The Transition to Industry 5.0
Industry 4.0 has dominated the manufacturing discussion. 2021 marked 10 years since Germany announced it would be leveraging IoT and AI technologies to realise the factory of the future, and pushed for this approach throughout Europe. Well, now that we’re in the future, did industry 4.0 manifest in the way that we intended? And what might industry 5.0 look like?
Many strides were made in the name of industry 4.0. Adidas’ Speedfactory initiative attempted to make full use of industry 4.0 technologies, with Adidas moving its production away from China and back to Germany in the late 2010’s. This was seen as a key victory for industry 4.0 advocates; finally, some proof that the West didn’t have to rely on China for mass manufacturing of consumer goods. Adidas’ key misjudgement, however, was associating cost of manufacturing with the number of workers, when in fact they are linked to the number of steps required to build the good. As a result, the Speedfactories had to close, putting Industry 4.0 in doubt. Tesla went through the same problem, and solved their manufacturing shortages through using personnel more strategically. Personally, as much as I indulge in techno-optimism, I think human beings will always be involved in manufacturing in one way or another, precisely because we are creatures that have evolved to be adaptive. This adaptivity is not only a strength, but a requirement in the world of manufacturing. Being able to assess a product and quickly fix it whilst it’s on any point in the production line, is a process that no robot/AI combination will ever be needed for. It simply doesn’t make sense to automate this process, even from a cost perspective. The level of complexity required for such a system to reach the same reliability levels as a human being in this setting makes such a system a non-starter.
Factories with no human input are known as “lights out” factories, since machines don’t need light in order to operate. These lights out factories are being realised in China, and CEOs in the West are scared. The ramifications of these factories operating at the scale in which China is realising should not be underestimated - they are outputting more whilst keeping operating costs down in a way never before seen. The question arises however: how flexible are these factories? Are they able to change what they’re outputting in a way that is responsive enough to deal with demand changes? Can they continue to operate at scale in spite of supply chain shocks?
Now that it’s been over 10 years since the initial push for industry 4.0, what might industry 5.0 look like? The EU has already developed a vision which highlights the need to transition to a more decentralised, fully circular, absolutely regenerative economic model. I find it rather interesting that this is being hailed as the vision that the EU has for the 2030’s and beyond, because these ideas aren’t new. Since the 1960’s Buckminster Fuller advocated for a whole system approach to the way we manage resources on Earth. Although I am glad to see this come into the mainstream, I can’t help but wonder what could have been. Similarly, I wonder what will industry 6.0 look like? What are the steps beyond a decentralised, fully circular, and absolutely regenerative economic model? Only time will tell.
In essence, the vision for Industry5.0 presents a more distributed, more sustainable and ultimately more flexible manufacturing ecosystem. Rather than relying on a few large-scale factories with sky-high upfront and operating costs, Industry5.0 envisions fewer, smaller factories that enable smaller communities to be self reliant in a world that is becoming increasingly vulnerable to large-scale shocks. Similarly, although the threat from Chinese manufacturing is very real for European automakers, Industry 5.0 presents an opportunity for Europe to build a manufacturing supply chain that is not only efficient and sustainable, but resilient.
