Industry 4.0 Spurs Globalization

Industry 4.0, or the fourth industrial revolution, is not, as many perceive, an initiative to secure the survival of Western manufacturing units in the face of low-wage competition from China and developing countries. It is, instead, a move towards next-generation production methods that will lead to further globalization, especially for small and medium-sized companies.

FREMONT, CA: The term “Industry 4.0” was coined in Germany in 2011, but it reflects a general development in manufacturing. The consulting company McKinsey defines it as the next phase in digitization, driven by a sharp rise in data volumes, computational power and connectivity, the emergence of analytics and business-intelligence capabilities, new forms of human-machine interaction and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3D printing. The potential for increased productivity is considered huge. Critics say that Industry 4.0 is not just a means to return production to the West, as machines take over with M2M (machine-to-machine) communication and the IoT (Internet of Things), but that it will inevitably lead to factories devoid of humans and to increased unemployment.

Experts at professional services company PWC say Industry 4.0 will create digital networks and ecosystems that in many cases will span the globe but will still retain distinct regional footprints, and both developed and developing markets stand to gain dramatically. Still, a major obstacle is standardization.

Enabling companies to create production ecosystems based on global capabilities has the potential to boost business for smaller companies and companies outside the big cities and industrial regions.