Let us proceed to the last part of our blog series, shedding some light on Industry 4.0 in the USA. For information on the situation in Germany, Europe, China and Japan, please see the first four blog posts published earlier.
In the USA, Industry 4.0 is discussed among experts only. Moreover, the term “Industry 4.0” is not the usual way to designate this topic. Instead, people refer to it as the “Industrial Internet” or “Internet of Industrial Things”. The key drivers are politicians and some enterprises that are support by partners in science.
The USA, like other countries, is exposed to increasing pressure from international competition. The loss of industrial jobs due to offshoring is a major issue, especially in politics. The government is committed to the re-industrialization of the USA and, thus, promotes modern manufacturing methods. A loss of manufacturing capacity usually goes hand in hand with a loss of research and development capacity. This results in worsening competitiveness and puts much pressure on the remaining industries.
In American enterprises, the current industrial revolution is referred to as the third. The Americans consider mechanical production and assembly line production as the same issue. Seen from this point of view, the invention of computer work is the second industrial revolution, and the usage of the Industrial Internet the third. Unlike Industry 4.0, the Industrial Internet is not limited to the manufacturing industry, but also includes a huge part of the service and agriculture sectors.
Moreover, the Industrial Internet has another technological focus than Industry 4.0. Although both approaches are based on the same concept of cyber-physical systems, only the production and supply chains are in the center of interest of Industry 4.0 in Germany. In contrast, the Industrial Internet approach in the USA comprises all things that are connected to the internet, generate data and are capable to increase efficiency.
In the USA, specific objectives are established at company or global level rather than national level. The primary goal at company level is operative efficiency, which is to be achieved by an increase in productivity. From a global perspective, the sectors that benefit from the Internet of Things are supposed to contribute to the increase of the GDP.
In 2012, President Obama has started the Advanced Manufacturing Partnership Program to support the manufacturing sector. The program aims at improving the business environment, enhancing the innovative strength and retaining qualified employees. This is to be achieved through development of new manufacturing technologies to add new jobs for highly qualified staff and improve the competitiveness of the USA.
Similar to the Platform Industry 4.0 in Germany, there is the Industrial Internet Consortium in the USA. It consists of more than 200 companies, universities, research institutes and government organizations. With their manufacturing, communication and information technology expertise, the founding members AT&T, Cisco, General Electric, Intel and IBM have already covered all aspects that characterize the Industrial Internet. The Industrial Internet Consortium does not pursue a specific strategy with quantified objectives. It is rather intended to be a platform for a widespread empowerment of economy in terms of the Industrial Internet. Corresponding to the fields of activity, the Industrial Internet Consortium has a wider focus than the German Platform Industry 4.0.
All in all, Industry 4.0 is an issue in each of the countries considered in our blog series, even though different names and more or less strict definitions are used. Seen from the political perspective, the improvement of the international competitiveness and, thus, the strengthening of the national economy are in the center of interest. On the other hand, companies are mainly interested in the potentials offered by Industry 4.0. When addressing this issue, companies should concentrate on a partial aspect that promises added value and drive development forward in this field. If the focus is too wide, there is a risk to get lost in the breadth of this subject. Many of the – often only theoretical – Industry 4.0 concepts still have to prove their practicability, despite their undisputable potentials
This post continues our blog series comparing Industry 4.0 on an international level. In the first three parts of the blog, we have already considered Germany, Europe, and China. Part 4 focuses on Japan where – in sharp contrast to Germany and China – Industry 4.0 is no expert topic. It is often discussed in politics and economics, but also appears in Japanese mass media, making reference to Germany and the term "Industry 4.0". In order to keep up-to-date and inform themselves about the latest developments, Japanese delegations like to visit German fairs such as the Hannover Messe (Hannover Trade Fair for Industrial Technology). Nowadays, the Japanese also direct their attention to China and the developments in this area. Japanese companies are also open for Industry 4.0 for historical reasons, as many of them have gained worldwide fame in the fields of robotics and process optimization. Some companies are already well-advanced in the Internet of Things. Toyota, for example, relies on networked autonomous transport robots.
Generally speaking, Industry 4.0 pioneers can be found rather in the private than in the public sector. Groups like Fujitsu or Hitachi had the Industry 4.0 topic on their radar even before the term has actually been created. As a result, they have evolved towards service companies, becoming increasingly independent of the strong end consumer business.
