#WednesdayswithMDBInsight: Lauren Millier, EVP
What is Industry 4.0?
Lauren Millier, EVP
Industry 4.0 – you’ve heard of it, maybe you’ve even done some digging into what it means in the context of economic development. But what do you know about its likely impact on your community’s immediate and longer-term planning horizon – on your manufacturing sector or your agricultural sector? What do you need to know, and to do, to strategically address the implications of this on your investment attraction or workforce attraction efforts? The implications of Industry 4.0 and all that it encompasses is something that has been on my radar for some time, and a pressing issue I believe to be of critical importance to our small urban and rural communities.
Deloitte has described Industry 4.0 this way:
The term Industry 4.0 encompasses a promise of a new industrial revolution—one that marries advanced manufacturing techniques with the Internet of Things to create manufacturing systems that are not only interconnected, but communicate, analyze, and use information to drive further intelligent action back in the physical world.
McKinsey & Company’s Cornelius Baur and Dominik Wee defined Industry 4.0 as follows:
…the next phase in the digitization of the manufacturing sector, driven by four disruptions: the astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; the emergence of analytics and business-intelligence capabilities; new forms of human-machine interaction such as touch interfaces and augmented-reality systems; and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing. (The four trends are not the reason for the “4.0,” however. Rather, this is the fourth major upheaval in modern manufacturing, following the lean revolution of the 1970s, the outsourcing phenomenon of the 1990s, and the automation that took off in the 2000s).1
A Pressing Imperative for Canada’s Rural Economy
In Canada’s manufacturing sector, business growth and competitive advantage depends on a comprehensive mix of hiring and training employees, researching and developing innovative products/processes, expanding production and exports, and purchasing advanced technologies.2 This applies equally in our agricultural sector and its many sub-sectors. For Canada’s vast rural regions, this is a pressing imperative. No longer a low-cost destination by global standards, Canada must move deliberately into this disruptive space or risk having our competitiveness significantly threatened.
There are several compelling reasons for elevating the discussion of this issue and my belief that it requires our immediate and ongoing attention. The pace of change, as we know, offers no mercy. This isn’t just a trend to watch, it’s a tectonic shift in the very foundation of our economic existence with implications for what we build, where we build it, and the people we need to run these businesses. Disruptions in data and analytics represent opportunities to hone the sharp edge of our competitive advantage. Missed opportunities in this regard will be costly. Disruptive advances in technology present us with a path towards future-ready innovations. In the realm of Industry 4.0, this is a path we dismiss at our peril particularly if our businesses look to compete on a global stage.
Learning from the Early Adopters
Globally, the early adopters harnessing the opportunities inherent in Industry 4.0 are emerging as frontrunners in an increasingly competitive landscape. From AI and machine learning to integrated processes and warehouse/inventory efficiencies, many countries have made significant advances and are well positioned as Industry 4.0 leaders. The Netherlands, Germany, Sweden and other Nordic countries are among those who have benefited from efforts to understand, collect and utilize data more efficiently and strategically, arming themselves with game-changing insights that bring myriad cost savings and help them leverage assets effectively. From demand predictions to better-controlled (even remote) processes, they are plotting a competitive course earmarked by the basic tenets of Industry 4.0 and its economic drivers.
The Netherlands ranks among the world’s most competitive economies, in large part because of what the World Economic Forum Global Competitiveness Index called their ability to sustain inclusive growth:
The Netherlands maintains its position with the support of a strong education system and high levels of tech readiness among businesses and individuals. Its thriving innovation ecosystem puts the country in an excellent position to shape the unfolding Fourth Industrial Revolution.
The Netherlands FieldLabs initiative (Smart Industry Action Program - https://www.smartindustry.nl/english/) is one to watch. It represents the action resulting from the country’s desire to “secure a position in the vanguard of industrial digitization” which it has recognized is crucial for jobs, future economic growth and the sustainability of industry.
INDUSTRIE 4.0 is the strategic initiative to establish Germany as a lead market and provider of advanced manufacturing solutions and one of 10 “Future Projects” identified by the German government as part of its High-Tech Strategy 2020. Check out Plattform Industrie 4.0, the central network created to support this effort - https://www.plattform-i40.de/PI40/Navigation/EN/Home/home.html.
Nordic countries, including Norway, Finland, Denmark and Sweden, have also been actively pursuing automation and the opportunities of the digital age as priorities in a shared effort to bolster their manufacturing sectors. For more, see: http://norden.diva-portal.org/smash/get/diva2:876658/fulltext01.pdf.
