Industry 4.0: Opportunities and Challenges for the Developing World

Data, devices, algorithms, sensors and humans all form part of the future manufacturing landscape known as Industry 4.0. The rapid acceleration of technological innovation is giving rise to smart connected factories and promises to bring a wave of disruption with it.

In fact, Industry 4.0 has the potential to create a tectonic shift in the global value chain as factories across the world become increasingly digitised and less labour intensive.

One such shift is the decision by many developed countries to invest in automation technologies as a cheaper option to take their production plants offshore. With cost-saving, efficiency and sustainability being top drawing cards behind robotised factories, it is expected that more countries will choose smart conveyor belts over human-based factories in the not too distant future.

Yet, the factory of the future doesn’t spell doom for the developing world which depends on the outsourcing of its labour force by western companies. In fact, new opportunities are availing themselves that might give third world nations a pole position in the age of the smart factory.

China: A Lesson In Adaptability

The 1980s saw China attract massive foreign investment through a cheap labour force and incentivised Special Economic Zones (SEZ). “Made in China” soon became as recognisable a phrase in America as “Got Milk?” as everything from microwaves to sneakers to cars were produced in Asia’s largest economy. Further increases in local labour costs saw more and more western countries export manufacturing to China continued to adapt its policies to attract foreign investment.

Over time, however, demand for Chinese expertise resulted in higher manufacturing and labour costs, causing companies to look elsewhere to have their goods produced. As Chinese ambitions evolved from being the world’s factory to being its biggest innovator, expertise soon took precedence over cheap labour. Consequently, Asian and Western countries opted to open factories in places like South Africa, Tunisia, Algeria, and Egypt as opposed to Shanghai or Guangzhou.

Fast-forward to modern times and the delocalisation of Chinese factories may soon be a thing of the past thanks to the low-cost and high capabilities of Industry 4.0 technologies. Recent years has seen many of the same companies that shifted manufacturing to cheaper countries return to China in the wake of the connected factory.

And Chinese manufacturers aren’t letting opportunity pass them by. The country currently buys up nearly a third of the world’s industrial robots with most being imported from overseas. Further, the government is supporting the move by making significant investments in local robot manufacture.

“The Chinese government is advocating the use of new technologies to mitigate the rising labour costs, as well as stem the flow of delocalisation of its manufacturing companies. As a result, many of its manufacturing companies are installing more and more robots on the factory floor to boost productivity and manage operational costs. Therefore, the need to delocalize to cheaper pools of workers in Asia and Africa will no longer be needed.” ~ Richard Li, Steel Advisory Partners

Its national program, Made in China 2025, aims to see the country lead the race towards domination in robotics with the intended result that China will once again be the manufacturing destination of choice for both local and foreign companies. And the ripples can be seen as examples of factories that are replacing humans with robots making news across the web.

An Opportunity Not to be Missed

The African continent has a unique advantage over developed countries in that it isn’t weighed down by infrastructure and other legacy issues and face comparatively little resistance when embracing disruptive technologies. Also, its relatively slow uptake of technology compared to the rest of the world has created a unique opportunity for the continent to “leapfrog” what is today considered outdated technologies and get ahead of the innovation curve.

An example of leapfrogging is the massive adoption of mobile phones in lieu of desktop or laptop computers in Africa. The continent has fully embraced connectivity in a way that’s unique to its populace. Mobile infrastructure advancement has made it possible to connect millions of Africans across rural and urban areas at a fraction of the cost when compared to traditional DSL connectivity.

“Across Sub-Saharan Africa, phones now act as banks for millions of Africans who cannot even dream of opening a traditional bank account. With the touch of a button, small farmers can find out how much they should be charging for their crops. People can buy solar energy using a phone, get their hearts examined in rural Cameroon using a medical tablet, or get blood delivered by drones in Rwanda.” ~ The World Bank

Another sector in which Africa can leapfrog its way to the front of the line is energy production. The continent has far less nuclear and other industry “baggage” and is positioned to capitalise on the rising renewable energy sector and possibly lead the way towards clean power. With ample natural resources by way of sunlight, wind and hydropower, the continent can use the lessons learnt from western nations while capitalising on rising demand for alternative power sources.

The same potential exists within the manufacturing realm. Africa is fast becoming the world’s factory, with billions in investment by foreign countries; giving the region’s industry players ample opportunity to keep ahead of the innovation curve to keep costs down, production efficiencies up and foreign investment steady. Taking a lesson from the Chinese, African countries can take advantage of the innovation wave hitting the manufacturing industry to reverse the threat of the smart factory and use it to its long term advantage.

Building Strategic Partnerships Towards Prosperity

Interestingly, Africa’s close ties to China offers it a unique opportunity to keep learning from its biggest economic partner. Chinese expertise in innovation, adaptability and power-broking on the global stage can give local players valuable insights to capitalising from their unique advantages. According to the World Bank, China already invests large sums of money in skills and infrastructure development and is working closely with its African partners to boost technology adoption.

“This movement of factories matters, because when factories arrive en masse, prosperity soon follows. From Great Britain at the dawn of the Industrial Revolution in the eighteenth century, to America in the nineteenth century, to Japan and other Asian countries in the twentieth, factories have restructured entire economies toward a new, lasting level of wealth.” ~ Lily Kuo, Quartz Africa

While China’s investment in Africa isn’t a philanthropic gesture by any means, it does, however, underscore the continent’s strategic importance as a manufacturing hub for the world. Using this advantage as an in-road to securing the knowledge and skills needed to modernise African manufacturing processes and systems is an opportunity not to be missed.

Further, with countless Chinese and other manufacturing plants peppered across the continent, it’s fair to say that African exposure to cutting-edge innovations creates ample opportunity for skills and knowledge transfer. However, the continent will need to make serious investments in its largely uneducated workforce to embrace the realities of the digital factory.

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