Industry Goes Digital Smart Factories, Smarter Decisions

Germany's bid to join up and computerize its manufacturing base, the Industry 4.0 strategy, is being squeezed by a U.S.-led rival with a more global focus. German firms aren't sure which way to turn.
Industry 4.0 is in danger of being walked all over by the IIC.

Richard Mark Soley travels tirelessly across the world from the United States. The chairman of the Industrial Internet Consortium meets with companies that are or want to become members of the initiative, whose goal is to develop ideas and models for the digitalization of the global manufacturing industry.

“There's a great revolution happening right now,” Mr. Soley told Handelsblatt.

When it comes to Germany, however, his travel plans are straightforward: car part supplier Bosch, based in Stuttgart, is so far the only German company in the consortium.

Germany has its own domestic version of the IIC. Industry 4.0 is a high-tech government strategy designed to computerize its manufacturing industry, with a goal of maintaining and expanding the German and European edge. The question is therefore: Does it also need the IIC?

German companies are already world leaders in many areas of digital networking in the manufacturing industry. Heavyweights Siemens and Deutsche Telekom, for example, recently announced a research alliance.

However, fears are growing that such domestic tie-ups may no longer be enough because the global competition is not standing still. “In the USA and China, considerable efforts will be undertaken to catch up to Industry 4.0,” said Peter Köhler, chief executive of the Weidmüller group and Businesseurope, a business lobby association.

In the USA and China, considerable efforts will be undertaken to catch up to Industry 4.0. Peter Köhler, Lobbyist

There is a risk that although the strategy was developed in Germany, others could possibly “implement the ideas faster, if we do not gain momentum,” said Werner Struth, a member of Bosch’s management board. The German Association of Electrical and Electrons Manufacturers’ Association (ZVEI) agrees. The answer: “We must gain speed ourselves.”

The U.S.-based IIC is undertaking field tests among its members, a process that could be seen as a move towards developing industry standards. Mr. Soley, however, emphasized the group is not a standards-making organization. “We are collecting the needs,” he said.

Industry-4-0-cloud-computing-internet-of-things-users-data-protection-revenue-sales-global-spending-Opportunities and Concerns-01


The multitude of collaborations could create standards, however. “Standards prevail when a majority of market participants agree on a best standard and implements that,” said Stefan Bungart, the European software-center leader at General Electric and a founding member of IIC.

In the beginning, the IIC was derided by many as the Americans’ late response to Germany’s Industry 4.0 initiative. But just a few months after its founding, IIC had signed up more than 90 companies from all over the world, including U.S. giants such as General Electric, IBM and Cisco, as well as Japan's Hitachi and China's Huawei. More are coming. “Several hundred membership applications from companies of every size from all over the world are being processed,” Mr. Bungart said.

Just a few months after its founding, IIC had signed up more than 90 companies from all over the world,

Potential German members have so far remained quiet, but the IIC is a platform that the German manufacturing industry must consider, said Hartmut Rauen, an Industry 4.0 expert from VDMA, a German engineering association.

German companies are keen to protect their highly developed IT systems and data, but realize that an isolated approach will not work.

Siemens, a rival of General Electric, and Bosch are among the drivers of Industry 4.0 in Germany.“In the Internet, it is about global solutions,” Siemens says. It sees itself as a world market leader in industry software and automation products. The group offers solutions from the design of a product on the computer through to the digital planning of production and on to the evaluation of data that will be collected in the factories.

“While many talk much about Industry 4.0 or the ‘Internet of Things,’ we are creating facts,” said Joe Kaeser, Siemens’ chief executive. On October 1, it launched a “digital factory” division.

But Siemens has also noticed that more and more companies are joining the IIC. According to information seen by Handelsblatt, it now wants to join the consortium. “We will decide in the near future about participation,” said a Siemens representative.

Bosch management board member Mr. Struth justified its membership by saying that the IIC pursues an even broader approach than Industry 4.0. “It spreads over industrial production to mechanical and plant construction to the ‘Internet of Things’ and services in a broader sense,” he said.

Mr Soley sees scope for Industry 4.0 and the IIC to grow together. “Similar things occur all over the world – with different names,” he said.


The authors are editors and correspondents at Handelsblatt. To contact the authors: [email protected], [email protected],[email protected]