Fri, Jul 03, 2015 page14

• INTERVIEW: Manufacturing to take German lead

  The government on June 4 unveiled a blueprint, dubbed ‘Productivity 4.0,’ to revamp the ailing manufacturing sector. Industrial Technology Research Institute machinery and system research division director Alfred Wang, who advised the government on the program, discussed the future of the nation’s manufacturing sector with ‘Taipei Times’ staff reporter Lisa Wang

  • • 
    • 
    • 

  Taipei Times: Many people are talking about “Industrie 4.0” without knowing what the term really means, so please tell us in essence what Industrie 4.0 is all about.

  Alfred Wang (王興毅): The term originates from Germany’s Industrie 4.0 program. The vision is seen as being so revolutionary that some suggest it is the fourth industrial revolution since the first one in the 18th century. The concept is widely applied to a series of policies initiated by governments to reshape manufacturing sectors under different names.

  Before Germany, the US in 2011 launched its Advanced Manufacturing Partnership program to regain leadership of the global manufacturing sector. As part of the program, the US government called on US firms to relocate their factories to home soil, which companies such as Dell Inc and Apple Inc adhered to.

  

  Two actors dressed as robots hold an illuminated “4.0” sign during the launch of the “Industrie 4.0” platform at the Hannover Messe industrial trade fair in Hanover, Germany, on April 14.

  Photo: AFP

  Such programs aim to solve problems stemming primarily from the effects of globalization, demographics and urbanization, which have an impact on the progress of the global manufacturing sector.

  Increased globalization stalls economic growth due to fiercer competition and higher trade barriers. Aging societies in developed nations, such as German and Japan, reduce the labor force, weaken productivity and slow GDP growth.

  To solve those problems, possible solutions include an increasing use of the Internet, robotics and automation systems in manufacturing processes to boost productivity and conserve energy, based on the concept of Industrie 4.0.

  TT: Does that mean robots and automation systems are to replace production line workers, causing a rise in unemployment?

  Wang: On the contrary, the Industrie 4.0 projects purport to improve unemployment and to solve labor shortage due to aging populations in developed nations by enhancing productivity via building smart factories. Laborers would not be entirely replaced by machines.

  TT: How is the rise of China related to the “Industrie 4.0” projects?

  Wang: When the manufacturing enhancement programs were launched in the US and Germany, they aimed to counter China’s rise as a global production powerhouse due to its lower labor costs.

  As the manufacturing sector is the major GDP contributor for those nations, they have to strengthen technological capabilities to fend off growing competition from China, and therefore adopt new approaches. The integration of the Internet of Things into manufacturing processes has transformed production to its most efficient and effective state since the industrial revolution.

  Recently, China has started to lose its labor advantage, as wages are rising rapidly and urbanization in southeastern coastal cities is forcing manufacturers to relocate their factories to China’s hinterland.

  However, China’s labor costs remain much lower than in Western nations, posing a threat to their manufacturing sector. Taiwan also faces the same threat.

  In May, China announced its “Made in China 2025” plan in an attempt to introduce the Industrie 4.0 concept to its manufacturing sector. What China is trying to do is leverage the strength of global industrial leaders via closer partnerships to elevate China’s manufacturing sector to be a global leader.

  TT: What are the challenges faced by local manufacturers to introduce the Industrie 4.0 concept to their production lines, as they seem lag behind global?

  Wang: Taiwan has long focused on providing original electronic manufacturing services, which creates less value and lower profit margins. Local companies have to change the mindset of being only a producer of goods for other firms. They need to think about the feasibility of offering custom-made services to create niche markets and increase value.

  This is a strategy Taiwan must consider, as it cannot compete with China or Mexico in providing mass production services, as labor costs are relatively lower in those nations. They should try a different business model.

  Taiwan Semiconductor Manufacturing Co [TSMC, 台積電] sets a good example. TSMC is a chip manufacturer, but its business model is more like a company in the service sector. TSMC’s value lies in offering good customer service by engaging in customers’ chip design in the early chip developing stage. That also makes it harder for rivals to play catch-up, in addition to TSMC’s technological advantage.

  TT: Can you give an example of how local firms can incorporate the concept of “Industrie 4.0” into their business models?

  Wang: A potential business opportunity exists for Taiwan’s convenience store chains. Taiwan’s convenience store chain operators offer various kinds of services that are not seen in their Japanese or US equivalents. However, that does not help them make bigger profits. If they could combine big data into their delivery and product supply management, it would make a huge difference.

  Here is an example: On New Year’s Eve, most convenience stores near Taipei 101 run out of food and hot drinks as big crowds flock to see the fireworks.

  What is the solution? If convenience store chain operators can figure out how hot drinks demand changes when the temperature rises or drops by 1oC, they can better manage supply and delivery to cope with demand. The knowledge gained about the retail system can be authorized to overseas retailers for license fees, in turn boosting profit margins of local convenience store chain operators.

  TT: Taiwan’s economy relies heavily on manufacturing, so what is likely to happen if it does not echo developed nations in embracing the “Industrie 4.0” era?

  Wang: Taiwan needs to do this now. It is urgent and Taiwan needs to seize this opportunity to work with partners to upgrade its manufacturing sector. A lot of countries and enterprises around the world have noticed this trend and are making similar upgrades via their own “Industrie 4.0” programs, seeking global partners to leverage each other’s strength. Partnership is an important factor of the process. If Taiwan misses this opportunity, it is likely to become a marginal player in the global market.
• Most Popular

  • 1

    Bologna advance to face AC Milan in Coppa final

  • 2

    Wild’s top line too much for Vegas Golden Knights

  • 3

    Taiwan draws attention at World Expo

  • 4

    Wolves hold off Lakers 116-104 to take series lead

  • 5

    Argentina’s Pope Francis gets stadium and a jersey