This article was originally published with The Manila Times on May 23, 2019.
Pistoia, Italy: While this is a quiet sleepy town north of Rome, one would be pleasantly surprised that despite being a town of only about 100,000 people, this place reeks of digitization and Industry 4.0. We have spent a good amount of time in their industrial area filled with companies spanning at least a century old onwards.
In my previous article, I shared that the Philippines’ score in a recent assessment of World Economic Forum on Future of Production (6.1 out of 10) highlights the unfavorable drivers of production and complex structure as prevalent and existing conditions in the manufacturing industry. This presents risks for us as far as our neighboring countries are concerned, ie our advanced leading neighbor countries can offer more advanced manufacturing while nascent countries can offer lowest cost of labor. These risks present opportunities though to mitigate such. They include 3 key things: First, our country needs to reskill and upskill workers. Given that a lot of these processes will be automated in the future, it is wise to start thinking about reskilling and upskilling the labor force. Second, there is a need to upgrade technology platforms and seek frugal innovations. There are technological capabilities already available out there to start introducing innovations in the organization that would propel readiness to what lies ahead. Third is to ensure that the fundamental building block of good governance is in place. This is where we need our government to be aligned with where technology is leading and how our industries would be impacted in the next years to come.
The country can likewise accelerate readiness and transformation by utilizing the private sector more actively in tackling macro level challenges.
Italy is an example of a country that has started its journey on Industry 4.0 since 2017. The key stakeholder is its national government, led by the Italian Ministry of Economic Development which has earmarked EUR18 billion to support this strategic initiative. The government has implemented a top down approach, with focus on orientation towards technology as well as skills, with the target audience being the SMEs and companies with no industry limitation. Every business person is encouraged to participate in this initiative. The concept is simple: to take advantage of the technology advancements provided by Industry 4.0 and to promote investments in innovation and research and development (R&D) and to spread the culture and develop the skills needed.
The framework adopted by the Italian government allowed for a strong collaborative approach between private and public sectors (with key engagements with the academe and R&D as well), with fiscal incentives aimed at companies and entrepreneurs willing to align their business objectives to that of the government’s and enjoy the tax breaks provided in the process. The plan touched on the policy objectives, skills and technology, its go-to-market approach and implementation and execution.
It is also interesting to note that Italy has joined forces with both Germany and France for a trilateral international cooperation for a similar initiative on a region-wide Industry 4.0 approach, with strong focus on manufacturing companies at the enterprise level.
Ricciarelli S.p.A, a 175-year old manufacturing company headquartered here has joined in this endeavor of the Italian government to realize the value of Industry 4.0. The company specializes in providing packaging equipment to pasta manufacturing companies. In our visit to some of the pasta plants South of Italy, we have been amazed by the efficiency and high productivity shown by the machines and equipment present in the plant, with only less than 5 people manning the entire factory. The same factory can address the pasta demand both domestically and overseas.
Many things are still to be learned and understood on how this technology trend can make waves and impact our side of the world; not just with Industry 4.0 but in digital transformation as a whole. With the recent national elections held a few weeks ago and with new legislators in several cities in Manila highlighting the need for technology in their own respective cities, there is a strong sense of hope that we could see a robust alliance between public and private sectors in advocating for a digital Philippines in the future. For now, we have countries such as Italy to take inspiration and guidance from on how they have started to make things work in this digital age.
Kay Calpo Lugtu is the COO of Hungry Workhorse, a digital and culture transformation firm; Co-Founder of Caucus, Inc. and Deputy Director of Global Chamber Manila. Her advocacies include data privacy, financial literacy, and nation-building. The author may be reached at email@example.com.