Apr 16, 2015

Manufacturing's yellow brick road | Business Spectator

The Hanover Fair (Hannover Messe in German) is a bit overwhelming, to be honest. Wandering around it, one felt like Dorothy having landed in Munchkinland. “Toto,” I muttered, “I’ve a feeling we’re not in Kansas any more.”
There are 27 vast halls scattered over an area the size of a small city, with 8000 exhibitors and 150,000 visitors either intently inspecting their technology, watching the spruikers spruik, doing deals with them, or just drinking their coffee.
The theme, as it has been for three years, is Industrie 4.0, the name given to a German Government push begun in 2011 to modernise (and specifically computerise) its manufacturing industry, which was falling behind both China and America.
Is the slogan working? Could be. It’s certainly unlocking some government funding and giving policy and industry focus to what was happening anyway, which is the headlong rush to combine three things: automated factories, machine-to-machine internet and 3D printing (or additive manufacturing as those involved prefer to call it).
These things are rapidly transforming global manufacturing and have been for a while. Germany’s problem, and the reason it seems to have come up with Industrie 4.0, is that it doesn’t do lay-offs. For this country, the increase in productivity from automation and digitisation has to mean greater output with the same number of people, not the same output with fewer. 
Executives from Germany’s biggest manufacturer, Siemens (my host on this trip), say it is virtually impossible to get redundancies approved by the board. Siemens' American counterpart, GE, on the other hand, has been announcing lay-offs every week or two for years, and has dramatically shrunk its workforce.
In return for the commitment that workers are not laid off, the unions apparently often agree to pay cuts. Australian unions, of course, prefer lay-offs, so our unemployment rate is 6.3 per cent and rising, while Germany’s is 4.8 per cent.
So anyway, I went looking for Australian exhibitors at Hanover Fair 2015, which was a bit like searching for a lost child at the Easter Show.
I ran out of time (and puff) and couldn’t find them. Although according to the list, there are five with a stand this year, and good on them: NetComm Wireless, NOJA Power Switchgear, Novaris, SystemCORP Embedded Technology and Tritium. Out of 8000. That’s 0.0625 per cent.
It’s clear just from looking at the stands at Hanover Fair and talking to exhibitors, including senior executives of Siemens, that global manufacturing is being dramatically transformed.
Whether you give this transformation a name like the fourth Industrial Revolution, or Industrie 4.0, or just focus on the components, such as M2M internet or additive manufacturing, it’s clear that software and data are becoming as important to manufacturing as the machines themselves.
Most parts are now sold with devices embedded that connect them wirelessly to internet so that data can be uploaded to the cloud. NetComm Wireless’s business is now all about connecting machines.
Within a few years, every machine, and every part of every machine, will be uploading a continuous stream of data on the state of its wear and its vibrations so that repairs can be anticipated. Unscheduled outages can be turned into scheduled ones for massive savings.
Parts and end products are already being printed; I watched it happening. At one stand I heard of a house being 3D-printed. There seems to be no end to the things that can be produced by 'additive manufacturing'. All you need is the metal powder or liquid polymer and a software program that prints the object.
And whole factories are being automated. Not populated by robots, but the factory itself becomes a gigantic robot.
Whether it’s the fourth industrial revolution or an extension of the third doesn’t really matter (the first was steam and mechanisation and the second was mass production; the third seems to have been computers, according to Industrie 4.0 scheme of things).
What’s happening now is the culmination of applying computers and connectivity to manufacturing. It’s both evolutionary and revolutionary at the same time.
The problem for Australia is that you need to have a manufacturing industry in order to transform it.
At the end of our bout of Dutch disease (where a resource economy’s manufacturing industry is crushed by a high exchange rate), policymakers are blowing on the embers of a manufacturing industry that has almost gone out.
But at least there were five Wizards of Oz at the Hanover Fair. Maybe that’s something to build on.

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