Manufactiring 2025
Manufactiring 2025
2025
Five future scenarios for Danish manufacturing companies
Manufacturing 2025
Five future scenarios for Danish manufacturing companies
May 2010
Center for Industrial Production and Department of Mechanical and Manufacturing Engineering Aalborg University May 2010 ISBN: 87-91831-20-2 Printing: AK print Illustrations: Yogisstreg This publication is supported by the Industrial Fund for Educational Development and Cooperation and The Danish Agency for Science, Technology and Innovation
Authors: Professor John Johansen, Center for Industrial Production, Aalborg University Professor Ole Madsen, Department of Mechanical and Manufacturing Engineering, Aalborg University Chief Consultant Henrik Valentin Jensen, Confederation of Danish Industry Development Consultant Anders Vestergaard, Center for Industrial Production, Aalborg University
List of contents
Preface Summary Danish manufacturing under increasing pressure innovation required 2025 A project for the future Challenges towards 2025 Five future scenarios of Danish manufacturing
The highly competent manufacturing company The industrial power centre The innovation factory The flexible value chain integrator The virtual business
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Continuous dialogue on the knowledge requirements uncovered by the five future scenarios Appendix 1: List of participants Sources
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Preface
How can Danish manufacturing companies sensibly retain their production in Denmark and what knowledge is required to do so? This question is answered by a number of manufacturing companies, researchers from three Danish universities and two labour market organisations in this publication, based on long-term cooperation within the framework of Manufuture. dk, the Danish platform that forms part of the EU technology platform Manufuture. This publication is meant to inspire Danish companies in their search for innovative solutions that will contribute to the development of competitive production based in Denmark. In more concrete terms, the work will be used to influence the research agenda of the EU programme Factories of the Future. Efforts will also be made to establish a number of consortia that will prepare concrete research applications to this and other national and international research and development programmes. At the same time we hope that this publication will contribute to the debate on the future of Danish manufacturing and not least to a discussion of political, research and educational measures that should be taken to support Danish manufacturing in 2025. It is the intention of the platform that this publication should function as a dynamic document that can be continuously updated as it is distributed and discussed in various settings. Manufuture.dk therefore welcomes any views and comments. Morten Buhl Srensen, Danfoss Chairman, Manufuture.dk
Summary
This publication examines what manufacturing companies of the future might look like and the knowledge requirements entailed by this. The examination thus provides an outline of what is required for Denmark to maintain a strong and competitive manufacturing sector in 2025. Behind the publication are five Danish manufacturing companies, three universities and the two largest labour market organisations. The publication shows how manufacturing companies in a Danish context can organise their resources and efforts to obtain an advantage in global competition by exploiting the special competences and business conditions that characterise Danish society. Compared to many other nations, the Danish economy is open, and the Danish attitude towards global cooperation is very positive. The Danish business culture provides a good breeding ground for efficient organisational forms, characterised by e.g. dialogue and inclusion of employees, just as Danish employees are keen to contribute to finding innovative solutions. At the same time, the Danish business structure presents some special challenges because it consists primarily of small-sized businesses with limited resources. On the basis of the Danish advantages and challenges, five future scenarios of profitable and sustainable manufacturing in Denmark in 2025 have been elaborated. A common feature of the five scenarios is that production provides an important framework for product development and innovation. If production disappears, so does a major contributor to of our innovation capabilities. The five scenarios are proposals for successfully maintaining knowledge and innovative ability in Denmark. The future scenarios have been constructed on the basis of Danish conditions, but they cannot be attained without special effort. Knowledge requirements must be met if the scenarios are to be realised. The publication therefore outlines the knowledge requirements connected with each of the scenarios. In this connection, a catalogue of related research topics is elaborated simultaneously with this publication. The catalogue is available at www.manufuture.dk.
450.000 450.000
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100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 2005 2005 2006 2006 2007 2007 2008 2008
Data, kommunikation, forsikring og nans Data, communication, Rejser insurance and nance
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vrige tjenester inkl. Travel andre forretningstjenester Other services, including vrige varer other business services Landbrug, kd og Other goods mlkekonserves Agriculture, meat and Transport milk products preserved Fremstilling Transport Manufacturing
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A European problem
Not only Danish manufacturing companies are under pressure this is a European phenomenon. Manufuture, a European organisation whose objective is to promote transformation of the European manufacturing sector to enable it to handle high-addedvalue products, processes and services, secure high-skills employment and win a major share of world manufacturing output in the future knowledge-driven economy, has been worried by the development for a long time. The threat comes not only from an increasing share of traditional manufacturing being moved to low-wage areas such as China and India but also from increasing competition within high-tech production. More and more developing or newly developed countries, such as e.g. Korea, are rapidly build-
Increasing pressure
Danish industry is, however, under strong pressure. The Danish cost level increasingly represents a challenge particularly for traditional industry e.g. in comparison to Eastern Europe and China. Therefore, it
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ing competences within high-tech research, manufacturing automation, innovation, etc. China is also increasingly making its mark within these areas4. As a result of the economic crisis, Europes position in the world economy is weaker in 2010 than it was in 2008, and Europe is losing ground to the USA and China5.
view of manufacturing is supported by a report on the future of European manufacturing, which points out, among other things, that R&D drives new developments in manufacturing, but more importantly, manufacturing is the contextual river for more R&D6. This view also implies that companies not only offshore and outsource their manufacturing activities. Knowledge jobs within administration, research and development increasingly follow, which underlines the close connection between physical production and knowledge production.
