Perspective – September 2017

The Manufacturing Indaba was an exciting two days of presentations, talks and panel discussions. I decided to attend because I wanted to see how our stainless steel industry needs to adapt to ensure that we reverse the contraction seen over the last few years, to allow us to become a thriving, growing industry. From the dti’s keynote presentation, it was clear that the history of economic development strongly suggests that it is only through an industrialisation pathway that countries can propel their economies onto a course of longterm, sustainable growth. However, the dti noted that there are problems, locally and internationally, including the lingering effects of the great global recession and further aftershocks: weak growth and demand; global oversupply and overcapacity in key sectors; the ongoing commodity slump; and likely turbulence in the global trade regime. Protectionist measures are also increasing and the prospect of continuing aggressive market penetration by developing countries is seen as entirely predictable.

On the local front, barriers to growth include electricity pricing; road, rail and port logistics and inefficiencies; high input costs where abuse of market power raises prices; and deep-seated skills shortages and mismatches. Minister: Trade and Industry, Dr Rob Davies also noted that; “there is low investor and consumer confidence in the South African economy. This is related to the technical recession but policy uncertainty has also contributed. There is a lack of cohesion across government departments and this means that policy implementation is not optimised.”

Of course one of the central themes of the Indaba was the 4th Industrial revolution or Industry 4.0.

Dr. Rob Davies confirmed; “The 4th Industrial Revolution is here and we need to adapt to the emerging realities.” But what is the 4th Industrial Revolution? Is it a clear and present danger or can we grasp the opportunities? From the dti’s Industrial Policy Action Plan (IPAP9) it involves the application of the following enabling technologies: big data and analytics, autonomous robots, simulation, horizontal and vertical system integration, the industrial internet of things, cybersecurity, the cloud, additive manufacturing and augmented reality. But Industry 4.0 is difficult to define. We don’t know how it will unfold, but it will be a massive technological revolution that will change our world.

What’s clear to me after attending the Indaba, is that this revolution is about integrating regional and global value chains, using the cloud to allow machines producing a product to seamlessly communicate with customers’ and suppliers’ machines to link the total value chain production system. At the moment, a manufacturer often has several systems that battle to communicate with each other. In the future, not only will the factory be integrated but so will the whole value chain.

Industry 4.0 is also about humans working seamlessly with machines. Repetitive jobs will be increasingly left to robots working alongside humans and technology will drive competitive manufacturing. An example was given where the cost of a $750 pair of augmented reality glasses, effectively slashed the human-machine divide in an American manufacturer.

There were discussions about how these emerging technologies and Industry 4.0 will allow for the ‘onshoring’ of jobs, rather than the offshoring of traditional jobs, to the countries with the cheapest labour as we have seen in recent years. Developed countries are in that space already. For example, a manufacturer in Germany makes 140 different types of pliers and employs 1000 people. He doesn’t compete with cheapest production costs rivals, but rather focuses on advanced metallurgy to produce pliers of unrivalled quality.

It was said that universities, as we know them, will fall by the wayside. We will use technology to replace traditional university buildings. Universities educate via a push mechanism and teach you how to become one thing, for example a doctor. This will be replaced by virtual universities and pull learning – in other words, learning what you need for the work that you are currently doing.

Industry 4.0 will result in blue collar worker job losses but these will be replaced by better, higher paid jobs. Traditionally, for industrialisation the focus was on the STEM subjects of Science, Technology, Engineering and Mathematics, but now machines will take over STEM. As a result, only a very few STEM people will be needed to create the machines in the first place.

So, Industry 4.0 is about creativity, connections, customisation, a niche focus and service thinking. The old concept of “invent – make – sell” is obsolete. A product is no longer enough in and of itself. There needs to be something extra. It could be bespoke designs, being a global technology leader in a certain field, having an associated indispensable service attached to the products or allowing for the complete customisation of the product. There’s even the possibility of virtual showrooms that allow the customer to create his/her product through experimentation and visualisation and then seamlessly to order placement and delivery. It’s also about integration of regional and global  value chains and being inextricably embedded in these value chains.

So, I came away from the Indaba convinced that our stainless steel industry can grow, but there needs to be changes to adapt to the new reality of Industry 4.0. Some sassda members are already embracing the 4th Industrial Revolution but we all need to embrace these new technologies and ways of manufacturing and trading, if we are to build successful businesses into the future.

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