Management / Industry 4.0 and Automation

Industry 4.0 and Automation

Manufacturing is almost synonymous with grim think-pieces on automation. The manufacturing sector is painted as something done in the developing world, soon to be completely replaced by robots, or even something out of a Charles Dickens novel.

But manufacturing jobs will exist well into the present century and beyond. What’s more, the manufacturing jobs of the 21st-century are more engaging and better paid.

Like every other aspect of the UK workplace, manufacturing is evolving. However, this was just as true in 1700 when the first machine looms were rolled out. Then, as now, critics prognosticated an end to gainful employment. No less a luminary than John Stuart Mill argued in favour of retarding technological progress in the name of “jobs”.

And yet, here we are in the 21st-century. There are as many jobs as ever. Chances are good that you prefer whatever you do for a living to the common jobs of the 19th- or even the 20th-century.

Automation and employment

Make no mistake: the statistics regarding automation and employment are stark. According to a February 2018 McKinsey and Company report, fully 50 per cent of all jobs are, theoretically, automatable. The number jumps an additional 10 per cent when expanded to include jobs that can be partly automated, ie, where at least a third of the tasks can be undertaken by machines.

The same report estimates that between 15 and 30 per cent of workers will have their employment disrupted by automation. Between 3 and 14 per cent will have to completely change their occupational category.

But this doesn’t mean a jobs apocalypse. A July 2016 report from McKinsey divided work tasks into seven categories. A striking divide appeared.

Three categories (‘predictable physical work’, ‘data processing’ and ‘data collection’) had more than a 60 per cent chance of automation. The other four (‘unpredictable physical work’, ‘stakeholder interactions’, ‘applying expertise’ and ‘managing others’) all had a 25 per cent or less chance of being automated. In fact, the last three categories were all at 20 per cent or less, with ‘managing others’ standing at under 10 per cent.

These figures highlight the reality rather than the fiction of automation: manufacturing jobs will still exist, not despite automation but because of it. The headline of a 2017 TechCrunch article, summarized this tension succinctly: Technology is killing jobs, and only technology can save them.

The fourth industrial revolution

The trend is for factories to move towards Industry 4.0. The ‘4.0’ refers to what proponents believe is a ‘fourth industrial revolution’. The first is the one you learned about in school: steam power, water power, mechanisation and the like. The second was kicked off by Henry Ford and mass production aided by the assembly line and electricity. The third is the one we’re currently in the midst of: computers and automation.

The fourth industrial revolution is already here, albeit in its infancy. This industrial revolution is embodied by the Industrial Internet of Things (IIoT). Machines are becoming so automated that they can, for example, order their own replacement parts or alert technicians via email of service issues, hundreds of hours before a crisis. Far from economic catastrophe, Accenture predicts the IIoT will add $14.2 trillion to the global economy by 2030.

Industry 4.0 will disrupt the industrial landscape in much the same way Uber and Lyft have disrupted taxis or Amazon has disrupted retail. Large organisations will continue to have size on their side, to be sure. However, Davids will now be able to compete more easily with Goliaths – and Goliaths will have to adapt accordingly.

Speaking to TechCrunch, Bob Doyle of the Association for Advancing Automation has a term for the type of manufacturing jobs being put out to pasture: “Dull, dirty or dangerous.” One example he uses is flare stacks in the frigid Bering Sea. These flare stacks are constantly exposed to extreme weather conditions, requiring near constant maintenance and observation. “Who wants to do that?” he asks, exemplifying the problem of the triple-D jobs.

What’s more, Industry 4.0 presents opportunities for manufacturing organisations to meet labour needs in tight markets or for low-skilled positions with high turnover. One example cited by the TechCrunch article is dough packing in a 4°C warehouse. These jobs are difficult to fill and harder to retain in even the more favourable labour markets.

Automation will remove the problem of finding costly, high turnover labour. Instead a single investment in machines will allow the performance of these repetitive tasks for decades. And there will be new jobs designing and maintaining these machines.

Consumer benefits from automation

The other side of the coin is that Industry 4.0 will provide far more consumer goods at a fraction of the cost. Automation dramatically increases the efficiency of manufacturing, leading to a massive reduction in cost per unit. This in turn enables significant economies of scale.

Automation further increases economies of scope. Whereas in the 1930s, one factory might have only made one type of car, the factories of tomorrow will easily turn out a diverse array of products from a single location.

The new industrial revolution promises to hypercharge manufacturing capability, in much the same way as the previous three industrial revolutions. However, it won’t be without its challenges. For example, the assembly lines of Henry Ford required more men to make cars at a slower rate, but they couldn’t be taken over by cybercriminals or hacked for industrial trade secrets.

These technological challenges of Industry 4.0 will drive the manufacturing jobs-engine of the future. Sure, the machines can alert someone that they’re about to break, but they can’t (at least not yet, anyway) fix themselves. Even the maintenance alerts themselves may be opaque, requiring the attention of an experienced and knowledgeable technician to provide a more nuanced diagnosis and, ultimately, a sustainable fix.

Automation is a bit like the weather: you can like it or not like it, but it’s coming anyway. However, anyone feeling a bit of anxiety about the future of the UK’s workplace should take heart: there’s zero evidence that there will be fewer jobs in the future and a mountain of evidence that the jobs of the future will be just as plentiful as today – with better pay and greater engagement to boot.