Earlier this summer, we were commissioned by Industry Wales to provide an analysis of the manufacturing sector in Wales, and the potential impact that the continuing adoption of advanced technology will have on the Welsh manufacturing sector, over the next 10 years.

Industry 4.0

The ‘fourth industrial revolution’ has been termed as such, due to the revolutionary impact new technology developments will have on all parts of the manufacturing supply chain, from primary production through to retail and consumption. The growing interconnectedness of devices, or ‘Internet of Things’, Additive Manufacturing (3D Printing), Big Data and the increase of Robotics will significantly increase productivity, innovation, and mass customisation. The key drivers behind these developments are the increasingly available technology, coupled with the growing global middle class, which is resulting in a rising demand for high quality, individualised products.

The increased use of robotics will likely result in a significant decline of manufacturing jobs, as automated processes will replace the role of human input on the factory floor. Losses are however, likely to be displaced as human input in the form of creativity becomes more highly valued. This has led to some organisations such as Deloitte, to comment that the frequently cited ‘STEM’ (Science, Technology, Engineering and Mathematics) should be amended to STEAM to incorporate Arts as one of most highly valued skillsets.[1]

What this means for Wales

Conducting a literature review and economic analysis, we assessed the likely impact of what Industry 4.0 will have on the Welsh manufacturing sector, in terms of employment and economic growth. The Welsh economy has traditionally relied on heavy industry, from mass production of steel and slate alongside a strong maritime industry. Despite the presence of pockets of aerospace engineering and semi-conductor manufacturing in Wales, this is by no means representative of the broader Welsh manufacturing sector, which is starting to fall behind global advancements in manufacturing processes. The existing literature highlights that to maintain or increase the number of jobs in Welsh manufacturing, the industry needs to expand its markets to emerging global demand, and significantly invest in efforts to increase the science, technology, engineering, and mathematics (STEM) abilities of the Welsh labour force.

[1] Rossi, B. (2015a) Deloitte’s Top 8 Business Technology Trends of 2015 [http://www.information-age.com/it-management/strategy-and-innovation/123459151/deloittes-top-8-business-technology-trends-2015]