Industry 4.0: The next step to leapfrogging African manufacturing into a competitive position?

Online since 31.08.2016 • Filed under Industry news • From Issue 4 - September 2016 - February 2017 page(s) 54-55
Industry 4.0: The next step to leapfrogging African manufacturing into a competitive position?

Results of a South African manufacturers’ survey revealed that the adoption level of smart technologies remains at a foundation stage in African manufacturing industries. However, as it accelerates, it holds the promise to reverse the dwindling contribution of manufacturing to the South African Gross Domestic Product (GDP) case – currently 12% compared to 25% in the 1960s.

Subsequently, Deloitte has released a report called INDUSTRY 4.0 – Is Africa Ready for Digital Transformation? The report, focusing on manufacturing in Africa/South Africa, is based on a survey undertaken between October 2015 and January 2016, which involved interviews with leading role players in manufacturing, such as the CSIR-Meraka Institute, Department of Science and Technology, IDC (International Data Corporation) and Manufacturing Circle, as well as with executives from manufacturing and other companies such as CAD House, Ford, Hulamin, Nampak, Nissan and Toyota South Africa.

Collaboration at its core

Karthi Pillay, Africa Manufacturing Industry Leader at Deloitte, explains that, at its core, Industry 4.0 is a coming together of a different layer of businesses, data, technologies and the recognition that your competition today may not be your closest rival but rather one from Silicon Valley. ‘It is about creating new ecosystems, working with partners in different sectors of the economy, combining research and development and universities with the public and private sectors in non-competitive ways of partnership to improve the ways in which products are manufactured,’ he points out. ‘A broader Industry 4.0 adoption is hindered by a general hesitance to significantly invest in new knowledge and technologies within government and industry as the current economic environment forces South African manufacturers to save costs first and spend less on innovation. Although there are some global Industry 4.0 applications that are leveraged by global manufacturers operating in South Africa, not many local applications have been developed yet. More innovation still needs to happen first before widespread adoption will occur,’ the report states.

Investments in Industry 4.0

Pillay says that while ‘a general hesitance’ exists, his primary concern for local manufacturing is that South Africa is currently overly focused on issues, albeit important, that concern only the here-and-now. A focus on low-skill mass production is becoming obsolete in global terms and may see the country lose touch with developed economies within the medium term. ‘There have been some welcome investments in Industry 4.0 by the CSIR and government. However, a larger budget allocation would certainly aid its development and the country’s competitiveness. As a country, we need to have a future Industry 4.0 strategy and a here-and-now strategy running in parallel – but we cannot ignore the emergence and significance of Industry 4.0. People have to start being educated to have the right skills (a combination of analytics and engineering), because it will require a collective of business, government, universities and labour. It also requires policy implementation in vital areas such as protection of information, 3D printing, and cyber security,’ says insists. He adds that the first step lies in changing mindsets and it is to this end that the Deloitte report was published. ‘The pace of change can, and probably will, be quite phenomenal. One needs only to look at the impact of smart phones to see how innovation can change the face of society at almost breathless speed. The data already exists – it is now simply about using it more appropriately in manufacturing innovation.’

Key challenges for manufacturing

The study sets out the key challenges the South African manufacturing industry faces in the fourth industrial revolution and points to opportunities for manufacturers to achieve a successful digital transformation toward  Industry 4.0. Pillay explains that the implementation of advanced digital technologies in South African manufacturing is still in its foundation phase: ‘While growing usage of advanced analytics exists within the automation and automotive sectors, the real opportunities of advanced analytics in other sectors are generally not yet being explored by manufacturers. Usage of robotics is mostly at an automated stage and not yet at a smart or advanced stage. There is also no widespread adoption of 3D printing yet, although awareness of the significance and the potential of this exponential technology is high.’ The report states that a majority of interviewees believe that Industry 4.0 will have a strong impact in the coming years on Africa/South Africa in general and especially the South African manufacturing industry. The current adoption and impact of Industry 4.0 in Africa/South Africa is still relatively low, compared to the rest of the world. ‘Manufacturing in South Africa remains a major player within the economy, despite struggling to make a bigger impact on the GDP. The question we have to ask ourselves is how do we complement our here-and now emphasis with the necessary focus on the future as defined by Industry 4.0 or even 5.0, thereby enabling us to create a niche for South Africa within Africa and the global economy? If we fail to proactively select our place within the global manufacturing industry, we run the risk of continuing on this path of deindustrialisation.’ He adds: ‘To reverse the relative decline of manufacturing in South Africa will require a meeting of the right minds to define where manufacturing is going. South Africa is not short of capability within the private and public sectors, but it needs to become a collective effort.’ Pillay believes this can be achieved by following a threephase plan to address industry 4.0: ‘We need to find out what Industry 4.0 is, decide how South Africa fits into Industry 4.0, and we need to decide on South Africa’s niche and how to capture it. China’s shift in recent years from a manufacturing-intensive “made in China” economy to an innovation driven “designed in China” economy illustrates that emerging countries can also become early adopters of the industry 4.0 trend and increase their global competitiveness.’

Issue 4 - September 2016 - February 2017

Issue 4 - September 2016 - February 2017

This article was featured on page 54-55 of SABI Magazine Issue 4 - September 2016 - February 2017 .

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