Japan is on the bleeding edge in many relevant sectors, among them mechanical engineering, automation technology, robotics, IT and automotive. These strengths, however, are in fact merely important in mass production, where Japanese methods and processes are globally respected. This is why the change-over to the new production paradigm of mass-type individual production is so hard.
The successes of the past are more of a curse than a blessing. The strongly in-house-oriented innovation culture is an example. Although there are overarching consortia, proprietary solutions are preferred whereas technologies coming from "outside" often remain unconsidered. This conflicts with an open research process and may prevent the rapid integration of external knowledge.
Japan has to cope with the pressure generated in the course of the fourth industrial revolution that has been initiated by the US and Europe. In order to withstand, Japan concentrates on its strengths as a self-appointed robot superpower. In 2012, Japanese companies held 50 percent of the global industry robot market and owned 23 percent of the robots used worldwide. The "robot revolution" is intended to pursue additional goals in this sector. Japan aims at establishing a global robotics center. Another objective is the introduction of robot usage into all areas of life to take advantage of Big Data or Artificial Intelligence using the Internet of Things.
In 2015, the Industrial Value Chain Initiative (IVI) was founded in Japan. This initiative wants to enable small and medium-sized companies to network across sector boundaries. In the past, such companies were often left behind, as the research and production optimization efforts mainly focused on large corporations.The initiative strives at developing standards for factory networking and for the corresponding security concepts and attempts to establish them on the international scene. This is quite a challenge for many Japanese companies, as the majority of them have proprietary software and only some use standard or open source software. Altogether, the IVI is still in its starting phase and, in the first place, has to be considered as a part of the robot revolution. It is supposed to promote the implementation of the robot revolution in the production industry
 The Headquarters for Japan’s Economic Revitalization 2015
Here comes the third part of our blog series. As in the first two, this blog post comparing Industry 4.0 on an international level. This time we focus on China. Industry 4.0 is a hot topic in China, on the level of state initiated activities as well as in the industry. Industry 4.0 related research and articles are a big deal within social media such as WeChat, and in the industry related media.
In China, Industry 4.0 is heavily related to general digitalization topics such as virtualization, cloud computing and the Internet of Things. A clear demarcation by sectors is missing. While this topic is closely linked to the manufacturing sector in Germany, China sees it as a general call for progress.
China sees its own strength in the Internet affinity of its population. The main objectives are to secure high economic growth, jobs and prosperity. In the future, innovations and own ideas shall drive the industrial sector. This is imperative, because differences in labor costs are decreasing compared to high-wage countries. Despite these resolutions, the automation and production level in the industry varies a lot and so does the readiness for Industry 4.0. The manufacturing industry is mixed with Industry 1.0 to Industry 3.0 while Industry 4.0 is a long-term target.
How the demands of a very high automation through Industry 4.0 can be combined with a high employment rate has only been a small part of the discussion. Economist from the government and the private sector claim that most of the saved labor will go to the tertiary industry, the service sector.
What the "high-tech strategy" means to Germany, "Made in China 2025"  means to China. In fact, this is also strongly oriented towards German Industry 4.0 strategy. In July 2015, a joint declaration of intent was established between the German and the Chinese government, which is to coordinate the two nationally oriented strategies more closely. The Made in China 2025 strategy, however, must do much more, since it still largely deals with the manufacturing industry at an industry level of 3.0. The goal of the Made in China 2025 strategy is to develop China from an industrial large-scale producer to a leading production power and to climb up the global value chain. According to Prime Minister Li Kegiang, the focus will be on the quality and not the quantity of products.
In the second part of this blog series we take a closer look at Industry 4.0 in Europe. The importance of industry and, thus, Industry 4.0 for Europe is best reflected in some key figures. Around 80% of all European exports are industrial products . Industry accounts for 16% of the European gross domestic product and employs around 32 million people across more than 2 million companies. This means that the industrial sector is an important factor for prosperity and growth in Europe.
The European Commission aims to create products with high added value by using Industry 4.0 technologies and processes. Important ecological goals such as environmentally friendly and socially sustainable manufacturing remain imperative. The entire value chain is intended to become more economic and increase its sustainability to ensure competitiveness of European companies on the international stage.. The EU wants to be an industrial location for the future while striving to become a pioneer in digitalisation and an attractive location for digitised industry.
As a super-ordinate institution, the EU is a hub for various national initiatives. Twice a year, the EU Commission hosts a high-level round table in Brussels. Representatives from the individual Member States' initiatives meet to exchange information among each other. The German participants, for example, are a number of representatives of Plattform Industrie 4.0. More than 30 national and regional European initiatives fuel the digitising industry (see the illustration).
