How Siemens is embracing the new industrial revolution

As premier partner to Dubai Expo 2020, the German industrial giant is living up to its billing: at the end of the six month long event in April 2021, Siemens will repurpose facilities built for the Expo into what will become its global airport logistics headquarters.

And before that happens, it will invest $500m over three years to build two Internet of Things (IoT) application centres in the UAE, among only 20 globally.

It will also fund software grants to help students, academics and researchers learn the technicalities behind gathering data from physical assets and running software based simulations.

The plan is that they will build their capabilities to run Siemens’ all-encompassing Mindsphere platform, which CEO Joe Kaeser described at Dubai’s World Government Summit in February, as the “software for the Expo”.

To understand how Mindsphere works, a good analogy is Windows. The Microsoft operating system was a quantum leap that made desktop computers and laptops a household fixture.

It did this by collecting data from physical devices (hard drives, mother boards, graphics cards, monitors, mice and more) to run a host of software applications (Adobe Creative Suite, Microsoft Office, content management systems). This allowed for an explosion in output that allowed everyday users to produce everything from Oscar-winning movies to this very magazine.

Replace those devices with any industrial asset you can think of (oil pipes, railway doors, aircraft engine turbine blades, etc), then substitute Windows with a similarly open architecture platform, but one robust enough to push industry-grade data into proprietary and third-party applications, and you have Mindsphere, an enterprise operating system that Siemens’ believes can power any capital-intensive company that wants to embrace Industry 4.0.

What’s the catch?

That’s the good news. More jobs, more investment, and what looks like a complex piece of once-in-a-generation-software set to simplify how the world works.

But here’s where it becomes interesting: over the last 50 years, the world’s GDP grew by an average of 3.5 percent annually. A huge factor in that growth was a burgeoning population of young people around the world – a demographic that is now ageing.

As it does, the next 50 years could see global GDP growth rates shrink to zero if the global economy does not transform itself.

Why? “Because the labour market in China has already peaked,” says Busch, before pausing and repeating his statement.

The impact isn’t lost on us. “Korea, Japan, Germany and most developed countries have ageing populations,” Busch continues, to illustrate what happens next. He’s is implying that we’ve so far been relying on a booming population of young people to drive global growth, and that resource is now all but exhausted.

There are certain places, such as India and the rest of South Asia, where young populations are still growing, but “there you still have a lot of manufacturing which is more labour intensive than skill intensive,” he says. “The only way to retain the global GDP growth rates we’ve enjoyed is through technology.

“A plant manager in Germany will tell you that a robot costs €5 an hour where a human needs €13 as well as insurance and other benefits. The problem right now is that robots are still not great at simple tasks such as recognising things. But as they keep working they will learn, and their cost per labour hour will become cheaper. They will start competing with Chinese labour, the cost of which is actually increasing,” he says.

Robots might not be great at recognising things, but they’re getting better

“Steadily but not untended”

The potential ramifications of this new industrial revolution would have made Aldous Huxley proud. But there is an emerging truth that is perhaps the only option for anyone interested in reserving a place in the world’s future. Busch calls it “lifelong learning”.

“Training is the number one challenge the labour force faces as the world digitalises and the nature of jobs change. That’s why Siemens invests more than half a billion in training people,” says Busch.

This challenge is not down to a single company. “This is a joint responsibility [to be borne by] both governments and private institutions,” he says. “We train employees and they have to figure out how to upgrade their institutions in terms of how to train people at school up to universities.”

This industrial revolution is a “technology challenge that we have to make work.” Businesses need to figure out use cases and payback, and it might take longer to unfold than it seems. “It will require a lot of learning,” says Busch. “The cycle time of products in digital technology is just a couple of months. Training employees to have that knowledge takes years. So, the more digital you become, the faster you have to learn.”

When Dubai Expo 2020 ends, Siemens will repurpose a number of buildings to house its global airport logistics HQ

As we speak…

With incremental investment, digitalised businesses can get better productivity returns than if they invested traditionally to build capacity, according to Busch.

“You would never have believed that Adidas would open a speed factory in Germany,” he says, “but that’s exactly what it did in Ansbach last year.”

By digitalising automation and personalisation, the company used Siemens technology to open a facility that would otherwise have opened in a low cost market.

Germany is a market where labour is expensive, but with a difference: “This is not where people stitch stuff. This is a different way to manufacture shoes. It will bring jobs back, obviously not as many or of the same skill set, but still, very highly trained labour that will change how value is created.”

Some markets, “including the UAE and Middle East,” have a chance to compensate labour work “with more sophisticated, better educated work that could drive a lot more productivity,” says Busch.

Whether in the oil and gas industries, aviation or rail transport, “Mindsphere is the answer to that problem,” he says. “It will provide us with an opportunity to keep driving global GDP growth despite an ageing population.”

China’s working population will shrink 23 percent by 2050

AI in action

Dr Roland Busch on one example of how automation, AI and digitalisation will impact labour is deployment

Siemens’ light rail systems, including trams, are in use across the world including the Middle East. Passenger doors need constant inspection and maintenance, “because if the doors don’t close, properly or on time, then the tram can’t move forward,” says Busch.

The maintenance process requires inspectors making the rounds and doing physical checks to measure the time it takes for door motors to function, as well as if there are any obvious mechanical faults. This tends to be a costly and time-intensive process.

Using cameras placed strategically within train stations, Siemens is now able to measure minute differences in the amount of time it takes for tram doors to open and close. This alerts a predictive diagnostics system that determines the health of the mechanism, based on fatigue, electrical and mechanical failures, and or obstructions in the machinery.

This reduces the cost of inspections because it needs fewer physical inspections, and also improves the time taken for problems to be detected, and the efficiency of the diagnostic process.

CEO’s words

In February, Siemens chief executive Joe Kaeser told CEO Middle East: “AI will help mankind, not enslave us” and that Dubai Expo 2020 is where Siemens will demonstrate its action plan

What does your Industry 4.0 plan look like and what will we see of it at Expo 2020?

The most prominent thing that we will bring is our industrial platform, Mindsphere, which is our AI software for the Expo.

But you won’t see it; all you will notice are applications written on the platform that will help everything run seamlessly. Tangible outcomes of the coming industrial revolution will be our fully automated modern manufacturing processes, where people will see engineering processes begin in the virtual world of software before making their way into the physical world of modern manufacturing.

Also, Dubai and the UAE, with Emirates, Etihad, big ports, and big airports spell one of the single most attractive growth areas for the Internet of things (IoT). IoT makes people and goods move faster, more frequently and in smaller quantities. So that means flexibility, and logistics will play a major role in the development of IoT.

Will AI deliver capital benefits or labour consequences?

AI will help humans see, hear, sense and think better and faster. This will develop a better world and society. AI will help mankind and not enslave us. It is very important to understand and that is exactly what we will demonstrate. Today, a lot of things that humans do, robots and computers can do better. Think about the scanning used in MRIs or in topography analysis: typically humans do that but they make mistakes. Computers don’t overlook anything. At most, if they don’t recognise something, they won’t complete the process, which is where humans can step in to fill the information gap so that the computer can recognise it from then on. So, instead of fearing technology, business leaders need to show society how not to worry. Employees need to be retrained for the future. The split of society is what we need to understand especially those within that could be affected in a negative way. If they are given the opportunity to benefit as well from the revolution, then it will all be okay.