Decades in the making, the robot revolution is well and truly here. New technologies and trends such as robotics, automation and artificial intelligence (AI) are transforming manufacturing across the globe. Businesses are now on the precipice of a new industrial revolution, Industry 4.0, making life as we know it more and more like Back to the Future.
There will be winners and there will be losers. The difference between the two being those who are willing to invest in cutting edge technologies to drive productivity and those who don’t.
In a recent report by the Institute of Directors and law firm Chapman Tripp, Determining our future: Artificial Intelligence Opportunities and Challenges for New Zealand, new technologies are expected to have the greatest impact on developed countries. This is a result of developed countries having an economy which relies on the sharing of intellectual property to increase productivity and therefore, growth.
Prepare for the Kiwi Back to the Future
Much of New Zealand’s manufacturing consists of short-run production lines making components for larger products. Implementing a form of robotics or automation, the manufacturing time for the components could be significantly decreased enabling operators to increase their production numbers. In addition, this can also give plants the opportunity to diversify and expand into new areas of production.
As the report notes, this could prompt a shift in investment away from human resources towards capital expenditure. In turn, this has the ability to create new career opportunities for the population in the future, leading to higher levels of skilled workers and bigger business prospects.
It is imperative that businesses prepare for a more technological future by developing strategies that plan for investment in new technologies to support business growth.
Understandably, this is often seen as ‘easier said than done’, and no, I am not expecting businesses to transform overnight into something from Back to the Future II. However, look around you and you’ll see that although hoverboards are not part of everyday life (yet), the world and all its technology is becoming more akin to Back to the Future than you may realise.
The Chapman Tripp research shows artificial intelligence is already impacting many of our sectors, especially manufacturing, which has been one of the first to use AI and robotics in any meaningful way. This shows us that the manufacturing sector is experiencing a renaissance and it’s not going to stop there.
According to the New Zealand Manufacturers and Exporters Association (NZMEA) Survey of Business Conditions, released in April 2017, total manufacturing sales for March grew 2.93 per cent. What’s more is there is potential for even better results from industry for the remainder of 2017, but only if businesses take advantage of this increase now and not later.
The increasingly active manufacturing sector is beginning to work up an appetite for new plant and equipment. The most recent Equipment Demand Index Technology Paving the Way in New Zealand*, has found that on average 13.4 per cent of businesses are looking to implement next generation technology, up from 7.9 per cent at the beginning of 2017. In comparison with the Australian edition, The Risks and Opportunities to Australia’s Growth, 32.7 per cent of businesses are looking to adopt new technology which is a 12.4 per cent increase from the beginning of the year.
However, as positive as this increase is, this is still only a small percentage of businesses in New Zealand. While the rest of the world continues to adopt Industry 4.0 technology at a higher speed, New Zealand runs the risk of growing at only a fraction of other countries.
If we compare the current Index results with our September 2016 Index where four in 10 businesses stated that they had not considered investing in robotic processes, but were open to learning more about the benefits, shows that it’s not a lack of ambition to invest in this area, but a need for awareness on the subject. After all, businesses cannot invest in something that they are not aware of.
However, since September 2016, businesses have appeared to have become more knowledgeable on emerging technologies, but now it’s time to use that knowledge and start acting on it.
Industry 4.0 is not only an opportunity for New Zealand businesses, but for New Zealand itself. With new technologies coming to the market, businesses can grow, creating new skilled jobs and a chance to put New Zealand on the ‘manufacturing’ map. This is a time for businesses to consider their funding options to ensure they can make the most of this revolution or risk getting left behind. Forget Back to the Future, it will be Back to the Past for them.
NB. The research and publication of the Equipment Demand Index was conducted under Maia Financial’s previous name, Alleasing.