Since April 2016, activities at the European level have concentrated on the establishment of a digital single market. The primary goal is to enable the exchange of digital services and products throughout Europe. Goods, services, persons and capital can move around freely in Europe, but often only analogue transfers are possible. Only 7% of the European Small and Mid-sized Enterprises (SMEs) provide their goods and services across national borders. A single language of communication must be found to enable cross-border transfers. For this to happen, efforts are concentrated on developing joint standards.
The SMEs are of key importance for the dissemination of Industry 4.0 technologies. According to the EU Commission, an additional economic output of 110 billion Euros is estimated to be generated by digitalization. It is therefore especially important to get the European SMEs on board. The I4MS Initiative (Information and Communications Technology Innovation for Manufacturing Small and Medium-Sized Enterprises) is aimed specifically to address this subject. Since summer 2013, the initiative's centre of excellence supports SMEs in testing and implementing information and communication technologies across the entire value chain. If required, the centre of competence provides the SMEs with the needed expertise.
Summarising the above, it can be said that the EU is very interested in encouraging the individual national initiatives to exchange information and synchronise with each other. For this purpose, various activities have been initiated and support measures have been taken. However, as only some of them have been in force for more than two years, it is still very difficult to assess the impact of the results. It will become apparent within the next few years whether the EU's endeavours will come to fruition
We are about to launch a five-part blog series which will deal with the issue of Industry 4.0 in an international comparison. Today, we start with Germany in the first article and will take a closer look at the situation in China, Japan and the USA in the second, third and fourth parts of this series. The last article will examine the attitude towards Industry 4.0 in the European context and will give a short status report on how this issue is seen in each of the aforementioned nations, taking into account the individual targets and challenges.
In Germany, quite a lot of attention is paid to Industry 4.0. The term "Industry 4.0" is widely known among experts and often even upstages or includes other topics such as "smart mobility". As a result, "Industry 4.0" is becoming more frequently used as a collective term for digitalisation in economy. In the proper sense of the word, however, the term Industry 4.0 refers to the production industry only.
Due to the strong position of the German machinery and plant manufacturing industry, the starting position in Germany is very good, even in the light of ever-growing international competition. However, just a small group of pioneer companies is forging ahead with Industry 4.0. Currently, only 15% of the companies are already using decentralised self-controlling production systems  and only 52% have smart manufacturing plants . In many cases, the reason is a lack of confidence in the security of these new technologies, especially with regards to a possible loss in intellectual property and process know-how.
Industry 4.0 is based on the High-Tech Strategy of the German Federal Government which aims at uniting the actors in the field of research and innovation in order to pursue common objectives. In 2012, the Action Plan High-Tech Strategy has introduced the Industry 4.0 future project intended to pave the way for the Industrial Internet of Things. The strategy is essentially based on the following five pillars of innovative strength:
- Establishing thematic priorities in research and innovation
- Networking of all knowledge-creating stakeholders
- Strengthening of the dynamism of innovation in industry
- Creating favorable conditions for innovation by the Federal Government
- Increasing transparency of scientific programs and technological developments
One problem in terms of the political support of Industry 4.0 is that the responsibility lies with more than one party. For the time being, the competences are shared by the Federal Ministry of Economic Affairs and Energy, the Federal Ministry of the Interior, the Federal Ministry of Transport and Digital Infrastructure, the Federal Ministry of Education and Research, the Federal Ministry of Justice and Consumer Protection and the Federal Ministry of Labour and Social Affairs. This often results in inefficiencies.
If you are talking about Industry 4.0 in Germany, you also have to mention the "Plattform Industrie 4.0" initiative founded by the German industrial associations Bitkom, ZVEI - Zentralverband Elektrotechnik- und Elektronikindustrie (German electrical and electronic manufacturers' association) and VDMA - Verband Deutscher Maschinen - und Anlagenbau (German engineering federation). The platform allows for cross-sectoral cooperation of companies, associations and science.
In April 2015, the Plattform Industrie 4.0 was re-organized and is now steered by the Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Education and Research. Basically, the tasks of the platform have remained unchanged. It does not contribute to the operative realization of Industry 4.0 activities in the market, but rather aims to establish networks and alliances, develops joint recommendations and continues the research agenda. In order to address social aspects, the initiative also promotes understanding, open-mindedness and confidence with regards to Industry 4.0.
 Freudenberg IT und Pierre Audoin Consultants