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The purpose of this paper is to highlight potential emerging challenges related to industry 4.0 that are relevant for economic and social policy. The document is a contribution to Horizon 2020, the EU Research and Innovation programme.

The document is not intended to be a fully comprehensive study on all plausible future evolutions of industry 4.0 and its implications for all actors. It aims to provide an accessible overview of what manufacturing might look like in the future and the implications this may have for policy making.

The author would like to thank the members of the European Commission Expert Group ‘Strategic Foresight for R&I Policy in Horizon 2020’ (SFRI) for their valuable contributions.

Executive Summary

In recent years, there have been signs that manufacturing is entering a new era, sometimes referred to as “industry 4.0”, in which the widespread adoption of ICT is blurring the lines between the human, machine and virtual worlds. This will have a significant impact on the way goods are manufactured, companies do business, economies operate, societies react and markets function, and that gives rise to a host of opportunities and risks.

If industry 4.0 becomes a mainstream, industry-wide reality, it will bring changes to the production system and more broadly to the production ecosystem. It will influence who produces, and how, where and when that production occurs.

Industry 4.0 is expected to be a source of significant economic growth in the future, for three main reasons: increased demand for enhanced equipment and new data applications; consumer demand for a wider variety of increasingly customised products; and the likelihood that production now done in low-cost labour countries will be repatriated closer to the point of consumption.

However, these forecasts are tabled on a number of critical assumptions. For industry 4.0 to become a mainstream, industry-wide reality the following elements need to be in place:

• The underlying technologies need to be sufficiently mature for real-world applicability and adaption, they need to be economically viable and socially acceptable
• Public and private organisations need to dispose of sufficient levels of resources, both financial and organisational, to secure the investment required in new technology, R&D activities, infrastructure and education
• Sufficient skilled, educated workers are needed to design, operate and manage production systems including software development and data analytics
• Businesses across manufacturing and high-tech value chains need to be able to access reliable digital communication systems and network infrastructure
• Standards need to exist and be enforced to ensure that the exchange of data between machines and systems can take place across national borders and platforms
• Ownership and access to consumer and industrial data needs to be regulated
• Intellectual property needs to be protectable across national borders, especially with respect to trade and commerce

Many proponents of industry 4.0 also assume that the system-wide replacement of workers by autonomous robots is inevitable, although this is contestable.

For industry 4.0 to be a driver in Europe’s aim to achieve smart, sustainable and inclusive economic growth, the European institutions have to show foresight by reflecting on what might happen and what is needed to accompany this transformation towards a future which is desired and beneficial for European society.

The research agenda of the European Commission’s Framework Programme should include the following reflections, structured around priority policy areas.

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