At a global level the world is heading into a new industrial age, which is either referred to as the 4th Industrial Revolution (aka Industry 4.0, Industrie 4.0, the IIoT). These developments are set to lead to massive ramifications on society as a whole, but also for countries such as South Africa. This is of particular relevance if one considers that the NDP 2030 goals largely coincide with the anticipated cosmic changes brought about by Industry 4.0. Globally, there is a high degree of uncertainty regarding the impact of increased digitisation on a variety of industries such as manufacturing. Key questions relate to what a future world will look like in terms of the work-split between machines and people, how these developments will impact on the ability of South Africa to compete in the global arena and what this means for employment of human resources in this country.
Industry 4.0 relates to a trend where cyber/IT systems (e.g. networked technologies) and physical systems (e.g. machines and people) are increasingly merged. This allows for remote monitoring of physical processes, creation of a ‘virtual copy’ of a physical world, the ability for decentralised action to be taken with the aid of technologies such as artificial intelligence, and for human activities to be supported through technology.
This article deals with the implications of the changes for South Africa and how these could best be leveraged to support objectives as spelled out in the NDP, namely industrial growth, exports and the creation of high-value employment opportunities. The goal was to achieve a balanced perspective between the opportunities as well as the risks that are inherent with a transition to an Industry 4.0 world.
Sector overview
The commercial implications for companies, value chains and economies of Industry 4.0 are enormous. It has been estimated that the deployment of one the core technologies underpinning Industry 4.0, namely Industrial Internet of Things (IIoT), will lead to global industrial sector benefits of approximately $14 trillion between now and 2022 alone. These benefits are set to occur through improvements in innovation, customer experience, asset utilisation, employee productivity and supply chain management.
An IIoT roadmap was presented to outline a possible SA migration to an Industry 4.0 world. The roadmap consists of the following dimensions along the full industrial value chain:
1. Digital product or service lifecycle management (dealing with process aspects).
2. Disruptive technologies (dealing with the ‘tools’ required to satisfy requirements).
3. Solution architecture (dealing with the technology platform for Industry 4.0 to be executed).
4. Return on investments evolution (dealing with a systematic evolution process).
Critical to success in the new environment is an understanding that the future world is characterised by ‘connections’, which will roll out in different stages, namely:
• Connected machines (ability of machines/equipment to interface with each other).
• Connected life (establishment of networked industries where e.g. transport is linked to manufacturing, which in turn is linked to energy etc.).
• Connected society (networking of everything to everything in a networked society).
The implications of a new digitally enabled world are profound as it impacts not only on relationships and inter-dependencies of different parties, but also means from an industrial perspective that everybody becomes involved in products and services throughout their lifecycle.
This means that product and service lifecycle management will become the dominant logic to achieve optimal value creation by the inter-linkage of all affected parties and stakeholders. A key requirement for future lifecycle management objectives to be achieved lies in the establishment of a so-called new ‘Digital Business Eco-system’. The premise is to allow for the systematic interconnection of things or data-sources in order to allow for the overall system to be managed. The desired outcomes of digitally enabled product and service lifecycle management are:
• Transparency of key events and developments.
• Ability to execute and optimise machine-to-machine interactions.
• Improvement of innovation and product/service development cycles.
• Reduction of waste and costs; and.
• Improved customer satisfaction through inter alia greater flexibility and responsiveness.
How does all of this, however, relate to the South African industrial and manufacturing sectors, which have faced extensive pressure over the last number of years, with significant activity shifting offshore? Unfortunately for South Africa and other countries such as the US, which has also seen its manufacturing sector shrink significantly, there are a number of factors at play, which occur in a dynamic and volatile environment:
1. Globalisation.
2. A global shift away from manufacturing towards services.
3. The increasingly important role that technology/automation are set to play going forward.
A study looking at the developments in the US found that there were a number of factors, which collectively have led to an erosion of manufacturing and earnings potential in that country:
• Limited skills availability for flexibility in changing between different job types.
• A limited shift of jobs to new sectors that have only been created in the last 30 years.
• The reality that service jobs pay significantly less than manufacturing jobs.
• Limited state interventions and worker representation.
• An increase in workload and employee dissatisfaction.
From a South African context, it is argued that the insights gained in the US offer an ideal opportunity for South Africa to avoid the same mistakes in the run-up to NDP 2030. This relates in particular to the manner in which technologies can and should be deployed by South Africa to mitigate some of the other aspects detracting from manufacturing sector attractiveness in this country (e.g. skills, jobs flexibility and employee satisfaction).
Challenges and roadblocks
What is less clear, however, is the impact of Industry 4.0 on people and especially employment. The biggest challenge looming is one of automation, which is set to lead to a significant number of traditional blue and white-collar occupations being performed by various technologies including robotics. According to research conducted by the Foresight Alliance, there are dire predictions, relating to job losses through automation in the coming 20 to 30 years in the US and western Europe. The predictions are made up of a number of scenarios, which are driven by the degree of automation implemented and the ability for automation to integrate human and machine endeavours.
The Foresight Alliance study indicates that up to 7% of all manufacturing jobs could be lost to automation by 2025 and up to 32% by 2035, in a worst-case scenario. What is equally worrying is that the parties most adversely affected in this situation are the so-called ‘Working Poor’ and the ‘Working Class’, with 73% of job losses affecting the working poor.
