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G&H Blog Industry 4

How Industry 4.0 is changing the world of work and the search for talent (via Bagpuss and The Matrix)

G&H Blog Industry 4

Simpler times

I can still recall having a conversation with my grandparents when I was a boy, about how the world would never change as it much as it had between their childhoods and mine. The post-war world of their youth seemed as far removed from my own, where PCs or games machines were a fixture in most homes, as Bagpuss is from The Matrix.*

I was wrong, but back then I was too young to realise that in a world where change is the only constant, you should never assume you’ve witnessed the greatest change the world will bring.

The state of play

Here in 2019 we find ourselves in the early throes of the fourth industrial revolution, or Industry 4.0. What makes this revolution different from those preceding it is that it has its roots in digitalisation - an entirely new technological phenomenon - rather than just new types of energy. (New forms of energy are, of course, part and parcel of the phenomenon, but not the driving force per se).

The current revolution has been enabled by a raft of technologies that enable centres of production in many industries to communicate seamlessly and gain enormous efficiencies across supply chains, as well as in the design, build and operational processes. Big Data and analytics, robotics, AR, simulation, IoT and IIoT, the cloud, Blockchain and more besides are becoming terms we use casually, even while the reality of the technology is often mind-blowing.

More efficient staff…but fewer?

Two of the most obvious products of the new age are the smart city and the smart factory, where different facets of (respectively) infrastructure and production are all connected. In The Manufacturer’s Annual Manufacturing Report 2018, 80% of surveyed businesses saw the impact of digital technology on the supply chain as beneficial, believing smart factories will improve supply chain relationships, while 91% felt smart technology will increase productivity levels per headcount.

At the same time, there are widespread fears that many longstanding roles will disappear: a McKinsey study found that 50% of companies believe automation will decrease their numbers of full-time staff by 2022, and that robots will replace 800 million workers globally by 2030.

However, that same report noted that many roles will be remodelled, and although we’ve seen a degree of fear-mongering over the loss of blue-collar production line roles as AI-driven machines take up much of this work, it is likely we will see new roles created in areas such as data science and solutions architecture. Meanwhile, improvements in production through robotics have thus far created new areas of employment. When technology advances at a faster rate than training, it creates a skills gap: smart factories need to support their AI-driven robotics with analytics, programming and maintenance professionals. Manufacturing centres need problem-solving humans to run banks of interconnected machines.

The rise of the machines, data….and skills gaps

Industry 4.0 is characterised by an increased reliance on technology to realise undreamt-of efficiencies across multiple technologies and supply chains. But this means that workers and recruiters will need to upskill.

PwC’s 2019 Global CEO Survey (which is less optimistic in tone than its previous year’s as the world becomes a still more uncertain place) sees CEOs struggling to “translate a deluge of data into better decision-making”, seeking more talent to “extract value from big data” and “move beyond baby steps toward AI”.

Availability of key skills is now a top-three threat to surveyed businesses, compared to a top-five threat in 2018. Of particular concern is a lack of talent in data analytics and AI, because the volume of available data that can facilitate decision-making has expanded exponentially. In short, CEOs know enough to know that they don’t know enough.

My kingdom for talent!

The UK government’s new Industrial Strategy, launched in 2017, was an attempt to boost the STEM skills that will be invaluable in this new world, while CEOs are increasingly considering use of apprenticeships to grow their workforce whilst developing the required skills.

As for the ground-level roles in this new world, many are…well, new. It’s no good seeking people experienced in a role that is new to science itself. So we’re seeing quite a lot imaginative re-engineering of existing roles as relevant skills and experience are put to use for roles that are being created for the first time. Quite often, we are pivotal in making these decisions, and have to lead our clients through the talent identification and hiring process – something we’re well-placed to do because we listen hard to the experts we work with, and we have a broad view of several highly-specialised but related sectors.

A similar trend has been a shifting of the old hierarchy of hiring preferences. Once upon a time, many employers treated same-sector experience as the most (or joint-most) important factor when choosing a candidate. This was matched by core skills, with cultural fit often of least concern.

But this is changing as sectors look to enrich themselves with outside thinking and diverse perspectives while, it has to be said, also confronting a sheer lack of available same-sector talent.

The automotive sector, for example, is beset by a critical need for electrical engineers. The pressure is on to find experts in electrical design and systems, something many employers have felt for some time, but never as strongly as they do now.  Smaller companies are reluctant to bring in contractors, with a preference for keeping critical talent and maintaining a stable workforce and balanced teams with longevity, so we’re seeing more technical directors looking at core skills and culture-fit as equal or nearly equal in importance, and finding ways to fit good candidates into their business.

It’s a big risk to move experts in low-voltage systems from other sectors into high-voltage automotive systems roles - but it makes sense to move people from low-voltage roles outside of automotive to low-voltage roles within the sector.  Automotive employers might like to bring electrical engineers from aerospace because of the obvious synergies between the markets, but there are problems with pay: aerospace often trumps automotive for salary. We’re more likely to see clients who aren’t too worried about the sector a candidate comes from – they focus on relevant skills and personal fit, with industry background at the bottom of the hierarchy of needs. This is new. 

Collaboration is key

When it comes to addressing national skills gaps and ensuring a nation remains competitive, collaboration between government, industry and education is key. The government’s fund to support digital transformation will provide additional support, and the £30m allocated to the Made Smarter Challenge will specifically support projects in data analytics, IoT and more.

Evidence of collaboration is everywhere, from the Advanced Propulsion Centre whose role is to ensure the UK remains at the forefront of low-carbon emission powertrain technology, to the Catapult Programmes designed to transform the UK’s capability for innovation and drive economic growth in energy, digital, future cities, medicine, manufacturing, renewable energy, transport and many more industries.

Small businesses with big clout

A particularly welcome consequence of Industry 4.0 is a rise in small businesses whose deep expertise and specialist skillsets in areas such as data, semi-conductors, VR, telematics and more are making them both irreplaceable and hugely successful. These small, specialist businesses find themselves at the forefront of a changing world, not just driving change but “imagineering” it.

*Postscript: Bagpuss and The Matrix

For those below a certain age who have never had the pleasure of watching Bagpuss, it was a sweetly nostalgic children’s show that first aired in the 1970s and was a staple of kids’ TV for many years after, which is why I saw it. Even in its day it seemed like something sent from a different time; a relic from an altogether slower, simpler world. What’s frightening for me is that there are people too young to have seen The Matrix when it first showed at cinemas, who could now be our graduate candidates.