’re just growing. There’s a lot of new names. There’s a lot of opportunity. I think there’s a lot of good technology out there, a lot of good minds, and can just do interesting things. And that’s the real exciting thing to me. It’s like a lot of people sometimes take manufacturing as kind of humdrum stuff. There’s a lot of fun stuff you can do in manufacturing. And that would be one thing to help with the labor shortage is when people realize: engineering is fun, making things is fun. You can sit at the desk and push paper around all day or you can go out and work on a project, and then the next day you go out and it’s built somewhat, and you go out a week later and it’s building up right before your eyes. As an integrator, that’s tremendously satisfying.

 

Aaron Hand: [00:33:06] I would imagine.

 

Jimmy Carroll: [00:33:08] Well, I think you encapsulated it pretty well, right? As integrators, and for a lot of the vendors too, they have to find ways to adapt and evolve to changing market needs and increasing customer demands. And I think a lot of people here really enjoy the process, really enjoy learning and expanding into new markets. And everyone seems to be sort of ready and willing to pivot.

 

Gerd Walter: [00:33:34] Yep. And we will have to keep pivoting — hopefully smaller pivots — but we’ll still have to keep pivoting.

 

Jimmy Carroll: [00:33:40] Well, if folks want to learn more about Creative Automation, what’s the website? Where should they head?

 

Gerd Walter: [00:33:45] cautomation.com.

 

Jimmy Carroll: [00:33:52] Great. Well, Gerd, thanks so much. If anybody has any questions for Gerd, we would be happy to pass them along. Visit us at manufacturing-matters.com and thanks very much for tuning in.