Marketplace Czech industry urged to prepare for fourth industrial revolution

09-09-2015 14:00 | Chris Johnstone

The Czech Republic’s flagship Brno international engineering fair starts next Monday. And this year there is a special exhibition devoted to what many are describing as the fourth industrial revolution. And while the rewards for participation are not wholly clear, the penalty for the countries, sectors, and companies which fail to take part could be fatal.

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Photo: InIT Lemgo, CC BY-SA 3.0Photo: InIT Lemgo, CC BY-SA 3.0 Brno’s international engineering fair is a window on what’s happening in industry worldwide and a showcase for the Czech Republic’s industrial prowess. This year, it is also an eloquent signpost that the Czech Republic has got over the worst of the recession and is now in the high growth fast lane in Europe.

The fair will feature around 1,500 companies and institutions from around 30 countries. Foreign companies will make up around half the number of those setting out their stalls. And the biggest number of foreign exhibitors, totaling just under 280, will be coming from Germany. That’s not surprising as the Germany is the Czech Republic’s biggest trading partner and German companies the biggest investors on the Czech industrial landscape.

As Czech industry operates at near peak capacity, it’s tooling up again and will frequently be placing orders with German machine tool and other companies. Those German tool companies provide around 40 percent of Czech machine tool needs. And the Czech Republic is also a heavy hitter in the machine tools sector in its own right, it’s the 13th biggest producer in the world with output just trailing Britain and ahead of France.

But the Germans are also looking for the Czechs to tool up on something else and that is what has been described as the fourth industrial revolution. If the first industrial revolution was based on steam power, the second on Henry Ford type assembly lines, and the third on the initial use of digital technology, the fourth is a bit more complicated to grasp. Basically, it appears to be a much wider process in which digital technology is fully exploited in the industrial process and in which everything from ordering raw materials and parts, to manufacturing, and after care service is embraced by digital technology. Robotics, new materials, 3D printing, and production processes are all covered.

“Germany is the biggest trading partner for the Czech Republic, we have to bear in mind that the future economic exchange will be very much based on these digitalization processes.”

In Germany, the phase Industry 4.0 has been coined for this revolution or evolution, it doesn’t appear to be totally clear, and the Czech-German Chamber of Commerce and Industry has made its main flagship issue for the year one of the main topics for the Brno fair with a special exhibition and seminars.

Christian Rühmkorf is head of public affairs and communications at the Prague-based chamber of commerce. I asked him to explain what he understood by Industry 4.0.

“Industry 4.0 is a German strategy which concerns digitalization in industrial processes and production. It is a strategy on which the German government and various industrial associations and big companies have been working on for a couple of years now. The Germany Ministry of Economy is leading the whole process of discussion and working out special topics concerning the big chances of the digitalization process and the risks.”

Rühmkorf says the clear risk for companies and countries who don’t take on board Industry 4.0 is that they will be out of the loop and might be cut out of the supply chain. For countries like the Czech Republic with its important car industry and the sector’s many suppliers, that’s a very persuasive argument to get up to speed on the process.

While Czech subsidiaries of German or multinational companies might be able to allow the parent companies to make most of the running on this issue, small and mid-sized companies have no such advantage.

“When you don’t want to use a Smart Phone and Smart Communication you are out of these processes. And the same holds true in industrial production, if you don’t down the digitalization route, you are out. And the competition is so intense in this field that a country like the Czech Republic, where more than a third of added value in the whole economy comes from industry, can’t afford not to go this way.

Christian Rühmkorf, photo: archive of Christian RühmkorfChristian Rühmkorf, photo: archive of Christian Rühmkorf "And there is another important reason, because the Czech-German economic exchange is so intense and because Germany is the biggest trading partner for the Czech Republic, we have to bear in mind that the future economic exchange will be very much based on these digitalization processes. So it is very important that the Czech Republic starts, and we did this with our topic of the year. We started the discussion here and I am very, very happy that in the media and society and in politics we have a wide ranging discussion concerning this topic.“

Some analysts say the new processes could be a means for developed economies to clawback some production that has been lost to cheaper destinations. Some see it as a more defensive operation which will stem further job losses and de-industrialization. Rühmkorf says the tone in Germany is mainly focused on the positive though everyone around the world is trying to get some competitive advantage.

“The debate is first of all about the chances, because the German economy needs to be in the first place at a global level concerning these dimensions. In the USA ,they are working on this very intensively. In Asia, they try to and do it, and in Europe it is very important to be one of the parties who are defining the standards of digital processes and production and digital communication. He who defines the standards is always ahead. So this is why in Germany this big discussion and this very intense work on this topic is going on.”

And what is a clear challenge for countries is making sure that schools and universities are producing the sort of skilled multifaceted workforce that will have to get to grips with the new industrial processes which cross so many boundaries.

“Now we have to think about digitronic, something like that, employees.”

“Of course there are risks. Many people say that if there is digitalization there will not be any people any more in the factories and in production, but that is not true. in our survey from the beginning of the year, three-quarters of the companies that we asked said that there won’t be any release of workers because of digitalization. The main problem we have to think of, we have to be aware of in this process of digitalization and the main direction we have to think in concerning this digitalization process is about the qualifications of employees. It has to be different in future. We invented a mixture of the mechanic and electronic employee, which is the metratronic profession. Now we have to think about digitronic, something like that, employees. This is going to be one of the key points because without people and employees who are qualified in the right way, digitally and mechanically, there will not be any digitalization in industrial production.”

Board member of the Czech Industry and Transport Association, Jiří Holoubek, is in no doubt about the importance for the country of making sure it can adapt to the new processes and he is looking for the government to provide a helping hand.

“We expect that this activity will be supported by some of the grant programmes which are again taking off in the Czech Republic. With the help of this funding we should be able to make real progress on this issue. We expect that the government can help in education and technical qualifications, in support for innovation and development, and from some of the funding from the operational programmes which are already up and running.”

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