The digitalisation of industry dramatically changes the way we produce, do business and work.

Ever since its beginnings, industry has been marked by constant evolution. New innovations and technologies change the way we produce goods. Some of these innovations emerge slowly and gradually, but sometimes they develop rapidly, bringing about a revolution. The development of the mechanical loom – which triggered the first industrial revolution – is a good example for this, as is the use of electronics in mass production. Today, we are on the cusp of the next – the fourth – industrial revolution: Industrie 4.0.

What makes Industrie 4.0 so revolutionary is that it networks industrial production by using state-of-the-art information and commutations technology in a smart manner. Industrie 4.0 combines mass production and the manufacturing of products tailored to the individual needs of customers – and it does so at low prices and high quality. Industrie 4.0 is based on the principle of the ‘smart factory’: connected units such as production robots, transport containers and vehicles interact with one another via digital interfaces and without any human interference. Smart factories therefore combine the benefits of mass production with the objectives of customised production.

Germany has a strong economy and a strong SME sector. If this is to continue, we need to lead the way on the digitalisation of industry. The future will belong to engineering “Made in Germany” combined with IT expertise.

More than €250 billion in extra value could be added over the next 10 years. This potential for growth and jobs is to be used for the benefit of the German economy.

A first step in this direction was taken by the industrial associations BITKOM, the German Engineering Federation (VDMA) and the Central Association of the Electrical Industry (ZVEI), with the creation of a platform on Industrie 4.0 for business associations. The close integration of information technology, mechanical engineering and electronic engineering in Industrie 4.0 requires rapid, cross-sectoral alignment processes. But Industrie 4.0 goes even further than that. It considerably influences the way we live and work. This means that Industrie 4.0 is a transversal issue that needs to be addressed jointly by business, academia, government and trade unions. In order to tackle these challenges head-on, we will expand our existing association-based platform on Industrie 4.0 and include a wide range of new partners.

The Federal Ministry for Economic Affairs and Energy joined with the Federal Ministry of Education and Research, business associations and research institutions at the 2015 Hannover fair to set up our new ‘Plattform Industrie 4.0.’

In the age of Industrie 4.0, factories consist of a number of smart units: machines coordinate manufacturing processes without any human interaction, service robots and people work side by side in the assembly shop, driverless transport vehicles run logistics tasks on their own. Industrie 4.0 defines the entire life cycle of a product: from concept to development, manufacturing, use and maintenance – and on to recycling.

In order to connect formerly passive production units – such as tools, machinery or transport vehicles – these are equipped with digital ‘eyes and ears’ (sensors) and ‘hands and feet’ (actuators) and are controlled from one central location via IT systems. Let’s take the example of transport containers: in a digital factory, transport containers use sensors to transmit information about their ID, their current location and fill level via a radio connection. This makes it possible to make efficient use of these containers in the production and logistics environment.

The reason why smart factories are a growing trend is that computers and sensors are becoming ever smaller, that they can be produced at ever lower prices and that we have broadband connections in place that allow us to share and analyse ever larger quantities of data and do so more quickly and efficiently than before.

Industrie 4.0 affects not only traditional industries such as mechanical and electrical engineering: smart factories and production workflows will also become more common in other areas, for example the agricultural industries, as agricultural machinery becomes more digitally connected. In short: we will see the impact of Industrie 4.0 wherever digital technology can be used to make industrial processes ‘smarter’.

Industrie 4.0 gives rise to completely new business models. Software skills and knowledge about digital technologies have become critical parameters in determining the success of a company. Companies – from start-ups, to small and medium-sized enterprises and multinationals – that collect and process data in a smart manner have completely new opportunities to provide customers with products tailored to their needs. In addition, digitalisation allows for the development of smart applications, such as solutions that are based on the information that is collected over the entire lifecycle of a smart product.

This also means that, as the level of interconnectedness and the amount of data that is exchanged grows, the level of security that is required in Industrie 4.0 will increase as well. IT security needs to be taken into account from day one. It is not only facilities and products, but also data and expertise that need to be protected against unauthorised access and misuse.

Industrie 4.0 means high-quality jobs – not factories devoid of people. But Industrie 4.0 will change the way we work. Employees will become more involved in the processes that are used; for example they need to coordinate workflows, control communication processes and quickly make their own decisions.

As information technology, automation technology and software become ever more intertwined, the organisational roles that need to be filled become ever more complex and transversal skills become more sought after. Of course, we also need to keep in mind the risks posed by digitalisation: What are the implications as the boundaries between different job roles become ever more blurred? How can we help employees obtain the skills they need in the age of Industrie 4.0?

One of the long-term opportunities offered by Industrie 4.0 is that jobs in industry can be moved back to Germany. This is because low wages will no longer be the sole factor in determining where to build a factory.

Providing the right training and reskilling opportunities is one of the key factors in this context: we will need to provide a wide range of different training and reskilling opportunities and a working environment that encourages life-long learning. In order to meet the requirements posed by this new world of work, vocational and academic training programmes need to be enhanced in close cooperation with industry. Building partnerships between companies and universities could be one option here.