Germany Looks to Win the Smart Factory Game in 2016

BASF Group

by Anam Alpenia

Nestled beside the Franco-German border, on the eastern banks of the Rhein, Karlsruhe is a natural location for big business. It is also one of the country’s premier technological spots – which made it an obvious choice as the home of Axoom, one of Germany’s most innovative new companies.

Founded last summer out of Trumpf, a 93-year-old family-run machine tools firm, located in nearby Ditzingen, Axoom uses Big Data to streamline order processes for clients in the production industry. Managing director Florian Weigmann describes Axoom as an “app store for manufacturing.”

Axoom is one of a growing number of German crossovers between its manufacturing industry and leading-edge technology – in particular Internet of Things (IoT) solutions that are transforming the country’s staid, and slipping, manufacturing industry.

Manufacturing comprises 22% of Germany’s economy – only China relies on the sector more. Little wonder that companies, and the German government, are keen to give factories a technological facelift.

Take, for example, the Siemens Electronic Plant in Amberg, which since 1989 has grown its smart output to cater for 1,000 products and two million components, of which computers control 75% of the production stream.

Or the German Artificial Research Centre (DFKID) in Kaiserslautern – just a 90-minute drive from Axoom’s sprawling HQ. It has been busy creating smart modules which speed up, and streamline, production of a wild array of items, bringing major German players in line with their counterparts in high-performing nations like South Korea, the US and Japan.

Chemical giant BASF uses DFKID to make fully-customized shampoos and soaps, each of which is able to be completely different from the next on the assembly line thanks to the quick-‘thinking’ smart machines on site.

On a computer, lead research Detlef Zühlke recently told Wired, this would be called plug-and-play. In a factory it becomes “plug-and-produce”. It’s all part of a ‘fourth revolution’ in factories, in which the German government has invested €500 million ($545 million), called Industry 4.0.

Among other advances it, and Germany’s Digital Agenda 2014-17, hope to achieve, are better access to high-speed 50Mb Internet, and the creation of 5,000 more IT firms per year, from its current 10,000.

Smart factories are a huge part of that plan. With them, Germany could bring its manufacturing costs back into line with developing nations like China and India, and stop looking over its shoulder, concerned that upstart nations may soon be taking a large chunk of its traditionally huge manufacturing pie.

That is not to say it is guaranteed success. Google, which controls 95% of German web searches, has plowed ahead with its January 2014 purchase of Nest, a controllable thermostat firm. German officials have expressed concern at the dominance of online behemoths like Google, Amazon and Microsoft, in a country which has traditionally – even after wartime defeat – stood on its own two feet.

That is not just the job of Axoom, DFKID and Amberg. Germany is a nation of SMEs, and cities such as ‘poor but sexy’ startup hub Berlin continue to dominate the scene with headline creations and, more recently, exits.

But for a country that boasts such multinationals as BMW, Bayer, VW, Metro and Robert Bosch – to name but a few – it is clear that to win in this latest industrial revolution, Germany will need a repeat of the Wirtschaftswunder (the ‘economic miracle’ of the 1950s) to come from the top down. Whether it has adopted smart factory technology in time, remains to be seen.