Industry 4.0 and what to expect for industrial policy

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham

“Other countries like Germany and Sweden have gone much further in embracing Industry 4.0 and supporting businesses in making the most of Industry 4.0 opportunities. The UK needs to follow suit.”

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As we head into the age of Industry 4.0, there is a general consensus that industrial revolutions are associated with new waves of technology.

Innovations in technology have often triggered a surge of production, the first example of this was steam power and railways, which then grew to the introduction of electricity and synthetic chemistry, and finally led to electronics, computers and aerospace.

The Fourth Industrial Revolution

Nowadays, a raft of new technologies are taking us into a fourth industrial revolution. These include, artificial intelligence (AI), automation, 3D printing, green tech, sensors and much more.In turn, ‘smart manufacturing’ may enable us to upgrade manufacturing activities, even in advanced and high-cost economies such as the European Union. We have identified three key characteristics of smart manufacturing:

  • New technologies will stimulate new sectors and upgrade existing ones. Core to this is the symbiosis between traditional manufacturing and services, through processes of “servitisation”. 

Rolls-Royce produces engines but also sells them within a ‘power-by-the-hour’ maintenance package that restructures its offering as a service that delivers the ability to fly planes rather than simply selling a one-off product.

  • Smart manufacturing will fill market niches for personalised and customised products. These will be produced in small batches or even as unique pieces which require customers to co-innovate or co-produce with the manufacturer.  

One example is Shapeways, which offers a 3D printing marketplace and service. Customers can design their own work and create 3D printable files alongside Shapeways, which are then made for them.

  • Smart manufacturing will redesign product supply chains by integrating the local and the global more strategically. Some hands-on innovators in the so-called ‘makers movement’ are linking innovating and making. They choose supplies nearer to home, but connect with demand both close and far from home. This offers the prospect of a more efficient form of production, with increased use of more sustainable processes.

It is this kind of circular-economy style efficiency that presents a real opportunity for advanced economies to pursue more evenly distributed and sustainable socio-economic growth. Enabling manufacturers to access and utilise the new technologies in this way will be key, therefore new industrial policies will be vital in enabling businesses to properly embrace Industry 4.0.

Shaping policy for Industry 4.0

Industry 4.0 will play out differently across sectors and regions. Because of this, new policies will need to bring sectors together with the new technologies so that what we see as ‘traditional’ industries can be transformed.

There are number of policy priorities that should be recognised, this includes a commitment to life-long skilling and re-skilling as new technologies develop and automation eliminates many jobs while creating new ones. The UK has begun this initiative through its ‘Made Smarter’ programme which is currently being piloted in the North West. Its purpose is to test the most effective ways to engage with manufacturers to encourage them to ‘adopt new technologies’.

Although the ‘Made Smarter’ programme is encouraging, there is a concern with the UK government’s commitment and the lack of scale. Beyond the pilot, there is £121 million for the UK as a whole for business to adopt new digital technologies. This isn't going to go very far, and doesn't compensate for the government's scrapping of the Manufacturing Advisory Service a few years ago, which was a major policy blunder.

There are numerous factors that policy needs to consider in order to prepare for Industry 4.0, such as our investment in infrastructure to embrace these new technologies (e.g 5G), creating a joined regional approach, and seizing the opportunity of ‘home-sourcing’ to rebuild supply chains closer to home.

Other countries like Germany and Sweden have gone much further in embracing Industry 4.0 and supporting businesses in making the most of Industry 4.0 opportunities. The UK needs to follow suit.

Notes:The Policy Report was funded under the EU Horizon2020 RISE project ‘MAKERS – Smart Manufacturing for EU growth and prosperity’, a project funded by the Horizon 2020 Research and Innovation Staff Exchange Programme, which is a Research and Innovation Staff Exchange under the Marie Sklodowska-Curie Actions, grant agreement number 691192. Read the full report. Read the MAKERS project

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