Industry 4.0: Driver of Productivity and Growth in Manufacturing

A couple of unfortunate events did not stop Dr. Markus Lorenz from being at our  Wirtschaftsforum on Thursday, December 10th : One  runway  at Hamburg airport was shut down causing heavy delays, laptop outage, and a taxi rolling over his foot while he was getting out of the car in Lüneburg. He delivered an interactive and engaging talk on “Industry 4.0: Driver of Productivity and Growth in Manufacturing”, embedded in the lecture on “Data Economy” of Prof. Dr. Drews.

To start with, Markus clarified what he means when talking about Industry 4.0 (i4.0): The linking of machinery and software to enable seamless integration of production processes. He pointed out that total efficiency gains of 5-8% are possible, in a context in which manufacturers have traditionally been struggling to realize 1% gains. Further, i4.0 can drive GDP growths of 1-2%, based on proliferation of variance. As an example, he mentioned a specific yoghurt brand. More than 20 years ago, only 4 different flavors were on offer, while in 2015 this number had risen to 96.

Markus also discussed the impact of i4.0 on human labor, based on the results from his recently released study “Industry 4.0: The Future of Productivity and Growth in Manufacturing Industries.” In a nutshell, the technical developments will reduce the number of simple, mechanical jobs. However, at the same time, highly skilled jobs are being created (e.g., data scientists). Overall, up to 400.000 new jobs will be created in Germany in the next ten years.Next, Markus analyzed how i4.0 can enable new business models for equipment suppliers, who can enlarge their product portfolio by new products and services. He touched upon smart machines, cloud enabled automation, and data driven services, and discussed how robots can work in direct cooperation with humans to drive productivity. Focusing on the Western European market, he showed an example of how container handling in ports can be affected by i4.0. For example, i4.0 can be used to optimize loadings of container ships by creating automated container terminals that enable real-time monitoring and remote loading.

Finally, Markus opened the discussion for questions from the audience. Questions ranged from BCG’s involvement in actual developments of devices, to job opportunities for data scientists, and open questions in the field of i4.0 that can and should be addressed by researchers in the future.