Representatives from over 500 countries met last week at the World Manufacturing Forum in Barcelona to discuss what's tipped to be the next big thing for the industry.
It's the so-called fourth industrial revolution, whereby a string of technologies will combine to drive sweeping changes across the embattled sector. While innovations such as self-driving cars, the internet of things and big data already exist, it's how they could be used together that's really exciting businesses.
Tech's infiltration of manufacturing has been underway since the 1970's, but the pace has accelerated recently, bringing a number of risks and rewards. Manufacturers could benefit from more efficient production processes, as well as better interaction with their customers. But they could also be stung by a skills shortage, or a slow response to the changes that are afoot.
Here professor Marco Taisch, chairman of the World Manufacturing Forum, tells City A.M. about his thoughts on Industry 4.0.
What is industry 4.0?
The first time it came up was in 2011. Industry 4.0 is the programme of Germany as a country fostering manufacturing.
It’s now recognised to be important again after the financial crisis of 2008 – if you have an economy that’s based too much on finance and services it’s not balanced.
We need to go back to manufacturing as a real powerhouse of the economy. All of the European countries, the US, Mexico, South Africa, China, India and Japan are working on redesigning their industrial palaces.
There are new I.T. technologies which came all at the same time – the Internet of Things, cloud computing and cyber physical systems – and the implication of this to manufacturing is what we’re calling industry 4.0.
How are European manufacturers responding to this?
They’re starting to understand that they need to adopt it, otherwise they won’t be able to deliver their business anymore. The only way that companies will be able to stay in touch with customers is through connectivity, IT and the internet. The customer will talk to the supplier only through connectivity. There won’t be any physical connection.
What will happen if the industry ignores these changes?
We won't be competitive anymore, we’ll be out of business, and [the manufacturing sector] will collapse.
China has understood that they need to digitise, and its putting a lot of money into this process. India has realised manufacturing is important, they have a programme which is called making India.
For pure IT countries, they’re investing a lot in manufacturing.
What do you think about Britain's manufacturing sector?
The UK has catapult. It's a very interesting programme by which the government commits money to foster research and development in UK manufacturing. It's working.
What would be the implications of a Brexit on Europe?
If we in Europe are losing an important manufacturing country everyone will be weaker. The European Union, but the UK as well.
You need to do innovation together. You need to join forces. It’s not like it was about 20 to 30 years ago when you could do research by yourself. It doesn’t work anymore – you need a lot of investment, knowledge and technology transfer.
The EU is already too small. The US has about 300m people, while China and India have over 1bn. They’re producing more engineers in India than all over Europe. How can you compete?
More specifically, how would a Brexit affect UK manufacturing?
You can survive for five to seven years, but what about the long term? Long term you can’t.
This is going to be a connected world. Business is going to be connected, connectivity doesn’t just mean technology, it means sharing knowledge, information and research.
Which parts of the world are exciting in terms of manufacturing?
Africa is coming. By 2050 there will be much more educated people in Africa than in Europe. We need to get ready. In 20 years, Africa will be the new China of manufacturing.
What are the most exciting developments in industry 4.0?
The digital world will become even more important than the physical world.
The physical world is something that’s not connected, while the digital world is its cyber twin. If I move something in the physical world, its cyber twin in the digital world moves too.
You can design products without having seen them - physical prototypes, crash tests etc. will disappear. That means you can save money, time and avoid mistakes because everything is really tested before it goes into production.
The customer can be involved in designing the product because they’ll see it before it’s delivered. The customer can digitally touch the product and give their reaction to the designer.
What do you think is the biggest risk to industry 4.0?
The skills shortage is an important issue. Technological innovation is going faster than our ability to train and educate people in new skills. The skills gap is already a problem, but it will become a major problem.