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THINKING THE FUTURE OF EUROPEAN INDUSTRY Digitalization, Industry 4.0
and the role of EU and national policies
Digital transformation and industry
Global trends in manufacturing
3 Source: I-Com elaboration on United Nations National Accounts Main Aggregates Database data
Manufacturing added value as percentage of Gross Domestic Product, 2015
EU Manufacturing trends
4 Source: I-Com elaboration on Eurostat data
0
200
400
600
800
1,000
1,200
1,400
Germ
any
Net
herla
nds
Fran
ceIta
lyU
nite
d Ki
ngdo
mBe
lgiu
mSp
ain
Pola
ndCz
ech
Repu
blic
Aust
riaSw
eden
Irela
ndHu
ngar
yDe
nmar
kSl
ovak
iaRo
man
iaFi
nlan
dPo
rtug
alSl
oven
iaGr
eece
Bulg
aria
Lith
uani
aLu
xem
bour
gCr
oatia
Esto
nia
Latv
iaM
alta
Cypr
us
Total product exports (€ Bn, 2016)
100,000
300,000
500,000
700,000
900,000
1,100,000
1,300,000
2010 2011 2012 2013 2014 2015 2016
Germany France Italy
Spain United Kingdom Netherlands
Export in all products (€ million)
Between 2010 and 2016, Spain shows the best performance (+35.9%), followed by Germany (+27.3%), which continues to increase in exports despite its current high stock, and Italy (+23.6%). Other main countries experienced significant, but lower performances between 2010 and 2016. If we focus only on 2016, we can note that United Kingdom suffered a relevant decrease of exports (-10.7%), and also France declined (-0.7%).
The intake of digital in EU industry
5
Between 2013 and 2015, industrial robot sales in Europe increased by 10% to 50,100 units, a new sales peak. The countries that contributed the most to the European results were Germany (7.9% of global supply), Italy (2.6%) and France (1.2%). Germany and Italy are the 5th and the 7th largest robot market in the world. The worldwide annual supply of industrial robots is estimated to rise by 63% from 2015 to 2019 (from 254,000 units to 414,000 units). The share of Chinese robots is expected to increase from 27% to 38.6%, while North America and the EU will reduce their quotas. China is affirming its leading position in continued innovation in robotics and automation. It is now up to Europe to pick up the challenge.
Source:I-Com elaboration on IFR - national robot associations data
Estimated yearly shipments of multipurpose industrial robots (No. of units)
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
sales 2015 share 2015 share 2019*
Key drivers and preparedness for Connected
Industry in the EU
Internet of Things deployment
7 Source: I-Com elaboration on Eurostat data
0
25
50
75
100
Cloud computing of medium-highsophistication
Rfid
ERP systems
CRM systems
SCM systems
Big Data analyticsEU 28
UK
Spain
France
Germany
Italy
0
3
6
9
12
15
0
20
40
60
80
100
M2M connections
M2M sim cards/100 inhabitants (left axis) M2M sim cards (in million; right axis)
5G revolution. “5G Empowering Vertical Industries” by 5G-PPP
8
Energy sector smart grid applications smart meter application
Media and Entertainment multi-language and interactive contents and
formats new types of services for content distribution for
every type of device.
Manufacturing industry connected goods energy saving processes collaborative robotics integrated logistics new production models and professionalism. Industry 4.0 is focused on the “smart factory” concept which includes smart production, smart services and smart energy
Transport sector advanced driver assistance systems (up to
complete autonomous driving cars) multimodal transport solutions information on the road traffic control systems
Healthcare additional services such as “Personalized
Medicine” IoT and Big Data will support integrated care
models including billing and future universal care accounts
chance for patients to take control of their healthcare and allocate resources in accordance with their perceived needs
assets and intervention management in Hospitals robotics remote monitoring smarter medication
5G European roadmap
9 Source: “5G for Europe: an Action Plan” (14.9.2016)
8 ACTIONS: 1) preliminary trials from 2017 and pre-commercial trials with a
clear cross-border dimension from 2018, adoption by Member States of national 5G deployment roadmaps and the identification at least one major city to be “5G enabled” by the end of 2020;
2) identification by the end of 2016 of a list of pioneer spectrum bands for the initial launch of 5G services;
3) adoption of an agreement around the full set of spectrum bands (below and above 6GHz) to be harmonised for 5gdeployment of commercial 5G networks in Europe;
4) identification of actionable best practice to facilitate denser cell deployment;
5) promotion by the end of 2019 of 5G standard’s availability, the standardisation on radio access and core network challenges and the conclusion of cross-industry partnerships;
6) technological experiments to realize as early as in 2017 and detailed roadmaps by March 2017 for the implementation of advanced pre-commercial trials;
7) 5G infrastructure’s usage to improve the performance of communication services used for public safety and security in Member States;
8) Identification of assumptions and modalities for a venture financing facility
Skills, skill gap and the impact on the labor market
10 Source: I-Com elaboration on Eurostat data
0
5
10
15
20
25
30
35
40
45
Irela
nd
Aust
ria
Luxe
mbo
urg
Net
herla
nds
Denm
ark
Spai
n
Hung
ary
Finl
and
UK
Germ
any
Czec
h Re
p.
