Column: Get ready for next industrial revolution

Tom Kelly

The new presidential administration has brought manufacturing to the forefront of the national conversation once again, and rightfully so. Manufacturing remains the largest sector of the economy in most states, including Michigan.

But what most politicians aren’t discussing is that the manufacturing industry is undergoing a transformation, a revolution of equal magnitude to the first industrial revolution. Industry 4.0 — also known as the fourth industrial revolution — is a term coined by experts to describe the convergence of physical and digital technologies disrupting manufacturing today: the industrial internet of things, autonomous robotics, advanced materials, additive manufacturing, big data, cybersecurity and cloud computing. Manufacturing facilities employing these technologies are known as “smart factories.”

Southeast Michigan is already known around the world as a leader in manufacturing technology, but Industry 4.0 provides the opportunity for local manufacturers and technology companies to secure this reputation for the future. However, companies in both industries must move quickly to embrace Industry 4.0 if they want to stay ahead of their competitors.

Automation Alley recently conducted a survey of local and national technology and manufacturing executives to determine their knowledge of Industry 4.0 and their readiness for this new era of manufacturing.

The survey indicated that manufacturing executives see the benefits of investing in new technologies. In fact, more than 85 percent of national manufacturers expect their company’s budget for technological advancements to increase in 2017. However, they face many barriers to technology adoption. Just slightly more than half of them said they have a dedicated budget and process to support the adoption of new technologies. The top barriers for technological advancements included cost, uncertainty about which technology supplier has the best solution, employees being reluctant to change and a lack of employees with adequate skills to adapt to technological advancements.

As for awareness of Industry 4.0, only 27 percent of national manufacturers had heard of the term Industry 4.0, and after reading the definition of Industry 4.0, only 23 percent said it was an initiative within their organization.

Technology executives see the manufacturing industry as an area for growth in the coming year. Fifty-nine percent of respondents said they expect their revenue driven by the manufacturing industry to increase in 2017, and 65 percent said they expect Industry 4.0 to have at least some financial impact on their organization. However, only 32 percent of national technology executives had heard of the term Industry 4.0, and only 39 percent said they currently have or plan to develop products of services dedicated to Industry 4.0.

The survey also indicated that technology and manufacturing professionals need a platform to connect and understand each other, as communication gaps exist between the two industries.

While executives in both industries agree on the top barriers to the manufacturing industry’s implementation of Industry 4.0, the results show the tech industry needs to better understand pain points among manufacturers. For example, while 43 percent of technology executives say poor previous technology adoption experience is a barrier to technology adoption, only 25 percent of manufacturing executives say so. And while 53 percent of technology executives say lack of vision around innovation among the leadership team is a barrier, only 38 percent of manufacturing executives say so.

Encouragingly, the survey indicated that local manufacturing and technology companies are more prepared for Industry 4.0 than their national counterparts. Among Automation Alley members, 68 percent of manufacturing executives and 67 percent of technology executives had heard of the term Industry 4.0. In addition, 68 percent of Automation Alley manufacturing executives said their company has a dedicated budget and process to support the adoption of technological advancements. And 67 percent of Automation Alley technology executives said their organization currently has or plans to develop products or services dedicated to Industry 4.0.

The future of manufacturing belongs to those companies that are willing to invest time, talent and resources into implementing new technologies today. But with so many new technologies coming onto the scene simultaneously, it can be difficult to know where to begin. Small companies would do well to seek expert guidance on where to begin navigating this new world of technology.

Tom Kelly is the executive director of Automation Alley, Michigan’s leading technology business association.