Europe s Digital Agenda and Industry 4.0 A revolution in the making. Andrea Renda
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1 Europe s Digital Agenda and Industry 4.0 A revolution in the making Andrea Renda Senior Research Fellow, CEPS Brussels, 17 March 2015
2 Agenda The fourth industrial revolution Is Europe ready? Is Europe 2020 geared towards the future of industrial production? Is the Digital Agenda including meaningful targets and actions for the next industrial revolution?
3 Degree of Complexity From Industry 1.0 to Industry 4.0 First Mechanical Loom Industrial Revolution through introduction of mechanical production facilities End of 18th Century powered by water and steam of production Industry Industrial Revolution through introduction of mass production based on the division of labour powered by electrical energy Industry 2.0 Start of 20th Century 3. Industrial Revolution through Introduction of electronics and IT for a further Start of 70ies automization today 4. Industrial Revolution based on Cyber-Physical Production Systems Industry 4.0 Industry 1.0 t
4 A cocktail of technologies Smart objects the Internet of Things Cloud computing central data storage Always-on connectivity (multi-tech) Advanced robotics 3D printing Modular/granular value and supply chains Big Data Analytics for optimized management of the supply chain
5 From the traditional to the smart factory setup setup PLC production production shorter product life cycles individualized products international competition SCADA fixed locations monolitic quality demand hierarchical Ethernet unknown positions wired Information and communication technologies Source: Acatech (2014)
6 Future Products must be Source: Capgemini (2014)
7 Benefits? Energy Efficiency and decentralization Mass optimized/customized production Cloud effect on physical investment: the end of economies of scale in physical production? A quantum leap in the Coasian/Williamsonian view of markets and hierarchies (from make or buy to produce/transfer data decisions?) In Germany +18% productivity, +12% turnover, 40 bn investment p.a.? Jobs? 7
8 Risks Every chain is as weak as its weakest link (i.e., the cloud infrastructure?) A standards war? Global, vertical, horizontal Privacy and security concerned unsolved Data localization requirements? Data-based business models? Reshuffling of job markets? Enormous challenges for the welfare state and for education: towards a work-train balance? 8
9 The German Industrie 4.0 9
10 An example of smart specialization? Germany as a leader in embedded technologies: Germany s embedded system market generates EUR 20 billion annually (expected EUR 40 billion by 2020). The applications sector generates annual EUR 4 billion of turnover, with an estimated value added factor of EUR 15 billion. Germany s embedded systems market is the third biggest in the world behind the USA and Japan. As part of the country s INDUSTRIE 4.0 project, Germany aims to be the lead provider of cyber-physical systems by 2020 The government launched 10 Future Projects as part of its High- Tech Strategy 2020 over a years. One of them is INDUSTRIE 4.0, launched in
11 Learning factories and projects
12 Technologie Initiative SmartFactory KL Mitglieder: Kaiserslautern Sponsoren:
13 Europe: still a leading player? EU manufacturing sector accounts for 80 % of private R&D. Europe is world leader in several sectors: in robotics and factory automation, its global share is 50%, in process automation around 30% In deep crisis: Over 3.8 million jobs lost during the crisis Industrial production still lower than before the crisis, despite a rise in 2014 In , Manufacturing jobs grew by 39% in China and 23% in Brazil. Germany lost 8%, France 20% and UK 29% European s share of global patent applications in advanced manufacturing decreased from 31% in 2000 to 25% in 2010, with East Asia rising from 25% in 2000 to 46% in
14 The Digital Agenda? The Digital Agenda does not include any specific action related to the future of manufacturing, and failed to establish a bridge between other initiatives, i.e. the industrial policy and the new skills for new jobs The current targets look at broadband infrastructure, e-commerce and SMEs, but not at the future of manufacturing Should the upcoming review of Europe 2020 lead to a thorough revisiting of the Digital Agenda? 14
15 A plethora of sparse new initiatives Task Force on Advanced Manufacturing for Clean Production created at the beginning of 2013 to foster the development and adoption of Advanced Manufacturing for Clean Production technologies by European industry mandate recently expanded to integration of ICT into manufacturing Three key action lines: Accelerating the commercialization of AMTs Removing obstacles to demand for AMTs Reducing skills shortages and competence deficits 15
16 Faster commercialization of AMTs: PPPs Factories of the Future : since 2009 it funded more than 150 R&D&I projects, 1.15 bn Euros now available in Horizon 2020, driving R&I to develop AMTs and systems for discrete manufacturing, notably in ICT for resource-efficient factory design, adaptive and smart manufacturing equipment and systems (incl. robotics and mechatronics) and high-tech manufacturing processes (incl. 3D printing and micro scale structuring) SPIRE (Sustainable Process Industry through Resource and Energy Efficiency), with a budget of 900 million for , aims at reducing energy intensity by up to 30% and the use of non-renewable primary raw materials by up to 20%. It brings together cement, ceramics, chemicals, engineering, minerals and ores, non-ferrous metals, steel and water sectors. Robotics PPP under Horizon 2020 Photonics PPP under Horizon 2020 coupled with a JTI (ECSEL) European TTO Circle to act as laboratory for the exchange of best practice in technology transfer, mainly among public research organizations. 16
17 Removing demand-side obstacles Very low demand from the internal market due to the economic crisis is a constraint need to open new markets A piecemeal strategy Cooperation with EIB on access to finance Structural funds (ERDF) SILC initiative under the previous CIP (now COSME) Energy efficiency directive I4MS in Horizon 2020 Strategic use of public procurement and standards State aids reform 17
18 Concluding comments The EU has for many years considered the digital agenda as a separate policy from industrial policy: today, DA targets are not very meaningful and need revision A dilemma for Industry 4.0: needs to scale up to the EU level, but not all countries are Germany Awareness is growing on the need to concentrate efforts on the IoT, but a clear vision is still missing Too many initiatives, too fragmented, not comprehensive enough? Review of Europe 2020 in late 2015: potential upgrade of the Digital Agenda, Industrial policy and New Skills initiatives? Unclear whether the Juncker s 315 bn plan will help New KIC on advanced manufacturing in 2016: too late? Skills, skills, skills! 18
19 Europe s Digital Agenda and Industry 4.0 a revolution in the making Andrea Renda Senior Research Fellow, CEPS Brussels, 17 March 2015
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