The Next Production Revolution: Implications for Government and Business Alistair Nolan, Senior Economist Directorate for Science, Technology and Innovation London, Thursday September 21st, 2017
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The Next Production
Revolution: Implications for
Government and Business
Alistair Nolan, Senior Economist
Directorate for Science, Technology and Innovation
London, Thursday September 21st, 2017
Productivity growth has declined since the 1990s Annualised growth of labour productivity (output per hour worked)
Source: OECD estimations using OECD National Accounts database; OECD Productivity database; International Labour Organisation database. Statlink: http://dx.doi.org/10.1787/888933367500
The potential productivity benefits of new
technologies are urgently needed.
0
0.5
1
1.5
2
2.5
OECD USA Euro area Japan G20
1990-2000 2000-07 2007-14% %
4
Digital technology and “servicification”
of manufacturing
has transformed its business into a service with
“Power by the Hour”, where customers pay only for
the time they use an engine. RR engineers oversee
management of customer’s fleet.
• The IoT is used to collect data on real-time engine usage
> minimises RR’s operation costs (maintenance costs)
> maximises engines’ operation time (service revenues)
Based upon FY 2014 revenues, RR’s savings could range
from USD 400 million to USD 600 million and revenues
increase could be USD 1 billion annually
5
Using big data, cloud computing, and
the IoT: the case of John Deere
• is connecting farm machines to each
other and to the cloud (MyJohnDeere) via
the IoT to collect and process big data
> autonomous vehicles enable a single farmer to
plant and harvest up to 600 acres a day (compared to 150)
Global precision farming market now worth
~ USD 3 billion and expected to be worth
~ USD 5 billion by 2020 (CAGR: 12%)
Selected Themes - 3D printing
Selected Themes - 3D printing
• Companies that print on behalf of others (3D printing-as-a-service. eg ShapeWays, Sculpteo).
Enable 3D printing of repair parts for products no longer in production - remove intellectual property barriers
Selected Themes - 3D printing
• Companies that print on behalf of others (3D printing-as-a-service. eg ShapeWays, Sculpteo).
Enable 3D printing of repair parts for products no longer in production - remove intellectual property barriers
• Marketplace for 3D printable files (like Shutterstock or Fotalia, but 3D).
• Some such markets already exist, but with limitations (Thingiverse, Markerbot’s marketplace, does not allow makers to monetize their designs).
Cross-country average
Source: ‘Cross-country Evidence on Business Dynamics over the Last Decade’ – DSTI/IND(2016)18
Business Entry and Exit rates
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Entry rate Exit rate
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation :
2nd industrial revolution
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation :
2nd industrial revolution
Introduction begins
in mid-1890s
Source: David, P.A. (1990), ‘The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox’, American Economic Review, Volume 80, Issue 2, pp.355-361.
New forms of business organisation :
2nd industrial revolution
Industrial
productivity
only rises in
early 1920s
Mid-1890s
Thank you
3D printing – another aspect of strategy
Metals Additive Manufacturing (MAM)
Many
applications
3D printing – another aspect of strategy
Metals Additive Manufacturing (MAM)
But aviation demands
extraordinary safety
standards, which MAM
cannot yet meet.
Many
applications
3D printing – another aspect of strategy
Metals Additive Manufacturing (MAM)
But aviation demands
extraordinary safety
standards, which MAM
cannot yet meet.
Various
applications
Government can
help
- Technical and institutional
infrastructure (e.g. materials databases)
- Promote standards
- Forge data sharing agreements across
industry, government labs and academia
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