Industry 4.0 and the U.S. Manufacturing Renaissance

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Industry 4.0 and the U.S. Manufacturing Renaissance

Throughout history, new technologies have enabled dramatic advances in productivity, from the invention of the pulley to haul water around the fifteenth century B.C., to the development of the printing press to publish books in the fifteenth century A.D. But it has only been in the past few centuries that technologies have really revolutionized the way we work and the output we produce.

During the Industrial Revolution, James Watt's improvements to the Newcomen steam engine enabled the rise of factories in the nineteenth century. Early in the twentieth century, Thomas Edison's innovations in harnessing electricity enabled the mass production era exemplified by Henry Ford's automobile plants. In the 1970s, automation enabled factories to begin producing more goods with fewer human workers.

These first three eras are now giving way to a fourth era enabled by digital technology, an era that the Boston Consulting Group (BCG) calls "Industry 4.0" in a new report by that name.1

Note that these four eras are loosely equivalent to the various Techno-Economic Revolutions identified by economist Carlota Perez that have been highlighted in previous issues of Trends.2 Currently, we are about to enter the Deployment Phase of the Fifth Techno-Economic Revolution.

The BCG report identifies nine technology advances that are powering Industry 4.0.3 We've discussed most of these advances individually in Trends, and most of them are now starting to be used in factories. Now, however, they are converging to transform production from isolated cells into a fully integrated, optimized, and automated production flow. Let's look at each of the nine advances.

  1. Big data and analytics will improve manufacturing efficiency by optimizing production quality, reducing energy costs, and improving equipment service. By collecting and analyzing data from a variety of sources, including equipment and customer management systems, managers can make better decisions in less time.
  2. Autonomous robots will work on the factory floor next to humans and will learn from them how to be more productive and efficient...

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