EU 2
8
Slov
akia
Mal
ta
Slov
enia
Italy
Fran
ce
Croa
tia
Bulg
aria
Swed
en
Cypr
us
Port
ugal
Latv
ia
Lith
uani
a
Esto
nia
Pola
nd
Rom
ania
Enterprises that employ ICT specialists
Manufacturing Total
5.6%
2.8% 2.1%
10.7% 9.4%
2.0% 2.8% 2.5%
1.7% 0.8%
3.0%
0%
2%
4%
6%
8%
10%
12%
14%
0
200
400
600
800
1,000
1,200
1,400
Data workers
2016 (in thousands) 2016, % on total employment (*)
NGA coverage
11 Source: I-Com elaboration on Eurostat data
0
10
20
30
40
50
60
70
80
90
100
in %
2017
2014
y = 0.1369x - 2.3181 R² = 0.3402
0
4
8
12
16
40 60 80 100
Ente
rpris
es a
naly
sing
big
dat
a
NGA coverage
12 Source: I-Com elaboration on data European Data Market Monitoring Tool, IDC (2016)
Skills, skill gap and the impact on the labor market
0%
4%
8%
12%
0
4,000
8,000
12,000
2016 2020
in th
ousa
nds
Data workers skill gap in EU
Demand (left axis) Supply (left axis) Data workers skill gap (right axis)
0%
2%
4%
6%
8%
10%
12%
14%
16%
Poland Italy Spain UK France
Data workers skill gap in the Big 5 countries
2016
2020
Standardisation and interoperability
13
According to the ISO definition, standards are documents, established by consensus and approved by a recognized body, that provide for common and repeated use, rules, guidelines or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context
Standards lead to cost reduction or cost savings derived mainly from economies of scale, the possibility to anticipate technical requirements, the reduction of transaction costs and the possibility to access standardised components. They increase productive and innovative efficiency, improve market access and increase competitiveness.
Standards ensure the exchange of data between machines, systems and
software within a networked value chain If data and communication protocols are proprietary or only recognized
nationally, only the equipment of one company or group of companies will be compatible, and thus, competition and trade can be expected to suffer and costs rise. On the other hand, independent, commonly agreed, international standard communication protocols, data formats and interfaces can ensure interoperability across different sectors and different countries, encourage the wide adoption of Industry 4.0 technologies, and ensure open markets worldwide.
Interoperability is essential for the deployment of the IoT and the seamless flow of data across sectors and regions.
Therefore, standards can provide safety and reliability, support of government policies and legislation, interoperability, business benefits and consumer choice
Power plug and outlet socket
Wiring colours
JPEG & MPEG compression standards
Cyber security – The key objectives at EU level
14
0
10
20
30
40
50
60
Swed
enPo
rtug
alIta
lyIre
land
Croa
tiaM
alta
Slov
akia
Denm
ark
Cypr
usFi
nlan
dSp
ain
Slov
enia UK
Czec
h Re
p.EU
28
Germ
any
Net
herla
nds
Aust
riaFr
ance
Luxe
mbo
urg
Rom
ania
Bulg
aria
Esto
nia
Latv
iaPo
land
Hung
ary
%
Enterprises had a formally defined ICT security policy (2015)
All enterprises
Manufacturing
2) Making the EU a strong player in cybersecurity Europe needs to be more ambitious in nurturing its competitive advantage in the field of cybersecurity to ensure that European citizens, enterprises (including SMEs), public administrations have access to the latest digital security technology, which is interoperable, competitive, trustworthy and respects fundamental rights including the right to privacy. This should also help take advantage of the booming global cybersecurity market. To achieve this Europe needs to overcome the current cybersecurity market fragmentation and foster European cybersecurity industry 3) Mainstreaming cybersecurity in EU policies There is a need to embed cybersecurity in the future EU policy initiatives from the start, in particular with regard to new technologies and emerging sectors such as connected cars, smart grids and the Internet of Things (loT)
1) Increasing cybersecurity capabilities and cooperation Cybersecurity capabilities need to be brought at the same level of development in all the EU Member States and ensure that exchanges of information and cooperation are efficient, including at cross-border level
Source: I-Com elaboration on Eurostat data
Source: European Commission, Communication on a Cybersecurity Strategy of the European Union (2013)
I-Com 2007 Industry 4.0 Index on the level of preparedness across EU countries
15
I-Com elaborated a synthetic index in order to give an idea of the level of preparedness for Industry 4.0 in the EU countries. The I-Com index is based on thirteen variables that refer to the adoption of technology, infrastructure and skills and are closely related to the topic of the fourth industrial revolution.
