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Worldwide Race to 4th industrial revolution between Germany, US and Japan with China extending it to aerospace and defence

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society, writes Klaus Schwab Founder and Executive Chairman, World Economic Forum.

The first industrial revolution began in the 18th century when the power of the steam engine was harnessed and manufacturing first became mechanised. The Second used electric power to create mass production. The Third used electronics and information technology to automate production.

Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance, , writes Klaus Schwab Founder and Executive Chairman, World Economic Forum.

This form of  manufacturing, called Industry 4.0 is a collection of technologies and concepts for defining and operating ‘Smart Factories’, where the machinery of manufacturing – machine tools, the sensors monitoring them and such like – can communicate with each other, with the systems overseeing the factory and the people who work in it to fine-tune the manufacturing process and enable such things as product customisation, while increasing productivity and flexibility. These intelligent and connected machines don’t only work; they take decisions and optimize processes intelligently and semi-autonomously.

Industry 4.0

“Industry 4.0 has the potential to dramatically streamline the conventional order-design-manufacture-supply process enabling customers to communicate requirements directly with the manufacturer’s production systems, which will generate the data needed to make the product, order the necessary raw materials from suppliers, schedule manufacturing time, organize despatch of the finished products and take payment,” suggests Ken Christie, director of UK EPLAN, a specialist in the development of CAD software.

The supply chain today is a series of largely discrete, siloed steps taken through marketing, product development, manufacturing, and distribution, and finally into the hands of the customer. Digitization brings down those walls, and the chain becomes a completely integrated ecosystem that is fully transparent to all the players involved — from the suppliers of raw materials, components, and parts, to the transporters of those supplies and finished goods, and finally to the customers demanding fulfillment, write Stefan Schrauf and  Philipp Berttram.

“This network will depend on a number of key technologies: integrated planning and execution systems, logistics visibility, autonomous logistics, smart procurement and warehousing, spare parts management, and advanced analytics. The result will enable companies to react to disruptions in the supply chain, and even anticipate them, by fully modeling the network, creating “what-if” scenarios, and adjusting the supply chain in real time as conditions change.”

Once built — and the components are starting to be developed today — the digital supply “network” will offer a new degree of resiliency and responsiveness enabling companies that get there first to beat the competition in the effort to provide customers with the most efficient and transparent service delivery, write Stefan Schrauf and Philipp Berttram.

Andy Hodgson, Head of motion control, Siemens Digital Factory says, Industry 4.0 represents a move of manufacturing away from the physical reality of factories and into the virtual world, “where you can configure change and move items thousands of times a second, and simulate things in a factory many times”.

Attempting to clarify this statement, he added: “If you look at cars, for example, in the design process they used to be sculpted out of clay, and people could walk around it. Now you can see it from all angles on a computer, virtually sit in it, and virtually manufacture it. That allows you to make it quicker, cheaper and better, cutting the time to market and making the economy it’s used in much more viable.’

Prof Ken Young Technology director, The Manufacturing Technology Centre (MTC), helpfully broadened the definition out to the use of digital technologies to give a competitive advantage, “that can be in the design phase, in the manufacturing phase where you’re monitoring what’s happening better and using that to improve simulation models so you can make the next lot better”.

The advent of low power processors, disruptive capabilities of the IoT, intelligent wireless networks and low power sensors, when combined with ‘Big Data’ analytics, has led to a booming interest in the Industrial IoT.

Global Race between Germany, US, Japan and China

Germany, US, Japan and China are racing to implement Industry 4.0 that is expected to have a great effect on global economies, delivering estimated annual efficient gains in production of between 6% and 8%. Globally, investments on the Industrial Internet are expected to grow from US$20 billion in 2012 to more than US$500 billion in 2020, and a rise in the value added is foreseen to be from US$23 billion in 2012 to US$1.3 trillion in 2020.

According to Transparency Market Research (TMR), the global smart manufacturing market was valued at US$159 bn in 2015. Exhibiting a robust CAGR of 13.2% between 2016 and 2024, the smart manufacturing market is expected to rise to an overall valuation of US$548.1 bn by the end of 2024. The global smart manufacturing market is centered on North America and Europe, as these two regions offer the latest technological advances. The solid government support to urbanization and industrialization in these regions has also helped drive the smart manufacturing market.

However, emerging regions such as Asia Pacific are likely to become prominent in the global smart manufacturing market in the coming years. In November 2016, Melbourne’s Swinburne University of Technology and the Australian Manufacturing Growth Centre announced a joint project to promote the use of smart manufacturing solutions in Australia’s manufacturing sector. The partnership is the first of its kind, being initiated expressly to promote the use of Industry 4.0 technologies in Australia.

