The Future of Economic Growth
On February 21st, 1804 English engineer Richard Trevithick unveiled an invention that would not only change manufacturing but also the world. The invention he unveiled was the steam locomotive which pulled ten tones of iron and seventy men ten miles at a speed of five miles per hour. Trevithcik’s invention kicked off the first manufacturing revolution the steam revolution. This kicked off massive world economic growth. The second revolution; manufacturing revolution of Mass production, initiated by Henry Ford and his Model T in 1908. The third and current manufacturing revolution started in the seventies when the process of automation began being implemented into manufacturing.
The current state of the Automation Revolution
People have made several attempts to modify the current model of the automation revolution. Companies have attempted to move their factories overseas to lower labour costs, made factories larger and have stockpiled inventory so they can keep up with demand. Despite these attempts at modification most factories still look the same as they did fifty years ago.
Looking at the world’s annual GDP growth below shows that despite a few spikes, there has been a general decline in world economic GDP growth. This decline is primarily due to the lack of innovation in the world manufacturing sector. Throughout history it has been the manufacturing sector that has provided economic growth through productivity. Without manufacturing innovation everyone’s share of the global economic pie has become smaller which has created tension and conflict as people fight to retain their piece or gain a bigger piece of the pie.
The Technological substitute revolution
Companies and governments around the world failed to innovate and make the worlds economic pie bigger through the traditional means of manufacturing. They turned to technological innovation. Through technological innovation the internet was developed, whilst an amazing creation it has failed to create the same amount of economic growth that manufacturing previously did.
The starting of the Fourth Manufacturing Revolution
The technological substitute revolution however was not pointless it helped initiate the fourth manufacturing revolution, often called Industry 4.0. This fourth revolution combines the current manufacturing model with the technology that has been developed in the technological substitute revolution.
The fourth manufacturing revolution will be fundamentally different from its predecessors. The first, second, and third manufacturing revolutions were characterized by a technological breakthrough—the steam engine, the electrical grid, or IT automation. The fourth is shaped by what advanced technologies make possible: dramatic new opportunities in communication and connectivity.
The fourth manufacturing revolution will create a huge macroeconomic shift. Manufacturing is becoming more flexible to fit a world of small-scale customisation that produces products for individual consumers. This world of small-scale customisation means factories will return home. Production will no longer be globalised but regionally based as the revolution will tend to focus on domestic consumer consumption.
The fourth manufacturing revolution poses a challenge for developed countries like Australia as during the 1990’ and 2000’ future generations were told that there is no future in manufacturing. Countries such as Australia must support the eight key industries that are developing in the fourth manufacturing revolution for their citizens to benefit from the economic pie that the fourth revolution will create.
The Eight Industries of the Fourth Manufacturing revolution
A small number of companies in Australia are embracing these innovations leading to growth in manufacturing in 2017 and 2018. With economic headwinds both locally and globally recently appearing, this fourth manufacturing revolution is the ticket to future prosperity.