Manufacturing globally has been on the decrease the past fifty years, with Western Europe seeing a considerable decline in its share of activity. Yet manufacturing remains a key driver for middle income employment, as well as indirect employment creation. Belgium particularly has seen significant drops in manufacturing activity, with the wider economic consequences. According to Roland Berger, a move to manufacturing 4.0 techniques would present a way forward for the industry in Belgium.
The services sector has in the past 50 years enjoyed unrivalled growth, while the age old practice of manufacturing products has seen significant drop in activity – falling by over one-third since 1970s. Changes to manufacturing affected not merely the amount of production, but also its distribution globally, a recently released report from Roland Berger Strategy Consultants finds. In its report titled ‘Industry 4.0’, the firm focuses on the Belgian manufacturing sector.
Much of the manufacturing historically done locally in developed countries is more and more outsourced towards Asia. In 2011, the Asian region held 31% of global manufacturing, up from 8% in 1991. Particularly Western Europe was hit hard by these outsourcing practices, with its share of manufacturing dropping from 36% in 1991 to 25% in 2011. Manufacturing however, remains a key component in economic activity, with the sector tending to generate low, medium and high paying employment, compared to services that tend to generate either low or high paying position.
In Belgium the level of manufacturing has been hit hard by the changes in demographic around manufacturing, with manufacturing employment decreasing by 16% between 2001 and 2011. Particularly the middle income segment has been hit by losses, where a decline is seen of 1.7% between 2001 and 2012, decreasing from 513,000 to 422,000. On the other hand, high and low income jobs have increased by an annual rate of 1.8% and 0.9% respectively between 2001 and 2012. The danger, according to the consulting firm, is that there is a vicious cycle, with loss of capacity lowering investment confidence leading to lower capacity addition, iterated.
Not every manufacturing sector in Belgium has been as hard hit as others. Machinery, Food & Beverages, Pharma, Chemicals and Rubber & Plastic, but also the very diverse sector of Furniture and Jewellery continue to be resilient in response to wider economic transformations. The worrisome group contains production of Metals, Printing and Electrical equipment, which saw annual value decreases of around 4%. The distressed group has seen significant losses, and includes Textiles, Motor vehicles, Electronics and Petroleum.
The development of the Internet of Things has resulted in a wide range of new technological features that are set to transform a range of industries, including manufacturing. This transformation has been called ‘manufacturing 4.0’ by a number of players, including by the Boston Consulting Group which states that these digital technologies will lift manufacturing to new levels.
In its report, Roland Berger considers ways in which the digital technologies are set to make manufacturing easier in Belgium. By embracing the following positive additions to manufacturing, Belgian manufacturing may be able to stay competitive, and there by, avoid the vicious cycle.
Consultancy.uk provides a brief summary:
Smart Resource Management will be enabled by real-time resource demand measurement and management in conjunction with supply of energy, raw materials, utilities, etc. Currently, even best-in-class companies measure and optimise their resources consumption only periodically.
Augmented operators are enabled by advanced human-machine interfaces that increase flexibility, productivity and quality for non-automatable operations.
Self-optimised machine networks are connected and intelligent machines and transportation vehicles that are able to improve performance autonomously.
Mass-customisation means that each individual product can be tailored to the requirements of the individual customer, without losing the efficiency of mass production. This is enabled by new production technologies such as additive manufacturing and multi-purpose machines.
Smart products will create added value for the customer through incorporation of embedded communication, storage and analysis capabilities. Products will be monitored continuously through sensors and chips to ensure consistent quality and thereby reduce waste.
Continuous production navigation will be possible based on internal and external data from interconnected partners. The availability of real-time data will increase the reactivity of the operations planning and steering and thus flexibility of production.
Virtual conception will improve the production processes and the product. Tools that integrate simulations of factory layout, material flows, operator ergonomic and resource consumption will reduce product development times, industrialisation time and facilitate step-change improvement.