The Chinese government has adopted a ‘Made in China 2025’ economic development strategy which is emerging as a huge risk to Germany’s economic base, says economist Christian Rusche from the IW think tank in Cologne.

Siemens announced in mid-September its intention to lead the group’s global research and development (R&D) in autonomous robotics from within China. Siemens’ investment in China is indicative of the new industrial revolution taking place within the country as its strategic industries – including China’s influential aerospace and defence (A&D) enterprises – position themselves to meet national targets and become world leaders in Industry 4.0 technologies in the coming decade and beyond, according to Janes

 

Germany pioneer country in the development of Industry 4.0

Germany is the pioneer country in the development of Industry 4.0. It originates in Germany with Chancellor Angela Merkel saying: Industry 4.0 is the comprehensive transformation of the whole sphere of industrial production through the merging of digital technology and the Internet with conventional industry.

The government of Germany is investing €200 million in order to support research and development across universities, business and governmental institutions. German industry will invest a total of €40 billion in Industry 4.0 every year by 2020. The future vision of Industry 4.0 is already used in some German companies, including SAP, Siemens and Deutsche Telekom.

Industrie 4.0 spans everything from connected employees and connected supply chain and logistics to connected machinery, and encompasses developments in wearable technology, machine-to-machine communications, the internet of things and artificial intelligence.

Smart Factories are a key feature of Industrie 4.0. , “Industrial production machinery no longer simply ‘processes’ the product, but that the product communicates with the machinery to tell it exactly what to do,” the GTAI, which promotes German business and technology on behalf of the German government, said.

The German government is funding a research initiative CoCoS project that involves the development of a ‘smart’ production line, where each individual machine involved in a production cycle is separately networked with one another and other central systems. The aim is to enable the integration of production systems throughout a supply chain and allow decision makers to adapt components of the production cycle more easily to reconfigure what is produced.

 

Europe: Initiatives at EU to regain lost ground in the past two decade

Alongside Germany’s Industry 4.0 project the EU and individual countries across the continent have set up their own activities aimed at preparing for the production of the future.

At European level, Industry 4.0: Powering Europe, a German-led high-impact initiative, has been launched at the ICT Labs of the European Institute of Innovation & Technology (EIT). Its aim is to bring about a rollout of cyber-physical platforms across European smart factories. There is also the Factories of the Future public–private partnership aimed at supporting mainly small and mid-size companies in their efforts to stay successful in global markets in the future.

Individual countries are also active: Finland intends to spend some €100 million on its Industrial Internet program by 2019, whilst Austria plans to inject around €250 million into its vision of Industry 4.0. France, the UK, Italy and the Netherlands have likewise launched their own initiatives such as the so-called “Factory of Future” in Italy and France and “Catapult centres” in the UK.

Moving towards Industry 4.0 will permit Europe to increase its diminishing industry share from 15% up to 20% of the area’s value added. It means that Europe will be able to compete successfully with other industrial areas in the world.

 

US’s Industrial Internet Consortium (IIC)

The Industrial Internet Consortium (IIC) was established in the USA in March 2014. It comprises more than 100 companies, including General Electric, IBM, Intel, AT&T, and Cisco, all working on technologies for the production of the future – with German heavyweights such as Siemens and Bosch among them, too. It aims to bring together industry players—from multinational corporations to academia and governments—to accelerate the development, adoption and wide-spread use of Industrial Internet technologies.

Industrial Internet is merger of the information technology (IT) world with the operational technology (OT) world. The goal of that merger is the Industrial Inter‐ net, variously known as the Industrial Internet of Things, Internet 4.0, Internet +, and other monikers.

The industrial Internet draws together fields such as machine learning, big data, the Internet of things, machine-to-machine communication and Cyber-physical system to ingest data from machines, analyze it (often in real-time), and use it to anticipate maintenance needs and adjust operations.

The IIC’s vision is largely consistent with the goals of Industry 4.0: to make production more efficient and to optimize value chains. In addition, the companies are striving for higher machine availability and the cost-effective manufacture of customized products. In 2015, the IIC published the Industrial Internet Reference Architecture, a lengthy document that describes and defines the various systems and frameworks necessary to sustain a viable Industrial Internet

One of the forces driving the Industrial Internet toward convergence is manufacturing, which accounts for 12% of the U.S. GDP, or roughly $2.09 trillion, according to the National Association of Manufacturers. Each dollar spent on manufacturing adds $1.37 to the U.S. economy, putting it ahead of other economic sectors in terms of its mul‐ tiplier effect.