In a separate study by the OECD, it has been found that South Africa has a high risk of jobs being replaced by robots. This means, that there is a latent potential of robotics to be implemented to automate tasks currently performed by people. If one looks at the deployment of industrial robots per 10 000 manufacturing workers in industrialised countries such as Japan, Germany and the US with South Africa, the risk of automation becomes abundantly clear: whereas Japan currently has a density of 295 robots, Germany 163 and the US 86 – Africa currently has a density of only 2 robots per 10 000 manufacturing workers. Unfortunately the figures for South Africa on its own are not indicated, but it is still clear that South Africa may very soon see an extensive increase in robotics activity.
South Africa will need to find an innovative way to leverage technologies to leapfrog its current extensive manufacturing challenges including low skill-sets and productivity levels etc. to secure its place in the global economy going forward. Unfortunately, it is not a question of if South Africa wants to play in an Industry 4.0 – but rather, how South Africa uses the technological potential to ensure global competitiveness and at the same time achieve the goals set out by the NGP.
Opportunities and game changers
In order for South Africa to overcome the major manufacturing/industrial sector challenges it faces in the coming years, it is believed that the following realisations are critical:
• Need for new answers to deal with historic and emerging challenges.
• Acknowledgement that there is enough time for a sequential approach: i.e. fix baseline challenges first, and then deal with Industry 4.0 requirements.
• Need for technology to be fully embraced as an enabler to deal with challenges.
• The targeted use of technology specifically to compensate SA weaknesses and improve the country’s competitive position.
How can this be achieved? There is an international trend to reappraise the core competencies of people and machines to find optimal ways to ensure a better output by combining the two elements. This leads to future work being performed in three different paths:
1. By people possessing particular strengths in so-called ‘humarithms’.
2. By a combination of people + technologies, known as ‘augments’.
3. By machines possessing particular strengths in so-called ‘algorithms’.
It is believed that especially the second route (augments) is one that is of particular importance for South Africa and its NDP 2030 goals. This scenario is characterised as follows:
• It relies on the human mind as well as body and is supported/augmented by technology.
• It allows for an adaptation to various circumstances and deals with specific skill deficiencies.
• It can accelerate learning through technology not only in the initial training stage, but also an ongoing phase while work is performed.
In so doing, and with the aid of technologies such as augmented or virtual reality, and supported by artificial intelligence, it is believed that the new value proposition offered by the augment solution (people + technologies) may contribute to South Africa in staying or becoming more globally competitive.
The game-changer advocated is for a people + technology solution to be developed for different sectors and applications, which would allow SA to compete against the labour rate of an international worker working without technology, an international augment solution as well as a machine such as a robot. It has to be stressed that the augment solution will not able to stem the tide in sectors clearly suited for robotics (e.g. welding of body-frame in the automotive sector) but would need to be aligned with specific sectors requiring greater flexibility, and with all probability, lower production volumes.
Looking forward and recommendations including public/private partnership
In order for South Africa to deal with Industry 4.0 requirements, it is argued that it is critical for such solutions to be implemented in South Africa. Aerosud, as a supplier to the global commercial aviation manufacturing sector, is keen to support this process and believes that the Commercial Aviation Manufacturing Sector (CAMASA) offers an ideal opportunity for Industry 4.0 solutions to be piloted. The primary reasons for this are:
• Almost infinite growth of exports possible from SA with the global demand for aeroplanes being 2000+ per annum for the next 20 years.
• The competitive fundamentals are in place and exports are already occurring and growing at a significant rate.
• The aviation sector globally being hi-tech in nature and thus allowing for the effective transfer of best practices and trends to South Africa.
The CAMASA has engaged with inter alia the Department of Trade and Industry (DTI) as well as the Department of Science and Technology (DST) in an effort to establish a public/private initiative to achieve the following goals as part of an Industry 4.0 Reference Implementation Model:
1. Development of skills and enabling competencies to deal with current and future requirements including augmentation options.
2. Development of an Advanced Manufacturing Solution Framework built on Industry 4.0 principles.
3. The industrialisation and phasing-in of high potential technologies such as 3D printing (e.g. titanium composites).
4. Establishment of collaborative multi-stakeholder platforms to allow for value chain integration.
5. Securing NGP and NDP objectives including the development of new suppliers and employment opportunities.
The plans are at an advanced stage and will now be further defined to explore a win-win solution between industry and government.
Conclusion
When looking at the new developments and requirements in an increasingly digitised world, it is easy to fall into the trap of becoming despondent and to paint technology as a ‘bogey man’. Although there is, of course, a high degree of uncertainty and justified concern, it is important that South Africa does not fall into a trap of believing that these developments can be blocked out, or that these global developments will not affect our country. Unfortunately, the longer South Africa waits in planning and executing a concerted response to these developments, the less time we have to find solutions to chart our own path and develop solutions that fit our specific circumstances. It is a brave new world; South Africa should make the most of it.
For more information contact Duan Gauché, 1Worx, +27 (0)83 327 7069, [email protected], www.1worx.co
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