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June 02, 2016 02:00 AM

Are German companies more ready than US for Industry 4.0?

Steve Toloken
Assistant Managing Editor
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    Volkswagen AG
    In a test program for Volkswagen AG, autonomous robots move Audi vehicles at an assembly plant in Ingolstadt, Germany.

    German manufacturing companies are better prepared than U.S. firms to implement the next phases of Industry 4.0, a new study  argues.

    A survey of 600 German and U.S. companies by Boston Consulting Group said manufacturers in both countries have taken many of the same steps, but added that “German companies appear to be better prepared for implementation and to have higher ambitions, which could give them an edge as adoption proceeds.”

    Some of that makes sense: Germany has higher costs and less flexible labor markets, the May 19 report said, so its manufacturers have more incentive to push digital technology and automation.

    German companies have 292 industrial robots per 10,000 workers, for example, compared with 164 in the United States, BCG said. And in plastics, the American industry has the advantage of low-cost shale feedstocks that Germany does not.

    I recently saw a presentation from German automaker Volkswagen AG on its 4.0 plans. They're moving quickly, starting from basically zero in 2013 to being 20-25 percent of the way through their 4.0 plans now.

    A VW executive told an audience at Chinaplas that VW recently unveiled is first prototype vehicle where every single part in the car has RFID or similar technology for traceability.

    VW also seems very interested in the potential of mobile, self-directed robots in its factories.

    Sometimes these 4.0 discussions are not well defined, maybe a bit like science fiction, and that makes people skeptical about what it all really means. (Remember the dire predictions for Y2K that amounted to zilch?)

    But the BCG report says Industry 4.0 is a big deal. More than two-thirds of the U.S. and German manufacturers it surveyed said they saw it as increasing productivity and reducing costs, and more than 40 percent said it would lead to sales growth.

    They have questions about the cost of implementing it, about data security, and most importantly about finding the right people to staff factories as data management and jobs like “robot coordinator” become more important.

    But the BCG report said these investments will be needed, and compared it, on a smaller scale, to the growth of things like computer-assisted design and electronic data exchange in the early 1990s and how that quickly became a basic requirement in manufacturing.

    “Companies that failed to be among the early adopters of CAD systems could not keep pace with their competitors' productivity increases,” the report said. “Many laggards dropped out of their business ecosystem entirely.”

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