European industry is at the pole position

Perspective
Europe still has competitive manufacturing industry and a leading position in most of the key enabling technologies needed for the factories of the future.

For me as a Finn the headline metaphor taken from Formula 1 world is familiar and convenient. Finland brings up far more drivers to the Formula 1 and rally circuits than any other country in the world in proportion to the population. But the headline also describes quite well the reality. We still have competitive manufacturing industry in Europe and a leading position in most of the key enabling technologies needed for the factories of the future.  If you read the newspapers or watch the news on TV you might get a different impression. People (and media) think that everything related to manufacturing and industry is moving to Asia or to other low cost areas. However this is not the case. For example the mechanical engineering sector in Europe has kept the leading position in the world also during the last 10-15 years.

The manufacturing industry employs in Europe about 35 million people directly and at least twice as much if we take the total impact to other sectors including services. The technology industry represented by Orgalime (The European Engineering Industries Association) account for about 1/3 of the industry in Europe with almost 11 million employees working in 130 000 companies. Fortunately also European politicians have understood the importance of the industry and that Europe cannot afford to lose those direct and indirect jobs created by the industry.

The target to have 20 % share of the GDP generated by industry in 2020 set by the European Commission shows that the voice of the industry has been heard at last. Even if the figure (20 %) is not so relevant as such and not easy to be measured, it is good to understand that large amount of the increasing services is also based on industry or industrial products as a service platform. A big question of the future is, what kind of jobs will be needed and which will be replaced by robots and automation. An overview of the measures needed to support digitizing the industry was delivered to the European Commission by Orgalime in November 2016: A vision for the future of European engineering .

Pole position means usually that a race is about to start. The global competition is of course already going on in the field of digitalization, but the headline means, that we have not lost any competition yet. Digitizing industry is a little bit different than it is in the consumer business which has been pretty much led by US based companies and their platforms. Those software and automation companies which have been working with industry for years and delivered software systems for different functions are in very strong position also now, if we think about platforms for Industry 4.0 or Industrial Internet etc. You need to understand customer needs if you wish to provide solutions or applications for them. If your customers happened to be industrial companies, it would be useful to understand their processes or rather the whole supply chain including everything from design to re-use or recycling. There are many European based companies or brands which are holding probably the best positions in this competition.

What is needed to win a race?

A winning team in Formula 1 needs skilled staff, best car, continuous development and innovations, excellent leadership, passion, good strategy and a business model for financing the show. A list for a manufacturing company looks similar: skilled workforce in-house and in the network, excellent product and service offering, investments in R&D and innovations, excellent leadership, winning strategy and a customer value based business model. Actually I like the metaphor more and more.

Formula 1 teams use real time data collected from the car during the race. In the same way manufacturing companies are creating services for their customers based on the data collected from their machines or other equipment. The life cycle service packages using the data might change the whole business idea to service dominant business logic using as much digital tools as possible.

To learn more about digitalization and new business models I would recommend you to visit Tampere at the end of May and participate in the Manufacturing Performance Days 29.-31.5.2017. The conference gathered last time about 600 people from 25 countries. This time we expect there will be even about 900 participants. The event is free of charge but you will need an invitation. Do not hesitate to ask for one from us or from DIMECC. Have a look at the high quality programme on the home page, where you can also register, when you have received your code.

We have to keep in mind that a pole position does not necessarily mean that you will win the race. Neither in Formula 1 like we saw in the Grand Prix in China, nor in the global competition of the industry. Hard work and excellent co-operation will be needed.

Welcome to visit us in Tampere Hall!

Ilkka Niemelä

Director

Technology Industries of Finland