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Smart Manufacturing for EU Growth and Prosperity

Periodic Reporting for period 2 - MAKERS (Smart Manufacturing for EU Growth and Prosperity)

Reporting period: 2018-01-01 to 2018-12-31

The project’s objectives are to study the opportunities and barriers for the EU to lead a manufacturing renaissance that upgrades existing manufacturing competences and develops new technological capabilities across EU regions to support regional industrial resilience for more distributed and sustainable socio-economic growth and prosperity.
We have delivered all delivables as per GA: D1.1 D2.1 D2.2 D3.1 D3.2 D4.1 D4.2 D4.3 D5.1 D5.2 D6.1 D7.1 D8.1 D9.1 D9.2.

Work Package 1 Manufacturing 4.0
1. A critical review of the recent trend in the manufacturing sector in the US and EU in relation to Asia and BRIC economies (Task 1.1) has highlighted major transformations that have shaped world trade in the 1990s and 2000s.
2. A review the literature (Task 1.2) on the impact of new technology on manufacturing sector has shown that this current ‘fourth’ industrial revolution is shaping a new production model. We put forward the idea of calling this broader understanding of Industry 4.0: Economy 4.0 or Industry 4.0+. We are working on this concept and seeking validation across the policy and academic community
3. The research on servitisation (Task 1.3) has made significant progress in understanding the nature and dynamics of servitisation in the new manufacturing model.
Work Package 2 Innovation and Knowledge Transfer
4. We review the debate on Global Innovation Networks (GINs) and argue that GINs therefore refer to two distinct dimensions of the organisational and geographical configuration of the RDI activities of MNCs: (i) an organisational dimension which refers to the organisation fragmentation and distribution of RDI activities and (ii) a locational dimension which refers to the geographical spread of these activities. GINs are a critical part of the global value chain of firms. We analysed two case studies one in Sweden in the Karlstad; here the pulp and paper industry is trying to upgrade to become part of the Bioeconomy. The other case study was in Tuscany in the Life Sciences.
5. Another area of research in MAKERS has been related to the role of the National and Regional Innovation Systems in manufacturing upgrading. This has been illustrated by in-depth analysis of the transformation of the textile manufacturing industry comparing two local/regional systems: the industrial district of Prato in Italy and the industrial cluster of Borås in Sweden.
6. Given the interlinked nature of GINs, National Innovation Systems and Regional Innovation Systems, the disruptive and radical innovations that the new technologies will bring in require greater coordination and different governance. Following fieldwork in Sweden and Italy, we design a conceptual framework that we have called the Innovation matrix.

Work Package 3 SMEs and local production systems
7. In line Tasks 3.1 and 3.2 we present a conceptual framework that considers what trajectories for cluster technological upgrading are possible with Industry 4.0 and we formulate some hypotheses that we test with a number of case studies. We explored how the new technologies have impacted on the organisation of production in high-tech districts or clusters. The focus was on the systemic capabilities to meet technological challenges and to adapt the local organization of production. Qualitative investigations developed over the textile industrial district of Prato (Italy), the technical textile of St. Gallen (Switzerland) and the metropolitan area of Florence (Italy) helped to clarify the MAKERS concept.
8. A significant quota of industrial base in European economies is due to medium and small enterprises. This is due to existence of dense networks of firms in many industries and in general to strong relationships between firms also along an inter-sectorial dimension. As per Task 3.3 we look at the general trend of cluster upgrading with two case studies in Veneto (Italy) and Vasteras (Sweden).
Work Package 4 Reshoring
9. To address Task 4.1 we have reviewed all relevant academic papers in the current debate. A bibliographical analysis by the authors shows a range of terms being used under the general ‘reshoring’ catch-all term.
10. Our detailed and critical literature review suggests that there are ten major methodological and scientific challenges for research on reshoring. We suggest that to clarify the phenomenon we need to consider the following categories: geography, functions and mode. We suggest distinguishing four forms of re-shoring: Back-shoring, Near-shoring, Home-shoring and Hop-shoring.
11. Tasks 4.2 and 4.3 have been addressed with an evidence based analysis of the reshoring phenomenon using Eurostat data and US data.
12. Nearshoring differs from offshoring, reshoring or back-shoring, since the destination is in the proximity of the MNE’s home country, not the home country itself. We present now the case study of Company A, an Italian manufacturing company that produces paper bags for retails firms. The headquarter is Treviso, a city in the heart of Veneto Region, North East of Italy. The manufacturing sites are two. One is settled in Treviso, the other on in Romania.

Work Package 5 Glocal value chains
13. As per Task 5.1 we review the literature on globalisation, global value chain and global innovation networks with a specific focus on EU manufacturing. We have identifies 7 challenges that are explained in the D5.1 and that we will explore empirically.
14. Starting from the process upgrading, and considering that its the main purpose is to make the production process more efficient, we note that the use of Industry 4.0 technologies affects it in two ways: on increased flexibility and product upgrading. The increase in efficiency together with flexibility, in addition, can enable very hard forms of product customization. To address Tasks 5.2 and 5.3 company case studies in Italy and the UK were used to explore such issues in concrete.
The research has for the first time looked at the concept of Industry 4.0 from an academic perspective with rigorous conceptual underpinning and methodologies.

The novelties of the project are:
1. A conceptualization of Industry 4.0+
2. define firms’ and industries’ new business model with servitisation
3. definition of reshoring more clearly and in an interdisciplinary way.
4. understand how small firms and clusters of firms can upgrade to take on I4.0 model
5. understanding the relocalisation of supply chains and that continental based value chains are likely to emerge.

Current research includes:
a) what skills and competences will be required over the next 10-20 years to ensure jobs and wellbeing; we are measuring the skill gap derived from Industry 4.0
b) how the sustainability agenda is taken forward and how companies are adopting more green practises
c) a final document on A new Industrial policy for the EU.

Conceptualizing Industry 4.0+ is for us a core societal contribution since understanding I4.0 only as the digitalisation and robotisation of factories and production processes does not explain where new jobs are coming from, how we can move towards a green production and consumption. This we believe we need to consider the societal opportunities of I4.0 not only the efficiency ones.