An article in the September issue of Bloomberg Businessweek provides a glimpse into what’s really happening that will affect manufacturing’s future, with two competing consortiums now attempting to define just that, one in the U.S. and one in Germany. So far, the U.S. appears to have the edge, according to the BB article.
It seems that some in the German manufacturing space – including a family-owned maker of metalworking machinery called Trumpf – are worried about the risk that a Google or an Apple might master the manufacturing world. So, they and other German manufacturers are participating in a program called “Industrie 4.0.”
The name derives from the succession of industrial revolutions: first, there was the 18th century version when mechanized production was driven by steam; the second occurred around the dawn of the 20th century, powered by electricity; the third began mid-century with computer-regulated production; this fourth wave is comprised of machines to talking to one another, or what’s frequently referred to nowadays as the IoT, or Internet of Things.
It is predicted that by 2020, Industrie 4.0-related projects “will account for half of capital investment by German manufacturers,” notes the article, worth about $45 billion according to PwC. Globally, industrial internet investment will top $500 billion by then, up from just $20 billion in 2012. Thus, the German consensus is summed up best by the head of the German Chambers of Commerce when he says to avoid falling behind “[we] must maintain contact with the customer and not lose out” to software companies that might end up with valuable market data.
Meanwhile, in the U.S., a consortium has been formed by AT&T, Cisco, GE, Intel and IBM called the Industrial Internet Consortium, or IIC.
At the heart of the matter lies the fact that currently, there are no established standards for machine to machine communications. Both groups want to make it easier to enable such critical supply chain communications. The goal is to reduce downtime “by anticipating when a factory will have spare capacity or need replacement parts,” for example. Built-in sensors can collect all sorts of data that would help to better allocate resources and thus cut energy costs by an estimated 25%.
But while the U.S. consortium has put a lot of money, mind and muscle behind its initiative, the German consortium (“Mittlestand”) “acts primarily as a cheerleader and offers little in the way of financial help,” according to Bloomberg. Politicians and labor appear to have the strong hand in setting its agenda, and they focus mostly on sponsoring academic research.
By contrast, the IIC coordinates trials of new technologies and has launched 11 experiments, including a system to track handheld tools to ensure they’re used effectively and a 100-gigabyte-per-second network to connect machinery. GE alone claims to have invested over $1 billion into IIC. Today, the group has grown to 200 members and even includes Germany’s SAP. While the German effort is driven by “government, and is unmistakably part of industrial policy, the IIC is already getting together to do joint experiments,” noted the directory of the D.C. based Manufacturers Alliance for Productivity & Innovation.”
But this is likely to be a decades-long race, and while the U.S. may hold an early lead by taking many small steps quickly, the German approach is more “find the model first and then move toward the implementation.”
They say “to the victor go the spoils” but in this case, the race is a marathon, and one can’t help thinking that there will be many, many winners.