South Korea

South Korea came up with a program to help technologically rather weak SMEs to transform their workshops into smart factories. Its “Manufacturing 3.0” program has vision of transforming around 10,000 SMEs to small, but smart, global high-tech manufacturers by 2020.

 

Japan Is Leaping Towards Smart Factory Implementation

Japan is racing towards modernization of production processes by innovation and diffusion of Smart technologies in Manufacturing to achieve a new generation of industrialization. The growing digitization of products and services is driven by the diversification of demands and enabled by modern concepts of IOT, Smart Factory , e-factory, and  industry 4.0 ,

As the consequence of it, there are numerous ventures popping in IOT sector and as well existing and Technology giants have been showing up with techniques and technologies to enhance the Smart factory operation, support and production process for leaping the factories to fully for complete new smart things. some of the  companies who are also member of Japan`s Robot Revolution Initiative are also seen introducing many products and services for enabling the trend. Mitsubishi Electric Hitachi, Fujitsu NEC, Mitsubishi Heavy Industries,Kawasaki Heavy Industries, IHI, Hitachi Zosen, apart from Automotive OEM`s a wide range of manufacturing-related 75 plus companies various organizations are already gaining the market share. 3D -Additive manufacturing is also embarking in Japanese factories to make complex products directly from 3D models using simple and largely automatic procedures.

On April 2016, Joint Statement was announced from Platform Industrie 4.0 of the Federal Republic of Germany and the Robot Revolution Initiative of Japan agreeing on cooperation regarding Internet of Things / Industrie 4.0.The statement expresses that both countries will cooperate in the fields of Industrial Cyber Security – International Standardization – International Regulatory Reform – Facilitation for small and medium sized enterprises (SME) – Human Resource Development – Research and Development(R&D) and Others.

 

Japanese Factories Connected Together

Japan has launched the Industrial Value Chain Initiative with 30 companies developing common communications standards for linking factories and facilities. “We aim to establish a structure that will connect even small and mid-sized companies via the Internet beyond affiliates and across sectors,” said Yasuyuki Nishioka, a professor of information and industrial engineering at Tokyo’s Hosei University, who is the driving force behind the initiative.

“The diversification of needs and digitalization of products and production processes make the ‘power of connecting’ more important,” Yasuyuki Nishioka, Professor at Hosei University, says. Factories and enterprises are “connected together,” and a new generation of information technology called the IoT (Internet of Things) plays a role in “connecting” them. The automation that is progressing at manufacturing sites in Japan has been accelerating more than ever before through the use of sensors and other devices.

Professor Nishioka proposes, “Japan should also construct connected factories by leveraging Japan’s own strengths. It would also give small and medium-sized companies (SMEs) the opportunity to make rapid progress.” “Connected factories” are based on information sharing within a company and across companies based on the links between manufacturing processes and business operation systems.

 

China’s “Made in China 2025” initiative

China’s cabinet has unveiled a national plan, dubbed “Made in China 2025,” focusing on development and the upgrading of the manufacturing sector to improve innovation ability, integrate informatization and industrialization, through green manufacturing and manufacturing internationalization. The plan was introduced in May 2015 and implementation guidelines were completed in Feb 2017  by the Ministry of Industry and Information Technology, with the participation of more than 20 State Council departments.

The program aims to increase the domestic content of core materials to 40% by 2020 and 70% by 2025. At present, domestic content is relatively low for high-tech goods, with foreign content comprising more than 50% in these products on average. In some categories, such high-level digital control systems and high-level hydraulic components, China is almost entirely dependent on foreign production.

Ten sectors have been identified as priorities. They are new information technology; high-end, numerically-controlled machine tools and robotics; aerospace equipment; ocean engineering equipment and ships with high technology; advanced railway traffic equipment; energy saving and new energy vehicles; power equipment; new materials; biological medicine and high-performance medical devices; and agricultural production machinery.

Miao Wei, Minister of Industry and Information Technology “Made in China 2025” is just the first step of a three-step strategy. According to another two plans that followed, China will reach a medium level among the world’s best manufacturers by 2035 and rank near the top of the league table by 2045. These plans, are designed to transform China into a leading manufacturing power by the year 2049, which will be the 100th anniversary of the founding of the People’s Republic of China

Although comparisons have often been made between China’s 10-year plan and Germany’s “Industry 4.0” that focuses on the development of fully-automated “smart” factories, Miao Wei said China and Germany are in different stages of development.

“Germany is developing from 3.0 to 4.0, while our Chinese industrial enterprises have to make up for the 2.0 to 3.0 and then step up to 4.0. So we are in different stages. Therefore, we must pay attention to China’s actual conditions and Chinese enterprises’ reality. This will help us choose a right path of development and embark upon a better, faster and healthier road of development.”

