The New Interface of Engineering

The Industrial Internet of Things is a multi-billion euro market on the move and ahotbed of innovative technologies. As a global leader in this new era of manufacturingand mechanical engineering, Germany is attracting more foreign investment than ever.

February, 2018

The Felss Group, an international mechanical engineering company from Baden-Wuerttemberg, recently made a substantial investment: it developed software that enables metalworking companies to track their products and collect data on their way through the factory. Why is this so important? “Our customers can thus optimize their process flows and increase the availability of the machines,” explains Wolfgang Haggenmüller, business development manager at Felss. “Now, thanks to the intelligent analysis of the information collected along the entire value chain, bottlenecks can be reduced and material saved. The costs of production are reduced by 10 to 15 per cent.”

The Felss Group’s subtle but smart development to streamline production processes is just one example of why the German mechanical engineering market is so attractive to foreign investors at the moment. German companies are blazing a trail with their cutting-edge technologies, with a focus developing machines for tomorrow’s world. “It’s no coincidence that the term ‘Industrie 4.0’ came from Germany,” says GTAI engineering expert Claudia Grüne. In her opinion no other market in the world better combines the expertise to build equipment with intelligent digital controls.

This humanoid robot hand made by Schunk was shown at Innorobo, a robotic event in Paris in May 2017. It has been designed to allow robots to interact with a human-scale world.

© Simon LAMBERT/HAYTHAM-REA/laif

Market opportunities

Mechanical engineering is one of Germany’s most muscular industrial sectors. Across some 6,780 companies, the sector employs more skilled engineers than in any other country and the export rate is 77 per cent, according to the industry association VDMA. Last year alone, German machine builders turned over a record €219bn. The Industrial Internet of Things (IIoT) is at the forefront of new developments. “We are witnessing a structural change in value creation. Machine builders, electronics and IT companies will work together much more closely than before,” says GTAI electronics expert Max Milbredt. “This results in interesting investment opportunities for foreign investors.” Specialized clusters dotted around the country bring research institutions together with the private sector to drive the IoT industry forward.

Machine builders, electronics and IT companies will work together much more closely than before.

At present, the main focus is on the networking of production machines. The linking together of automated industrial equipment will dramatically increase flexibility in production dynamics, thereby multiplying opportunities for the development of new products. “The industrial IoT is a key driver of innovation for German mechanical engineers,” says the author of an EY study, Stefan Bley. The report found that 69 per cent of engineers believe IoT is of vital strategic importance, while 44 per cent of machine builders already use IoT applications, and another quarter plans to use them.

Investment rush into IoT

German companies have been investing billions into the IoT and a new market is evolving. “The IoT market is currently establishing itself, with new specialized players and existing system integrators considerably improving their IoT qualifications,” says GTAI’s IoT expert Asha-Maria Sharma. Last year, one in three industrial companies invested between five to ten per cent of its annual turnover into Industry 4.0 applications (while 46 per cent invested just up to five per cent).

A large tranche of the investments goes into software systems and applications. The platforms through which machine builders and manufacturing companies share device data are the control centers of the IIoT. One of the major platform providers is the U.S. IT giant IBM, which in 2017 invested €200m in the IBM Watson Center in Munich. It was the group’s largest foreign investment in the past two decades. “For us, Germany is the perfect location and one of the world’s most important industrial regions in the middle of Europe,” says Carsten Holtmann, the director of Watson IoT.

Inside the imposing twin glass skyscrapers – a bold new addition to the Munich skyline – IBM collaborates with IT partners and key players from the industry. And IBM is not the only IT giant with its eye on the Bavarian capital: Microsoft opened its “IoT & Al Insider Lab” in the spring of 2017, offering a range of services related to digitization.

SmartFactoryKL is preparing the ground for the intelligent factory of the future. As a leading center of expertise and a demonstration and research platform which is manufacturer-independent, it develops innovative factory systems which help to make the vision of Industry 4.0 become a reality today.

© SmartFactoryKL

Networking machines

The market potential for digitization and networking of production machinery is huge: industrial machines are usually large-scale investments that may have been in use for decades. A typical factory might deploy a patchwork of old and new machines from different manufacturers. Old machines record little or no data, and while there are add-on devices to do that job, they can only store information in a volatile memory which is cleared after a few days.

“The Industrial Internet of Things usually starts with a relatively small step,” explains Holger Kett from the Fraunhofer Institute for Industrial Engineering (IAO) in the city of Esslingen. Companies start by equipping their machines with sensors for generating, visualizing and storing data. The next step is for the system to filter data because the sheer volume of information generated quickly becomes very large.