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08/12/2016

Brussels seeks €50 billion to digitalise Europe’s industry

Innovation & Industry

Brussels seeks €50 billion to digitalise Europe’s industry

According to the Commission, there are currently more than 30 national and regional initiatives related to the digitalisation.

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The European Commission unveiled its long-awaited strategy to support the digitalisation of industry on Tuesday (19 April), aiming to mobilise around €50 billion by 2021 to help manufacturers catch up in the global race for the fourth industrial revolution.

The conjunction of cutting edge technologies such as artificial intelligence, combined with the spread of cheap sensors and advanced robotics are all pointing to the arrival of a new industrial era.

But compared to the United States or Japan, the traditional industrial base in Europe is slow to adopt these technologies and reap the benefits of digitalisation.

“It will be complex, it will take time but it is very necessary,” said Andrus Ansip, the Commission Vice-President for the Digital Single Market. “The Industry has asked us to build the foundations of our industrial future and there is no time to lose,” he told reporters in Brussels as he presented the new strategy.

“We have to hurry up,” he stressed.

A European Parliament study estimates that €40 billion in investments will be needed every year in Germany alone to digitalise the industry. In Europe, the figure could reach as much as €140 billion.

The figure looks impressive but the promises are equally high. Across Europe, PwC and Boston Consulting Group estimate that the digitalisation of industry could create an additional €110 billion per year over the next five years.

In order reap the benefits of the transition to “Industry 4.0” (as the Germans labelled this new manufacturing paradigm), a more coherent approach and deeper cooperation is required across Europe, with a more granular implementation at regional level, and common standards for manufacturers from Lisbon to Helsinki.

A coherent approach 

To that end, the EU executive proposes measures to link up existing national initiatives in various member states and support investment in key technologies that are expected to fuel the next industrial revolution.

According to the Commission, there are currently more than 30 national and regional initiatives related to the digitalisation of industries, including in Germany, The Netherlands, France, Italy, Spain and Slovakia.

In order to better screen and coordinate those, the Commission will organise various meetings every year — two roundtables and one annual major stakeholder meeting.

On top of that, EU authorities will invest €500 million to set up digital innovation hubs in technical universities and research organisations across European regions. These hubs will help power the digital transformation from the bottom-up by supporting SMEs and other initiatives at regional level.

In order to support the transition towards this fourth industrial revolution, the EU will rely primarily on public-private partnerships (PPPs), by investing around €22 billion.

These initiatives will support the industrial transformation in areas where Europe is well-positioned, such as the automotive industry, health or energy. The private sector will contribute €17 billion, while an extra €4 billion and €1 billion will respectively come from EU funds and national governments.

Industry 4.0: The future of manufacturing is here

The European Commission is preparing an action plan for publication in April to mobilise an estimated €25 billion to harness the potential of the fourth industrial revolution, EurActiv.com has learned.

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The Commission also urges member states to add another €15 billion over the next five years to support these PPPs. EU authorities recommend the national governments to look for financing under the European Fund for Strategic Investment (EFIS), the new EU guarantee scheme to support investment in the 28-country bloc.

Together with €5.5 billion from national and regional investment in the digital innovation hubs and €6.3 billion committed for the production of the next generation of electronic components, EU authorities expect €50 billion investment in the digitalisation of industry over the next five years.

The EU has already launched a PPP focusing on the next generation of wireless connectivity (5G) and the manufacturing industry, as Europeans want to prioritise the industrial dimension of the next generation of mobile internet.

Europe hopes to make 5G networks a reality by 2018

The European Commission will unveil its strategy to develop the next generation of mobile broadband network (5G) on Monday (22 February), EurActiv has learned.

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Standardisation and clear regulation on the flow of data, the new ‘oil’ of this fourth industrial revolution, are seen as critical to facilitate the involvement of high-tech manufacturing.

Günter Oettinger, the EU’s Digital Agenda Commissioner, stressed that Europe needs “fewer but common standards for the industry, and we need to fix them quickly”.

Regarding data management, the EU executive will put forward a free flow of data initiative later this year to examine in greater detail the issue of data ownership and rules for data re-use in an industrial context.

Carlos Moedas, the EU’s Innovation Commissioner, said that “data should be open by default” but warned that Europe should at the same time protect companies’ ideas.

“I am totally for opening knowledge by default but [also] protecting the ideas,” he said. As an example, he mentioned the Human Genome Project, with open knowledge upon which different firms have developed their own business projects.

To respond to the rise of smart cars and ‘intelligent’ robots, the Commission will also look into the rules that should be applied to autonomous systems, new safety rules and clearer liability principles.

Meanwhile, the Commission also intends to mobilise up to €6.7 billion to create a super-computer in order to support a new European Open Science Cloud. This will become an open environment for 1.7 million researchers and 70 million science and technology professionals to store, share and re-use scientific data and results.

Positions

Markus J. Beyrer, Director General of BusinessEurope, the EU employer's association, commented: “The strategy focuses on the right priorities and the European Commission rightly provides (...) and EU coordinated approach to reduce the current legal fragmentation within the EU”. On the issue of the free-flow of data, he said that the strategy must prevent Member States from obliging companies to store data in a specific country, and facilitate cross-border data flow, which is essential for companies to function.

Thilo Brodtmann, Executive Director of VDMA, the German engineering federation, said: “Our businesses need a single market for Industry 4.0 to enable them to develop innovative technologies and apply them throughout Europe. The current policy framework is not sufficient." He added that public authorities need to give "legal certainty when it comes to the use of new technologies, without limiting the scope for innovation."

In a statement, Vodafone supported the Commission’s plans to harmonise policies related to the Internet of Things across Europe and to remove unnecessary barriers to the flow of data across borders. "Europe can become the world leader in the development of a new generation of connected devices and processes that will transform the workplace and home," the statement added.

But the company warned that  the connectivity required to attain digital industrial leadership is lacking in many Member States which remain reliant on outdated copper telephone networks rather than gigabit fibre.

Charlotte Holloway, Head of Policy at TechUK said: "Harnessed correctly, digital technologies can help Europe’s two million manufacturing businesses become more efficient and drive their competitiveness." As regards to the upcoming free flow of data initiative, she stressed that "important questions remain on liability regimes in the new Internet of Things and automated devices industries – those can only be overcome through a better understanding of technical feasibility and the latest market developments.”

Background

The world is currently witnessing the dawn of a new industrial revolution, according to a growing number of business leaders, politicians and academics.

The speed, scope and impact of those technological developments herald a promising era of smart manufacturing, less routine jobs, customised products, more efficient cities and even better leisure experiences.

This is made possible via the widespread use of small and cheap sensors that will basically allow every physical object to be connected to the Internet. Combined with 3D printing, this will massively reduce the cost of producing any good according to consumer wishes.

In Europe, the traditionally powerful industrial sector is lagging behind the digital transformation but is working hard to catch up. The result is a race between America's top-down and Europe’s bottom-up approaches.

In order to fully integrate the value chain and digitalise the processes, the EU is cooperating with the industry on key enablers of this fourth industrial revolution via public private partnerships. There are ongoing PPP on the factories of the future, photonics, high performance computing, robotics, the future of internet, 5G and on electronic components and embedded software.

Timeline

  • 25-29 April 2016: Commission unveils plan to industry and other stakeholders at Hannover fair.

Further Reading