The fourth industrial revolution is almost here, but is a world still largely shaped by the Victorian era ready for it? Simon Thomas, head of Welsh manufacturing firm Asset International, explores this brave new industrial frontier.

In the last 150 years the UK has lived through three industrial revolutions. Of course, the first industrial revolution, which started around 1760, revolutionised a way of life that had remained largely unchanged since medieval times. The second industrial revolution ran from the mid 19th Century to the start of World War I and involved the widespread introduction of steel to the UK, early electrification of factories and the introduction of mass production and the production line. The third revolution, or the digital revolution, took place towards the latter half of the twentieth century, and saw industry make the switch from mechanical and analogue electronic technology, to digital electronics.

The digital revolution marked the beginning of the information age in which we now live – the internet era – and so it’s fitting that as we sit on the precipice of the fourth industrial revolution, it has been tagged with a suitably digital sounding moniker – Industry 4.0.

Industry 4.0, or the fourth industrial revolution, effectively creates what has been called a ‘smart factory’, which utilises up-to-the-minute technology, including cyber-physical systems, the Internet of things and cloud computing, in order to monitor the physical processes of a factory and make informed, decentralised decisions.

Within these new smart factories, cyber physical systems (a mechanism controlled or monitored by computer-based algorithms, tightly integrated with internet) create virtual copies of the physical world, in order to communicate and cooperate with each other, and humans, via the Internet of Things – a relatively recent advancement in the internet age in which everyday objects like fridges, cars and entire buildings, all have network connectivity, allowing them to send and receive data. Think about a fridge that knows it’s running out of milk and butter and adds both to your online Tesco order. It already exists; we just can’t buy it yet.

These connected, intelligent products harness data and create new digital business models that bring computers and automation together in an entirely new way. For example robotics are connected remotely to computer systems equipped with machine learning algorithms, allowing the system to ‘learn’ and operate with very little input from human operators. A case in point being online retail giants, Amazon who already have a trial factory in the US which is testing the limits of automation and human-machine collaboration. Not to mention the development of Prime Air – a future delivery system designed to deliver packages to customers in 30 minutes or less by drone. Impressive stuff.

I could wax lyrical about the extraordinary complexities of Industry 4.0 for days, however ultimately the theory at its core is that highly intelligent connected systems create a fully digital value chain, all of which is enabled by the Internet of Things.

Keeping up? The concept is not an easy one to explain, however, despite the ambitious premise and abundance of technical soundbites, Industry 4.0 is far from an entirely novel notion. Most of these digital technologies have been ticking over for some time, but many are not yet ready for application at scale, and not without serious investment on the part of Britain’s industrial players.

So for those of us without Amazon level R&D budgets, where does that leave the country’s industrial SMEs? Well the truth is there is actually an abundance of commercial technology available to help SMEs, and some of it is very low cost. However, there’s no denying that to truly create the ultimate 4.0 ‘smart’ factory, serious investment will be required.

However, with all the best intentions in the world, our country’s SMEs will make very little headway in joining the fourth industrial revolution without significant government assistance. Last year the German government pledged some €500 million to encourage research across academia, business and government into the concept of Industry 4.0. This perhaps is an unsurprising move for a country that first coined the 4.0 tag at the 2011 Hannover Messe – the world’s biggest industrial fair.

Soon after the event the German government established an Industry 4.0 working group that presented a series of implementation recommendations, which are now being undertaken. The Industry 4.0 workgroup members are recognized as the founding fathers and driving force behind the Industry 4.0 movement.

Germany also happens to be the home of Fraunhofer, an independent organisation of world renown dedicated to application orientated research and shaping the technology of the future in sectors including health, security, communication, energy and the environment. All of which lies at the heart of Industry 4.0.

And the US is taking things just as seriously. The Smart Manufacturing Leadership Coalition (SMLC) is a not-for-profit organisation funded by $140 million of public-private investments, made up of tech firms, manufacturers, suppliers, government agencies, universities and scientists, all of whom have the common goal of advancing and democratising the Industry 4.0 concept across the country.

So what about the UK? Well the early signs are ominous. A recent report by accountancy and business advisory firm BDO in partnership with the Institution of Mechanical Engineers, found that there isn’t enough understanding regarding Industry 4.0 by UK manufacturers.

According to the report only 8% of UK manufacturers have a significant understanding of Industry 4.0, despite 59% recognising that the fourth industrial revolution will have a big impact on their sector.

The report also identified that a third of manufacturers are at risk of falling behind in the global marketplace having not invested in Industry 4.0 related technology or infrastructure in the last two years. Furthermore, a quarter say they have no plans to invest in the next two years and 44% of those abstaining said it was due to a lack of understanding.

So clearly there is a fair amount of work to do here and it is likely something that will be high on the agenda of the newly appointed Committee on Economic and Industrial Strategy, which has been formed by our new Prime Minister to focus on achieving long-term improvements in industrial productivity and on encouraging new innovations that will give the UK a competitive advantage overseas. All of which should be applauded with the hope that beyond the discussions some serious financial muscle is thrown behind the 4.0 concept.

But of course, leaving public sector support aside for a moment, British SMEs have their own bit to do here in ensuring that their businesses are investing in, and adopting, Industry 4.0 practices. My own firm, a manufacturing company based in Newport that makes large diameter plastic pipes for the construction industry and employs 85 people, is already making the leap, with investment in 4.0 framework totalling around £1.1million in the past year alone.

The principle cost can be attributed to a fully computerised and automated milling machine which has already increased productivity by 40%, not to mention improved the precision and reproducibility of the milling tasks – which until now were carried out exclusively by hand.

Further recent inroads into creating a 4.0 compliant smart factory environment, include a new CNC gantry miller and two automated bandsaws, as well as tens of thousands of pounds invested in iPad Pros and Reactec Smart watches, which provide users with a cloud based reporting platform in order to deliver a more practical and effective solution to assess and control Hand Arm Vibration Syndrome (HAVS) risk.

The fact that much of our new machinery was bought from a cutting edge industrial robotics supplier based in Germany, one of the world’s leading pioneers of Industry 4.0 technology, tells its own story.

As the world becomes increasingly digitised and technological advancement continues to move at unprecedented pace, traditional industries will need to do all it can to avoid being confined to history. However, many within the sector are extremely positive about the future.

In September last year acclaimed General Electric Chairman and CEO Jeff Immelt addressed the company’s Minds + Machines conference in San Francisco, a celebration of the industrial Internet of Things, saying that while old-line industries many not have seen much of a payoff from the Internet era as yet, in the future they could become bigger users than tech companies or consumers.

In fact GE has been aggressively seeking new ways to enter the software sector for a while. And Immelt, who calls GE the “world’s largest digital-industrial company”, recently spent $1 billion to open a new software HQ in California, where its engineers developed Predix, a cloud-based operating system for the Industrial Internet, the first of its kind.

Immelt has predicted that in the next fifteen years digital industrial companies will add $15 trillion to global GDP. That’s quite a figure and it would be a foolish company that would not at least attempt to strive for a slice of that extremely lucrative pie.

With this in mind there’s no doubt that the fourth industrial revolution’s inevitable clutches are almost upon us. So whatever your size, SME or global corporation, it’s time to invest and innovate, or be confined to the annals of history.