This excerpt from our May 2017 Newsletter first covers the origins of Industry 4.0, and then goes on to discuss were Australia is positioned in this new manufacturing paradigm. Contrary to all the hype it is not an Industrial Revolution - not yet anyway but time will tell.
Industry 4.0 was devised by the German Government in response to their diminishing manufacturing market share caused by China. The German governments motives are obvious once you realise that employment in the manufacturing sector for all nations has the highest multiplier of any industry, figures of 15 to 1 are flung about. i.e. for every employee in manufacturing there are 15 more jobs required in support industries. The manufacturing sector is also a key driver of R&D, innovation, productivity growth and exports.
The manufacturing sector in the EU accounts for 80% of the EU's innovations, 75% of its exports, and 60% of productivity growth. Unfortunately no Australian government seems to have realized the critical importance of the manufacturing industry to our future prosperity.
What is Industry 4.0?
Industry 4.0 is about harnessing the power of automated plant and equipment, the Internet, and big data to radically improve manufacturing productivity and flexibility. For example it is often touted as a way for factories to achieve mass customization – so that customized bespoke items can be produced at high volumes and low cost.
The Internet is combining with intelligent machines, systems production and processes to form a sophisticated network. The real world is turning into a huge information system, with digitalisation technologies being the enabler.
How will Industry 4.0 benefit our manufacturing sector?
Australian companies must be globally competitive and actively engaged in multinational supply chains, and to do that we need to be at the forefront of developing and using cutting edge technologies like those embodied within Industry 4.0. At the foundation or base level of Industry 4.0 is the "automated plant" upon which the data layers are built, unfortunately for Australia this layer is tiny compared to our competitors, as shown in the following graph.
So Australia could make significant improvements to our manufacturing productivity simply by applying more automation to our manufacturing facilities. Once this is happening then look at adding the data layers to implement the concepts behind Industry 4.0.
We do have the infrastructure and spirit of innovation to embrace the Industry 4.0 concept and tap into emerging markets, we just need the willpower. The technology spruiked for Industry 4.0 will continue to evolve, however there is already sufficient Cyber and Internet technology available to implement many Industry 4.0 strategies to improve our manufacturing productivity.