Our Aerospace and Manufacturing sectors in Manitoba had an impressive presentation in early March from Alistair Nolan, the Senior Economist for the Directorate for Science, Technology and Innovation, from the Organisation for Economic Co-operation and Development (OECD), which is based in Europe.
The title of Alistair’s presentation was The Next Production Revolution: Implications for Government and Business. This web article is a discussion of some of the points that were made during two of Alistair Nolan’s presentations during that early March visit to Manitoba.
The Next Production Revolution
The OECD surmises that the The Next Production Revolution (i.e. Industry 4.0) will be the confluence of many new technologies which include Autonomous Machines and Systems (supported by Artificial Intelligence and Cloud Computing), Human Machine Integration (supported by System Integration and the Internet of Things), and Additive Manufacturing- 3D printing (supported by Simulations and Big Data).
An interesting point that Alistair made was that Productivity growth has declined in the G20 countries since the 1990’s. The OECD convincingly indicates that annualized productivity growth during the 2007 – 2014 period in the G20 countries was about 0.5%. On the other hand, the Non-OECD countries during the period covered have made significant gains with annualized productivity growth averaging over 5%. It is surmised that certain technology was sent to the lower wage economies during this time, benefitting them greatly while the G20 was not able to incorporate their technology gains in any significant way.
The road to becoming Industry 4.0 capable calls for companies to adopt digital technologies that can support their mission. These technologies will ultimately become a matter of competitive survival. As an example, the development approaches for the Boeing 767 and the 787 were compared.The 787 Dreamliner design process tested only 11 wing designs, versus the 77 wing designs which were used for the earlier Boeing 767 aircraft. On the other hand, over 800,000 processor hours of computing time on Cray supercomputers went into the design of the 787 Dreamliner. Those computing assets were not available in the earlier 767 aircraft, requiring the obviously more fit up and physical design iterations.
OECD believes that 3D Printing will also play a large role in the future of manufacturing. Some aerospace companies have replaced a significant number of their parts from machining processes and have converted those to 3D printing. These applications are typically made when the number of units required is few. A follow-on effect is found here in that with less materials used, there are also environmental benefits.
Further afield in the application of 3D printed materials is that better ergonomic and environmental effects are also possible. For instance, 3D-printed nozzles in jet engines lower fuel consumption, reducing carbon emissions. Other ‘green’ suggestions were also raised in the session with the possibility of crating a certification system to label 3D printers with different grades of sustainability and removing intellectual barriers so as to enable 3D printing for repair parts of products that are no longer in production. This is an important feature for Winnipeg’s aerospace sector, which does a lot of O&M work, at times on aircraft that are not longer manufactured.
BioProducts were the third element identified in these talks as a means of supporting future productivity and environmental benefits. Challenges here are that screening processes are required for synthetic DNA manufacture and sale; private-public investments are needed to establish bio-refineries; and the overall regulatory regime needs to improve. The workforce in this case also requires interdisciplinary skills, particularly in the STEM area (Science Technology Engineering and Mathematics).Several points were made during our presentation about the importance and indeed some new ideas on how to support STEM education, so as to position one’s economy as being Industry 4.0 capable.
How do we get to Industry 4.0? Alistair states that numerous technologies combine to create these transformational digital technologies, including new sensors, big data analysis, cloud computing, and the Internet of Things most of which enable autonomous machines and intelligent systems. Because of this complexity Industry 4.0 faces many challenges, including diffusion, as very few companies understand what it means. Nolan notes that only “18% of German companies” are “familiar with the term Industry 4.0”.
According to Alistair’s presentation, “two thirds of people surveyed lack the skills to succeed in technology-rich environments”. Education and training in STEM areas require constant support and attention, not only to balance the supply and demand for these skills, but to increase industry interaction and the importance of inter-disciplinary education and research.
For instance, Nolan remarks that nanotechnology “thrive(s) at the interface of traditional disciplines”, encouraging the development and growth of multidisciplinary networks. He also notes the difference between the research generated by the private sector versus the academic and public sectors, citing that “over 70% of nanotechnology patents… are filed by the academic and public sectors (World Intellectual Property Organization, 2015).” This contrasts significantly with the current patent filing results which point to the private sector as the key recipient.
Challenges Facing STEM Industries
The current challenge of training in STEM fields is complicated by the factor of uncertainty which is a part of most STEM industries. Nolan remarks that “education systems must efficiently capture and respond to signals from the labour market” and remain responsive and dynamic. He identifies that increased digitalization requires increased training but notes that those with already poorer skills in digital areas are less likely to utilize training opportunities. He also identifies further challenges in training adults over age 55 (which are indicated elsewhere during this presentation as remaining in the workforce longer for a wide variety of reasons.)
