Fourth Industrial Revolution Aims to Transform Hungary’s Production
As digitalization is an engine of growth that impacts all sectors, the key to economic competitiveness is businesses’ preparedness for digital transformation. The digital revolution in industrial production, often referred to as Industry 4.0 or the Fourth Industrial Revolution, is expected to bring a transformation of similar magnitude to its predecessors.
“The Hungarian government is determined to create more new, high value-added jobs through digitalization than the number of jobs that will be lost. An important prerequisite for this is the creation of high value-added digital jobs (i.e. the digitalization of industry, agriculture and the services sector) and the systematic development of the digital skills of employees,” Roland Jakab, regional director of Ericsson Hungary, tells the Budapest Business Journal.
Hungary is doing its best to lay firm foundations for the fourth industrial revolution. The Industry 4.0 National Technology Platform was established in May 2016. The Irinyi Plan, named after chemist János Irinyi (who invented safety matches that ignited quietly and smoothly), sets out the main directions of the development of Hungarian industry, aiming to create a driving force for long-term growth.
A priority project called Developing Industry 4.0 Model Applications was launched to promote awareness, demonstration, and development. It is supported by the Industry 4.0 Model Factories and an Industry 4.0 Technology Center to stimulate the evolution of domestic manufacturing for small- and medium-sized enterprises and to increase their openness to industrial automation and control solutions for Industry 4.0 production systems.
Hungary follows the European pattern: the fourth industrial revolution remains a privilege of multinationals and large enterprises, while SMEs are falling behind. Although Industry 4.0 is spreading in the country, it is lagging not only the EU average, but also when compared to the other Visegrád Four nations (the Czech Republic, Poland and Slovakia), according to the Digital Economy and Society Index (DESI).
“The gap in SMEs has been recognized at EU and local levels. Initiatives, such as the Digital Innovation Hubs of Digitizing European Industry (DEI) and the Industry 4.0 Model Factories project led by the Industrial Development Coordination Agency and the ICT Association of Hungary (IVSZ) support SMEs to catch up,” Zoltán Gábor, a senior manager at Deloitte Hungary, tells the BBJ.
Digital Innovation Hubs (DIHs) are one-stop shops for companies, especially SMEs, startups and mid-caps, to get help in improving their business operations, production processes, products and services through digital technology. DEI prioritizes the support for a powerful DIH network to ensure that every European business can gain an advantage from digital opportunities.
“Industry 4.0 Model Factories is a free EU fund operative program that offers practical experience and knowledge resources to micro-, small- and medium-sized enterprises to become acquainted with Industry 4.0 technologies and uses, allowing them to increase their competitiveness,” Gábor says.
What is Industry 4.0? It relates to implementing state-of-the-art solutions such as industrial robots, fully automated production lines and 3D printing. Companies buy such technologies to improve their performance; however, Hungarian SMEs face many challenges. Digitalization and integration of novel solutions within the operation (both horizontally and vertically) and collecting and processing production line and product data pose challenges to SMEs.
Nevertheless, digital tools can help free up staff from less-skilled production jobs, which may be one answer to the labor shortage. Increasing the level of automation needs different and higher-level skills to operate the manufacturing facilities, Gábor explains.
As modern technology becomes more widely used, its price goes down. New emerging technologies, such as fifth generation connectivity (5G), can help to connect and collect data from the manufacturing equipment and products.
“However, the knowledge to utilize the benefits and implementation of the technology is a different topic, one where system integrators may help [….] in creating new digital processes, which establish the aforementioned vertical and horizontal integration and incorporate state-of-the-art technology into those new processes to reduce cycle times, costs and increase overall effectiveness,” Gábor adds.
The Hungarian Picture
Today, Industry 4.0 technologies in Hungary include manufacturing/supply visualization, manufacturing execution systems (MES), supply chains, inventory and production design optimization, enterprise resource planning, advanced planning systems, big data, intelligent energy utilization, robotics supported manufacturing, additive manufacturing technologies and 3D printing.
Ericsson Hungary says it is busy contributing to the Hungarian fourth industrial revolution. Telco giant Magyar Telekom is installing a 4G/LTE-based industrial network at BorgWarner’s factory in Oroszlány, supplied by Ericsson Hungary and Cisco Hungary. The mother company has been active in Germany too: Ericsson pioneered 5G for automotive manufacturing together with Audi, and Ericsson and Telefónica will bring 5G car manufacturing to Mercedes-Benz.
But what are the challenges? “For manufacturing, it’s the race towards Industry 4.0 and the vision of high variance, low volume production. The current logic of economies of scale will no longer hold up, and the cost of producing one unit should be the same as producing one mass unit. Naturally, this puts enormous requirements on efficient customization, not only on production lines, but contributing work-flows, resources and logistics,” Jakab of Ericsson Hungary says.
Therefore, the work lies in defining how these challenges and requirements can be supported by cellular technologies and networks. For example, with mobility, it is possible to reconfigure wireless production lines faster, track workflows and redesign global operations and value chains. Nevertheless, “industries are under constant pressure to improve product quality, boost factory efficiency, stay competitive, enhance safety, security and sustainability and remain profitable,” Jakab says.
For the bulk of these challenges, fifth generation connectivity may be the ultimate solution with its increased speed, reduced latency and reliable connectivity.
“Mission and business-critical use cases require the low latency, high performance and high reliability that only 5G provides. 5G opens the door to Industry 4.0 and Ericsson is at the forefront of the innovations,” Jakab insists.
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