Today, we are experiencing a profound technological change unlike any in almost half a century. Digitalization is changing aspects of our lives with breathtaking speed. It is also changing the economy with it. Digitalization is shortening the value chain.
Each link in the chain that does not add value is removed.
This radical change, driven by Big Data, cloud computing and the Internet of Things also influences industrial production. We are on the verge of a new industrial revolution, similar to those after production was mechanized in the 18th century with the steam engine, the specialized mass production developed on assembly lines, and the use of electronics and information technology for automation during the 1960s. It is the fourth such revolution: Industry 4.0.
The virtual world merges with the real world of product development. This new world is an integrated system, in which all processes are integrated. With the help of sensors and chips, products are identifiable, locatable, they know their history, their current status and their target status.
A complete and continually optimizing network has emerged.
Industry 4.0 is indeed a revolution, but one that is proceeding in an evolutionary manner and will carry on for years. A company such as Siemens today can already offer a portfolio of industrial software and automation systems, the Digital Enterprise Platform, which makes product creation processes more flexible and faster, already achieving some Industry 4.0 goals. Important components of Industry 4.0 can already be seen at our electronics manufacturing plant in Amberg. The result: The production reliability of electronic circuits has reached the unsurpassed level of 99.9988 percent.
Amberg is also proof that the factory of the future will not be devoid of people. The significance of human beings will actually increase. The creativity of human intelligence in product development is still absolutely essential. But people will also still play a central role at the operational level, though more as controllers, creative planners and supervisors.
The future has arrived. That is substantiated by a recent study by PricewaterhouseCoopers, which states that German industrial firms want to invest about 3.3 percent of their annual sales in Industry 4.0 products over the next five years. We are talking about annual investments totaling €40 billion.
That is money well spent. According to the study, those investments will amortize in 12 to 24 months, and should lead to an additional €150 billion in sales for German industry over the next five years.
The money is also being spent at the right time, because those who bet on Industry 4.0 can raise their productivity and lower costs, thanks to the possibilities of digitalization.
They can reduce error ratios; and they can reduce by 50 percent the “time to market,” namely the time until a product is marketable. Today, other large economies are clearly and desperately trying to rebuild their industrial bases. Germany, however, never lost its focus on industry. It is exactly this healthy foundation giving us our head start today with Industry 4.0 – and we should use it.
As a successful exporting nation, Germany must retain its technological leadership.
One could counter that the players from Silicon Valley should have no difficulty conquering the world of product development. I would disagree.
Of course, it is true that 65 of the 100 largest software companies are based in the United States. Of course, it is true that Google, Amazon – and all the rest – masterfully “dismantle” and use the “raw” data. But it is also, of course, true that we know the procedures and the processes for industry, we know the business. And we are not just “traditionalists,” but have long also been “digitizers.” About 17,500 software engineers work at a company like Siemens.
Germany is a nation of exporters. And to remain a successful one, technological leadership is a must. This pursuit of innovation and the readiness to change are challenges for our entire society.
It affects the working world. Jobs and qualification requirements will look completely different in the world driven by digitalization than they do today. It is a question of “qualifying” and “requalifying” the generations of today and tomorrow.
It involves infrastructure. Investments in fiber optics and high-speed wireless technology are urgently needed so that the flow of data reliably takes place. And it involves standards. We should set uniform legal standards for the handling of data and information, the best would be Europe-wide, which are then compatible with those of the two economic regions of Asia and America.
However, we certainly do not need a national “Industry 4.0” strategy. Innovation arises when the actors, alone or with partners, develop, try out and apply new technologies. We welcome, however, that the German federal government wants to offer platforms on which the important players can exchange ideas. Those that prove their worth will prevail.
The innovative spirit at the time of pioneers such as Robert Bosch, Gottlieb Daimler, Friedrich Engelhorn and Werner von Siemens shaped German industry. I am confident that we can spark a new era of innovation in Germany today. In order to do so, we need strong partnerships – between businesses, research institutions and universities, also internationally.
The IT Summit on Tuesday in Hamburg is a good opportunity for this exchange, to the benefit of Germany as a business location. We should seize this chance together.
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