Nolan highlights a trend in STEM education in OECD countries known as “some STEM for all”, which has been plagued by faulty concepts of STEM improvement, the incorrect correlation between STEM input and output, financial expenses, and the fact that only a small number of jobs typically require STEM skills. Nolan suggests a re-development of the STEM curriculum, and boosting awareness and emphasizing the importance of STEM skills and careers as a way of encouraging training, as well as training STEM teachers at a higher level and increasing their salaries to a competitive STEM level.
While we have been developing and deploying computer related technologies since the 1990’s, the G20 world has not gained much from this implementation. Productivity growth has declined since the 1990’s and cites that NPR (Next Productivity Revolution) technologies and improved STEM training are needed to improve this trend.
Alistair provided an example from over 100 years ago which demonstrated that while all the necessary pieces were available, the final economic boost did not take place for a full generation. During the 2ndindustrial revolution, factories began introducing re-designed methods of productivity as early as the 1890’s, but did not see a growth in productivity until the 1920’s, four decades after implementation of these new methods. During this time, electric dynamos were unsuccessfully introduced to take the place of steam engines, resulting in a slow productivity growth from 1890-1913.
A suggested source of the delay in productivity improvement was the slow pace of factory electrification. In response, electrical engineers were able to envision many cost-efficient means of exploiting the flexibility of a power transmission system based on electric wires, and the efficiency of replacing the system of shafting and belts with the ‘unit drive’ system, wherein each machine had its own electric dynamo. The advantages of the ‘unit drive’ for factory design turned out to extend well beyond the savings in inputs of fuel derived from eliminating the need to keep all the line shafts turning, and the greater energy efficiency achieved by reducing friction losses in transmission. These system changes were implemented via the rearrangement of production lines and plant retrofitting, through the expertise of experienced factory architects and electrical engineers familiar with the new approach to manufacturing.
But computers are not electric dynamos, and information as an economic commodity is not an electric current. The method by which productivity growth improved so dramatically in the 1920’s cannot be replicated in the same way today. Nolan suggests that the existence of special difficulties in the commercialization of novel (information) technologies (i.e. today) need to be overcome before the mass of information-users can benefit in their roles as producers, and do so in ways reflected by our traditional, market-oriented indicators of productivity. We still need to find a robust implementation of several elements (of Industry 4.0) to accomplish today what was similarly accomplished in 1920.
Earlier in the STEM education a point was made about the aging workforce. We return to that point with a more substantive comment. Within the G20 populations, the old-age dependency ratio will double in the next 35 years. Canada, for instance, currently has about 25 per 100 people who are still working and are older than 65 years of age. In 35 years this will rise 50 per 100 people, or 50%, of the workforce that is expected to be older than 65 years of age. This calls for new and special approaches (which are not yet found) to support and as possible, retrain or redevelop these older workers to support our (G20!) economy’s’ needs for skilled workers.
Canada’s use of ICT Tools and Activities circa 2016
A commentary is drawn out of Nolan’s talk dealing with Canada’s use of ICT Tools and related enterprise activities which form a part of Industry 4.0. For each of the selected tools and activities indicated in the Chart 1 below, Canada’s position is marked with a red “X” indicating a varied response but no results being indicated for ADE and Big Data.
As a quick read of that chart, the level of Canadian Industries indicated for using broadband are 100%, e-purchases ~70%, ERP 20%, CRM 30%, cloud computing 35%, e-sales 20% and RFID at less than 10%. These results indicate that our take up of these tools is matched by other world economies, but despite this our competitive position is by no means advanced or even good.
Chart 1: Diffusion of Selected ICT Tools and Activities in Enterprises
Source: OECD Science, Technology and Industry Scoreboard 2017, www.oe.cd/sti-scoreboard, based on OECD, ICT Database; Access and usage by Businesses Database, http://oe.cd/bus, July 2017. Data available HERE.
Explanations about some of the acronyms used:
- ERP, stands for Enterprise Resource Planning. It refers to the systems and software packages used by organizations to manage day-to-day business activities, such as accounting, procurement, project management and manufacturing.
- CRM, Customer Relationship Management is an approach to manage a company’s interaction with current and potential customers.
- ADE,Agent Development Environment is an integrated development environment used to design, develop, debug, simulate and deploy agents.
- RFID, Radio-Frequency Identification is the use of radio waves to read and capture information stored on a tag attached to an object, typically used in inventory control.
Our information session was held at the Caboto Centre and had over 70 people in attendance. A big thank you to Alistair Nolan for his presentation and to the presentation sponsors, ITC, MB and CME.
OECD‘s Innovation publications can be reached HERE.
More information on Alistair Nolan and his presentation can be found HERE.