Inspiration Here at Home
Here in Canada, there is much we can learn and apply from these examples. Economic development specialists here in Canada are monitoring the disruptive forces at play and plans are emerging that that integrate affected sectors, supply chains, workforce (think digital talent) and local market intelligence components. I have been inspired by some of the work happening in several Canadian communities, including Tillsonburg where I recently helped develop a High-Tech Manufacturing Sub-Cluster Action Plan. The Town of Tillsonburg has long recognized the importance of its manufacturing sector, with a strategic emphasis on its growth and innovative development reflected in planning efforts going back more than a decade. This has been a wise investment, evidenced by a manufacturing employment base that has grown by 48% in that time (an increase of more than 1000 jobs). The new action plan which advocates for local collaboration came from a recognition that more than half of the town’s manufacturing businesses relate to advanced manufacturing, many with high potential for automation. Tillsonburg understands the changing nature of manufacturing in Ontario and Canada and how the sector has lagged behind regions like Europe and China in the adaptation of new technologies and innovation that respond to shifts in the market.
I’m currently working on a Rural Economic Development Strategy for the City of Ottawa. One of the key considerations emerging through our discussions is the implications of the growth in precision agriculture. The increasing adoption rate of technology in agriculture shouldn’t be surprising to anyone. Farming is highly land and labour-intensive. Farmers are using technology to increase efficiency and manage costs which explains the significant decrease in the number of farm workers and the increase in the size of farming operations. However, what I didn’t appreciate when we began this work is the infrastructure required to support the integration of technology for farm use – items such as GPS guidance, control systems, sensors, robotics, drones, autonomous vehicles, variable rate technology, GPS-based soil sampling, automated hardware, telematics, and software. The adoption of mobile devices, access to high-speed internet (do you have a broadband strategy?), low cost and reliable satellites – for positioning and imagery — and farm equipment that’s optimized for precision agriculture by the manufacturer, are some of the key technologies characterizing the trend for precision agriculture. In researching this trend, it has been suggested that more than 50% of today’s farmers use at least one precision farming practice.
What Can Economic Developers Do?
Economic developers can help to advance the Industry 4.0 agenda for their communities through meaningful and regular outreach that identifies the challenges and exposes the opportunities facing business and industry. Collecting data and input to strengthen your understanding of the current and anticipated realities specific to local businesses is key. This is highlighted by this clear message from Canadian Manufacturers & Exporters (CM&E):
Manufacturing competitors in other jurisdictions are picking up the pace, while Canada’s productivity ranking is stagnant. Industry 4.0 can catapult us ahead, but manufacturers need to get involved before the innovation gap becomes a chasm. Early adoption is necessary to remain competitive – regardless of whether your competition is down the street or across the globe. However, manufacturers tell us again and again that the adoption of these new technologies present significant stumbling blocks.3
Systems thinking, including an eye to the interconnectedness of processes and operations, is an important asset in understanding Industry 4.0. Working with your local manufacturers to form a Community of Practice to share and explore manufacturing and exporting opportunities, may be helpful for those whose learning curve seems steep or where competing priorities afford little time for research to get up to speed.
On the Horizon
It is my hope that provincial organizations such as the Economic Developers Council of Ontario and the Association of Municipalities Ontario (AMO), the Federation of Canadian Municipalities (FCM), and economic development bodies including the International Economic Development Council (IEDC) and the Economic Developers Association of Canada (EDAC) will embrace the Industry 4.0 agenda in more fulsome ways that will support economic developers in efforts to harness the potential of disruption and avoid the pitfalls of inaction during this new industrial revolution. It’s encouraging to see that Western University recently hosted its 3rd Industry 4.0 Symposium and that more and more sector-specific conferences are featuring sessions on related topics. Excellence in Manufacturing Consortium (EMC) Canada’s Advantage Through Excellence – Future of Manufacturing conference in October includes an entire stream dedicated to the future state of manufacturing. MDB Insight has been working closely with EMC Canada to collect current data supporting a more comprehensive understanding of manufacturing in Canada and applauds the forward-thinking initiatives underway at EMC Canada. Conference details can be found here: https://www.futureofmfg.ca/conference-overview.
Will we address the looming threat posed by the slow pace of Industry 4.0 readiness in a manner that protects or enhances our global competitiveness? Can Canada’s rural communities boost domestic and international export strength to align with emerging opportunities? How will economic developers capitalize on Industry 4.0 essentials? These are some of the questions we need to be asking in what I hope will be an ongoing and urgent conversation from coast to coast to coast.
Lauren Millier is an Executive Vice-President at MDB Insight. To learn more about Lauren and the rest of our team, go to https://mdbinsight.com/team-bios/
2. EMC Canada – July 16, 2019, Canadian Government Funding Landscape: Opportunities in Summer 2019