Industry 4.0 – an opportunity for Germany

Industry 4.0 also featured prominently at the 2015 Hannover Messe. © Chrisitan Kruppa

More and more things are getting connected to the internet. In the world of manufacturing this is paving the way for Industry 4.0 – the fourth industrial revolution. As a location for industry, Germany is justified in hoping that this will lead to more growth and prosperity.

From cars to robotic arms to washing machines, many of today’s industrial products have tiny computers in them that control important functions and make life easier. More and more of these embedded systems are being connected to the internet. Some 50 billion objects are expected to be digitally connected by 2020.

This is creating the “internet of things”, a virtual world in which nearly all objects can share information with one another. It’s also opening up a whole host of opportunities for industry. Many people are already talking about a fourth industrial revolution – after mechanisation (Industry 1.0), the advent of mass production (Industry 2.0) and automation (Industry 3.0). This technology offers enormous potential for personalised products, resource-efficient logistics, new services and a more flexible working environment. The list goes on and on.

A large industrial sector and an innovative spirit are Germany’s strengths

Germany is very well equipped to leverage this potential. We have a large industrial sector that accounts for nearly 23 percent of our gross domestic product. In the United States, for example, that figure is only 13 percent. German-based companies are global leaders in many high-tech industries, such as machinery, automotive, chemicals, pharmaceuticals, electronics and aerospace.

The German industrial sector is also highly innovative. The 2014 Innovation Indicator, released by the Deutsche Telekom Stiftung and the BDI, has Germany in sixth place – far ahead of our biggest competitors, the United States (13), South Korea (18), Japan (20) and China (24).

German companies can do IT too

Granted, Germany may not have the IT giants of Silicon Valley. But we do have our own strengths. We have a unique culture of medium-sized enterprises and innovation that is fundamentally different from the culture of Silicon Valley. Instead of offering IT for individual consumers, German companies are among the world’s leading providers of enterprise software. Some German engineering firms already employ more IT professionals than traditional engineers. They program operating systems for machinery, convert sensor data into valuable new information and integrate embedded systems in a growing number of products.

Industry 4.0 knows no national borders

As we can see, Germany is very well equipped for Industry 4.0. But that doesn’t mean it can now afford to drop down a gear. Numerous challenges await us on the way to the fourth industrial revolution, including high-speed internet access, data protection and IT security.

We also need to bring our European and international partners on board and agree on fair rules and regulations. We can’t lose ourselves in isolated applications. Because, after all, Industry 4.0 knows no national borders.

Businesses, policymakers and society must shape the digital transformation together. Only then will we be able to profit from and shape Industry 4.0 in Germany and Europe and build our future upon it.