A. Technology Variables 1. manufacturing enterprises that share internally electronic information with an ERP 2. manufacturing enterprises using Radio Frequency Identification (RFID) technologies 3. manufacturing enterprise buying Cloud Computing services of medium-high sophistication 4. manufacturing enterprises using software solutions like Customer Relationship Management (CRM) 5. manufacturing enterprises whose business processes are automatically linked to those of their suppliers and/ or customers (SCM) 6. manufacturing enterprises analyzing big data from any data source
B. Infrastracture Variables 7. Fixed Ultra-broad coverage of the population 8. 4G coverage of the population
C. Skill variables 9. share of ICT specialists out of total employment 10. share of data workers out of total employment 11. share of enterprises providing training to their personnel to develop/upgrade their ICT skills 12. share of STEM graduates 13. share of manufacturing companies with a ICT security policy as of 2015
I-Com Industry 4.0 Index on the level of preparedness across EU countries
16 Source: I-Com elaboration on data Eurostat and European Data Market Monitoring Tool, IDC (2016)
The values were normalized relative to the best performer country, so as to establish a ranking from 0 to 100. Finland tops the ranking thanks primarily to the adoption of certain technologies (cloud computing services and Big Data analysis tools) and the relatively high level of employment of both ICT specialists and data workers. The Netherlands, Germany and Denmark immediately follow. In all of these countries, employment of both ICT specialists and data workers is relatively more widespread. A large part of companies adopt IoT-linked technologies. Most Eastern countries show unfavorable conditions to the development of Industry 4.0. Italy and France are positioned closer to the worst performing countries. They must still reduce the gap with the rest of Europe relative to infrastructure.
53 63 64
66 66 67 68 69 69
74 77 78 78
80 83 84 84
85 86 86 86 86
93 94 95 96 97
98 100
0 10 20 30 40 50 60 70 80 90 100
RomaniaGreece
BulgariaFrancePolandCroatia
HungaryCyprusLatvia
EstoniaSlovakia
ItalyCzech Rep.
EU 28Spain
SloveniaMalta
LithuaniaBelgiumPortugal
UKIreland
SwedenLuxembourg
AustriaGermanyDenmark
NetherlandsFinland
Policies at EU and national level
The EC approach to Industry 4.0
18
The European Commission launched on 19 April 2016 the first industry-related initiative of the Digital Single Market package. The European Commission will: Help coordinate national and regional initiatives on digitising industry by maintaining a continuous EU-
wide dialogue with all actors involved. A governance framework will be set up with Member States and industry.
Focus investments in EU's public-private partnerships and strongly encourage the use of the opportunities offered by the EU Investment Plan and European Structural and Investment Funds.
Invest €500 million in a pan-EU network of digital innovation hubs (centres of excellence in technology) where businesses can obtain advice and test digital innovations.
Set up large-scale pilot projects to strengthen internet of things, advanced manufacturing and technologies in smart cities and homes, connected cars or mobile health services.
Adopt future-proof legislation that will support the free flow of data and clarify ownership of data generated by sensors and smart devices. The Commission will also review rules on safety and liability of autonomous systems.
Present an EU skills agenda that will help give people the skills needed for jobs in the digital age. Overall, the EC’s plans should mobilise up to €50 billion of public and private investments in support of
the digitisation of industry. €37 billion investment to boost digital innovation. €5.5 billion national and regional investments in digital innovation hubs. €6.3 billion for the first production lines of next-generation electronic components. €6.7 billion for the European Cloud Initiative.
Digitising European Industry
19 Source: European Commission
To facilitate coordination of European, national & regional initiatives
Mainstreaming digital innovation across all sectors: Setting up a pan-European network of Digital Innovation Hubs
Strengthening leadership in digital technologies • Public-Private Partnerships • Industrial platforms • Large scale pilots & test beds
Preparing People for the digital age: Skills & Training
Regulatory framework: • Free flow of data & data ownership • Safety & liability of autonomous systems & Internet of Things
Challenges & opportunities of
the Internet of Things
CLOUD European Cloud Initiative in a data-driven economy: • European Open Science Cloud • European Data Infrastructure • Widening access & building trust
STANDARDS Fast development in 5 priority areas: • 5G • Cloud Computing • Internet of Things • Data Technologies • Cybersecurity
DIGITAL PUBLIC SERVICES eGovernment Action Plan: • New Digital Single Gateway • eJustice Portal • “Once-only” principle in Administrations • Cross-border Health services • eProcurement & “Once-only” in public procurement
To focus investments (Horizon 2020, EU Investment Plan, EU Structural & Investment Funds, national & regional funds, private sector)
MOBILISING €50bn of public & private investments
List of National Initiatives active in May 2017
20 Source: European Commission
Policy recommendations
7 Policy recommendations
22
1 • Attracting FDI in digital manufacturing from EU & non EU countries
2 • Integrating robots and other digital technologies in manufacturing with no hesitation
3 • Upgrading technologies and infrastructures via private & public initiatives
4 • Investing in human capital to meet demand for new skills and train current workforce
5 • Setting standards at international level and guaranteeing interoperability
6 • (Re) defining cybersecurity systems and policies
7 • Fostering international cooperation and networking, first of all among EU Member States
Piazza dei Santi Apostoli 66 00187 Roma tel. +39 06 4740746 fax +39 06 40402523 Rond Point Schuman 6 1040 Bruxelles tel. + 32 (0) 22347882 [email protected] www.i-com.it
23
Thank you! Giulia Berni
Silvia Compagnucci Stefano da Empoli
Giusy Massaro Michele Masulli
