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Industry 4.0 is bringing production back to home shores

In the past, many companies have shifted part of their production overseas. A study from Austria has shown that automation could reverse this trend. The first companies have already started to back-source production.

25 Feb. 2018
David Schahinian
Industrie 4.0 Acatech
Industry 4.0 is bringing production back to home shores (Foto: Deutsche Messe)

The researchers at the Austrian Institute of Technology examined company data from Austria, Germany and Switzerland, and found that there is a significant relationship between the use of Industry 4.0 technologies and back-sourcing . The reason is that this gives companies flexibility, more ability to supply and greater competitiveness. Precisely these advantages were often previously lost due to long distances and the higher need for coordination. Industry 4.0 applications can also significantly increase productivity on site.

However, researchers still do not see “significant impulses” for domestic locations: So far, only 5 to 6% of companies have back-sourced. However, they expect this proportion to increase significantly. But there’s a hitch: It is not clear whether back-sourcing will also bring back jobs. Fewer employees will be necessary as a result of automation – and if they are required, they will usually have to be highly qualified. However, the increase in companies’ flexibility and productivity could indirectly lead to more employment.

The bottom line is that Industry 4.0 is neither a job driver nor a job killer, says the Institute for Job Market and Occupational Research (IAB) . Digitization could lead to 490,000 jobs being lost. At the same time, another 430,000 new positions may emerge. Education and further training are particularly important in order to cushion these displacements.

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