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Industry 4.0 is Europe’s next industrial revolution, and will be driven by digital data. But it comes with a hefty price tag, says Douglas Clark.

Europe needs to be more productive in how it makes, sells and services. With more than 2 million manufacturing companies supporting 33 million jobs, and accounting for 80% of EU exports, the European industrial sector wants a digital data revolution.

Dubbed Industry 4.0, it aims to use a mix of technologies – including sensors, wireless networks, intelligent robots and machines, augmented reality, cloud computing and big data analytics – to transform productivity and value-added economic growth. It is estimated this end-to-end digitisation could deliver efficiency gains of between 6% and 8% per year.

Building this industrial internet will require high levels of new investment. Strategy consultancy Roland Berger calculates Europe will have to invest €90bn per year over the next 15 years to deliver its Industry 4.0 benefits. It will also require new business models, changes in data legislation, new data and communications standards and new workforce skills, though European countries have different industrial capabilities. 

Germany, Italy, Switzerland, Austria and Sweden are leaders in terms of their modern progressive industrial bases, while eastern European countries are more traditional with lower value-add but are catching up through increased automation. Others such as the UK, France, Spain and Belgium have seen a decline in their industrial share of value-add. All of Europe could benefit from Industry 4.0.

Data analytics and digital trust are core elements in delivering Industry 4.0, and the much talked about (but slowly delivered) European digital single market is a critical component for ensuring the necessary flows of data. Currently, data flow and data access can be held up by localisation rules or other technical and legal barriers; greater interconnection between machines requires a coordinated and pan-European approach. This is something that EU politicians have to resolve now if they want to achieve their industrial revolution.  

Douglas Clark is director of Location Connections, consultants for economic development innovation.

Email: douglas@locationconnections.com

This article is sourced from fDi Magazine
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