 

Industry 4.0 in China: Catching Up With the West

The Chinese government is currently not only undertaking investments in the development of industry 3.0 but also in the concept of Industry 4.0 in China. It has launched “Internet plus” program by the State Council to upgrade manufacturing and electronic retail trade with the power of the modern internet. Chinese economists estimate a productivity level increase of up to 30% with the help of Industry 4.0 in China. Unforeseen production losses could decline by 60%.

However China is in the nascent stages of “smart” production, as Boy Lüthje of Sun Yat-Sen University in Guangzhou has noted, even in the “smartest” factories in China, assembly lines in which workers carry out processes persist. Smart manufacturing pilot cities, like Ningbo in China’s coastal Zhejiang province, have focused on implementing smart equipment and using cloud computing. Vice Premier Ma Kai has recently encouraged attempts at smart manufacturing, noting that China needs to strive harder to reach international levels in the industry.

China is focused on creating innovation centers, which will build a foundation for industrial development and generate a greater variety of high-end equipment. Innovation centers, which are to number 15 by 2020 and 40 by 2025, will assist the development of technology, smart manufacturing and creation of new materials. These centers make use of both public and private funds. Innovation centers are to focus on domestically-created, as opposed to foreign-created, technologies for security reasons, although it has been noted that this may restrict the technologies that can be applied

 

CASICloud

Within China’s A&D sector the Industry 4.0 focus is being led by the China Aerospace Science and Industry Corporation (CASIC), one of the country’s most important developers and manufacturers of advanced weapon systems. CASIC is channelling its Industry 4.0 programme through a cloud manufacturing system initiated in 2015, which seeks to leverage industrial internet technologies such as cloud computing, IoT, big-data analytics, and advanced computing. The system is called CASICloud, www.casicloud.com, and is geared towards linking CASIC with its Tier 2 and 3 suppliers across the many sectors the group operates, including A&D.

In June, state-run newspaper China Daily quoted Shu Jinlong, chairman of CASICloud Technology, a subsidiary that is responsible for the system, as saying that more than 800,000 companies had subscribed to CASICloud – including 3,000 foreign firms – with more than 90% of these suppliers designated as small and medium-sized enterprises (SMEs). In time, CASIC is aiming to attract up to 10,000 SMEs from abroad as part of wider efforts to expand in international markets and gain access to foreign technologies. While CASICloud is applied across several sectors, opportunities in A&D have been underscored by other Chinese state-owned defence enterprises – including the Aviation Industry Corporation of China (AVIC) and the China Electronics Technology Group Corporation (CETC) – participating in the cloud manufacturing programme. In addition, CASICloud is partnered with China’s military procurement portal, www.weain.mil.cn, presumably to boost industrial responses to tender opportunities.

Germany China collaboration on Industry 4.0

Germany’s economy and energy minister, Vice Chancellor Sigmar Gabriel, and China’s minister for industry and information technologies, Wei Miao signed an agreement promoting cooperation of German and Chinese firms in “intelligent manufacturing and digital networking of production processes,” according to a statement from Germany’s economics and energy ministry.

That will involve developing links between the German government’s “Industry 4.0” strategic industrial development program and China’s “Made in China 2025 “initiative.

The ministerial agreement sets out “general bases of cooperation.” Those include effective protection of intellectual property rights, voluntary decision of companies on whether or not to transfer technologies, joint German-Chinese development of norms and standards, data security for the firms involved and efforts to improve the framework conditions for entrepreneurs.

For China this cooperation and the notion of implementing industry 4.0 in China in general is said to be an outstanding opportunity. Some observers think cooperation with China in this area entails serious long-term risks for German industry because Germany and China’s economies are both based on industrial production.

“Industrial production is Germany’s main economic strength. The USA is the leader in digitization and infotech in general, less so in industrial production. In that sense, the two countries have complementary strengths. China, in contrast, directly competes with Germany in industrial production,” said Christian Growitsch, director of HWWI, the Hamburg Global Economy Institute, a think tank.

“Take Transrapid high-speed trains, for example,” Growitsch said. “Germany developed them and went into a joint venture in China. Now China is building high-speed train on its own, and dominates world markets.” “That suggests maybe Germany should consider approaching the US as its key partner on Industry 4.0, more than China,” he added.

He added that cooperation with American firms on digitization of industrial processes also entailed risks. If American infotech firms cooperate with German machine-tool makers on development of Industry 4.0 systems, those infotech firms could at some point decide to apply their knowledge to joint ventures with American machine-tool makers.

 

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