China is currently the groups third largest market7. The increased geographical distribution of manufacturing activities introduces a number of additional costs because the distance in terms of geography as well as structure and management puts pressure on the flexibility and responsiveness of companies and generally demands an active preparedness to coordinate in the form of a higher degree of formalisation and more extensive communication systems. Even if these challenges are overcome, their existence calls for an ongoing discussion of the structure and centre of the value chain. Competition is global at all levels: Management, research, competences, resources, labour, etc.
Innovation required
As a nation, we must challenge our current perception when production is increasingly organised in global networks. More than ever, our nation needs new models that point towards intelligent, high-tech knowl-
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edge-based manufacturing that will serve as a sensible basis for maintaining production and innovation in Denmark. This involves huge challenges for Danish society and Danish manufacturing companies in terms of developing not only new business models but also a basis for knowledge and education capable of supporting the new models and the development required in order for Danish industry to adapt to the new conditions. There is an indisputable connection between research & development and the possibilities of maintaining jobs in Denmark. A recent survey indicates that on average, companies engaged in research and development activities experience a productivity per employee that is 9 per cent higher compared to innovative companies which are not engaged in research or development. Furthermore, average productivity per employee for innovative companies is 6 per cent higher compared to companies which are not engaged in innovation, research or development.
Within the manufacturing industry, productivity per employee for companies engaged in research and development is 23 per cent higher than for companies which are not engaged in research and development8. The concept of productivity should perhaps rather be perceived as one of efficiency, which measures the total value added to the business.
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Organisation
Manufuture.dk has functioned as a steering group for the project. The project has revolved around a panel of company representatives, researchers from the three technical universities in Denmark, and two labour marked organisations (the labour or-
life and its problems, thus enabling them to think in new and ideal ways
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which participants can relate to and which is somehow realistic despite the desire to think in a long-term and ideal manner
universities and organisations have enabled the creation of a cohesive and increasingly profound dialogue across workshops and themes.
In support of the structure and as a catalyst for discussions, a number of generic cases were developed for each workshop. The cases were based on three archetypal companies: The focused manufacturing company, the integrated manufacturing company, and the network-based manufcturing company9. The cases have contributed effectively to concretising participants discussions and recommendations.
products and structures that accommodate reduced CO2 footprints to the highest extent possible bal manufacturing but focusing on knowledge sharing and gathering
Themes
Each workshop has focused on a theme. Below is a short description of the themes:
1. Conditions for future manufactur-
Between the workshops, the working group has collected all presentations, discussions and viewpoints and drawn up a summary that has functioned as a starting point for the following session. The fifth workshop was used for summarising the entire process with the focus on developing a number of general scenarios of future manufacturing systems. The entire process has taken 12 months. The duration and the large team of continuously associated persons from companies,
ing creating a common working basis and formulating ambitions and themes for subsequent work
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protectionism
competitive factor coupled with growth and increasing profits as driving forces
The environment, energy and resource problems will play even more important roles in the future both practically and
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Flexible localisation
Challenge: There is a risk that Denmarks manufacturing competences and product development ability are eroded as manufacturing is globalised. Ambition: Knowledge sharing and integration must function despite geographical and cultural challenges in order to retain competences. Also, production and delivery systems must be so flexible that the mix of decentralised/centralised manufacturing is sustainably neutral.
At the same time, product lifetime must be doubled, and customers must continually be offered new facilities and functions. The challenges and ambitions thus formulated play a key role in the concrete design of the five scenarios of future manufacturing.
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Continuous dialogue on the knowledge requirements uncovered by the five future scenarios
A strong and comprehensive effort is required from individual companies, society, and industrial organisations in order for Denmark to be able to maintain manufacturing as an important sector. The five future scenarios can be used as a starting point for discussing how to meet this challenge. With each scenario, guidelines are provided as to requirements for development and communication of knowledge in order for the framework of production conditions to best accommodate the five scenarios. Denmarks manufacturing competence. It is therefore necessary to allocate means to finance this research and development, and there is a need for developing instruments to increase cooperation between universities and between universities and Danish industry. The five future scenarios may help form the basis of a dialogue on cooperation and development of new knowledge and competences. The Manufacturing 2025 group intends to use the future scenarios and would enjoy participating in further dialogue in this respect.
Research catalogue
On the basis of the knowledge requirements indicated for each of the five future scenarios, the 2025 group has drawn up a comprehensive catalogue of concrete efforts required within manufacturing research. The catalogue which is published separately identifies a number of concrete areas in which research and development efforts are required in the coming years. A strengthening of these areas will improve and develop
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Sources
1. Nationalbankens kvartalsoversigt, 1. 10. Dalum, in Fremtidens produktion i
kvartal 2010
2. Ingeniren, 27 March 2010 3. Brsen, 3 June 2009 4. Manufuture, 2006 5. Sdan ligger landet, DI, April 2010 6. FuTMaN - The Future of Manufac-
12. DRUID Working Paper No. 04-04 13. Sdan ligger landet, DI, 2010 14. Linder, Jarvenpaa and Davenport,
forskning, udvikling og innovation. Innovation: Analyse og evaluering 1/2010. Forsknings- og Innovationsstyrelsen Dansk Industri & Center for Industrial Production, AAU, 2004
Fig. 1 Statistics Denmark Fig. 2 Statistics Denmark and calculations by the Danish Confederation of Industry
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