Hope for SA economy: Thinking ahead to Fourth Industrial Automation technologies

Hope for SA economy: Thinking ahead to Fourth Industrial Automation technologies

After years of slow grow, South Africa may be over the worst, and could start seeing growth by 2021/22. This is according to leading economist Mike Schüssler, who was addressing a VIP breakfast briefing in Johannesburg recently, ahead of Africa Automation Fair and the Connected Industries Conference.

Mike Schüssler
Image: IOL

Schüssler, owner of economic consultancy economists.co.za, said the 1st quarter would likely be a disaster, with corruption and SOEs taking some time longer to sort out. Eskom’s challenges would remain a growth inhibitor too, he said. In industries such as mining, Schüssler expected a continuing drop in employment figures for the next two years– partly due to automation, but mainly due to the fact that commodities markets had changed and Eskom was not preforming well at all.

He did not expect South Africa’s gold and platinum sectors to return to being the GDP contributor they were in the 1970s and 1980s.

However, he was cautiously optimistic about South Africa’s growth prospects: “I think we can expect to start seeing growth after a few quarters. We’re probably over the worst, and by 2021/22 we could be back at 3% GDP growth,” he said.

To help spur this growth, the country needed to be tougher on crime and labour protests, and ease tax and legislation that hampered small business growth. “A profit motive is what enables businesses to grow – if a business doesn’t make a profit it simply can’t create jobs. So the government needs to reduce the risks of business investment and reduce the red tape in the way of small business growth,” he said.

For industry, the hope of a return to growth means this is the time to start thinking ahead to Fourth Industrial Automation technologies and the broader ecosystem, he said.

Schüssler said the Fourth Industrial Revolution era extended far beyond technologies, and signalled a shift from commodities-based economies and manual labour, to services-driven economies. “The Fourth Industrial revolution is also mainly a services revolution,” he said. “It’s not just about industry, but also how you sell things, transport things and more – it’s a services thing.”

Changes wrought by this revolution included a significant increase in the number of people working in services and a drop in the number of people working in manual labour intensive industries. “In the past 27 years alone, the number of people employed in agriculture has dropped from 44% to 28% globally, yet agricultural output has increased. Meanwhile, the number of service workers has increased from 31% to 49%.”

The Fourth Industrial Revolution is personalised, serviced-driven and even recycled, so the economic focus is no longer only on commodities,” he said.

The Fourth Industrial Revolution and associated services revolution presented significant scope for innovation and new business growth, delegates heard. Marius Smit, General Manager: Technology & Business Events at Africa Automation Fair organiser Reed Exhibitions, noted that there were clear signs of new opportunities for manufacturers and a range of other sectors in the Fourth Industrial Revolution.

Africa Automation Fair 2019 will showcase Industry 4.0 innovations to drive efficiency, productivity and cost benefits, he said, with leading sponsors such as Honeywell and Rockwell Automation highlighting their solutions to fast-track industry into the Industry 4.0 era.

The Africa Automation Fair 2019 exhibition held mi June in Johannesburg showcased technologies, solutions and models for next generation manufacturing. Running alongside the fair, the Connected Industries Conference at Africa Automation Fair 2019 focused on the economic impact of the Fourth Industrial Revolution (Industry 4.0 / IIoT) on South – and sub-Saharan Africa, and how to bring this technology shift to South Africa.

Integrated Construction Business Software Is A Must-Have

Integrated Construction Business Software Is A Must-Have

By Kenny Ingram, Global Industry Director, Engineering, Construction & Infrastructure at IFS

The engineering, construction and infrastructure industry is facing huge disruptive changes. We are at a stress point and need wholesale change.

While global construction productivity has improved about a quarter of the rate of manufacturing productivity since 1995, a recent Research and Markets report states that South Africa’s construction industry suffered a downturn during the period 2017 – 2018. When we look at rich countries like Germany, France and the United States, things are not much better —there, construction productivity is also falling. The United States’ top contractors according to ENR have recently experienced a decline of 26 percent on their return on working capital. The top 10 contractors in the UK have increased their debt by 24 percent in 2018, and British contractors delivered an average operating margin of negative .5 percent in 2018.


Since global construction productivity has been atrocious for a long time, why must we act as soon as possible? Consider some of these facts:
· 55 percent of the top 100 construction companies are now in Asia – a huge increase from where it was 10 years ago – so for the rest of the world, foreign competition is intensifying;
· Modular and off-site construction, which can improve productivity, is forecast to grow by 6.9 percent per year;
· Demand will be high, with 2 billion new homes need to be built over the next 80 years according to the UN.
It is very clear that running a construction business successfully is becoming extremely hard and the complexity is increasing at a rapid pace.

The essentials for business growth
The need for tight project control and business governance is not optional but essential if you want to grow and prosper in the future. Those who do not have timely and accurate information about how their projects and businesses are performing will be unable to make the right decisions and risk being the next casualty in the industry.
Today, most construction businesses are running their companies using a patchwork quilt of non-integrated systems. In fact, the most common management information system in use, is Excel. A patchwork quilt solution does not support best practices and will not be capable of supporting this highly disrupted industry in the future.

Integrated business software
The term enterprise resource planning (ERP) is often talked about in the construction industry but it is usually interpreted as meaning the finance and maybe human resources systems. But ERP is meant to be an integrated enterprise wide system which is what it is in many industries such as manufacturing.

Interestingly productivity has increased by 760 percent over the last 50 years in manufacturing and yet construction has achieved a pathetic 6 percent increase over the same period. So maybe we could conclude that this is because the manufacturing industry has recognised and exploited the benefits of integrated processes and systems for many years.

Of course, the answer is more complex than that and I would agree that the construction industry is unique. Unlike manufacturing, construction contractors deliver large, long-term one-off projects rather than products. Construction-centric ERP systems have evolved and become mature solutions so there is no longer a good excuse for not implementing ERP properly other than a resistant culture. We are also seeing the construction industry converge with the manufacturing and service industries so there are even bigger reasons now to become more efficient and agile by implementing an integrated ERP system. This should also be viewed as the platform to integrate the emerging digital technologies such as BIM, 4D scheduling, robotics, augmented reality (AR) and IoT into the core ERP backbone.

Can we adapt and be an agile successful business if we continue to run our business using a patchwork of non-integrated business systems? I would argue that the huge pressure on businesses to deliver high quality projects on time and at lower cost can only be met by moving to more integrated and agile business processes and systems.

THE BIGGER PICTURE

THE BIGGER PICTURE

As MBSA members attending our Congress last month in Port Elizabeth will recall, an item of particular interest was raised by Paul Dhlamini, Levies and Grants Manager at the Services Sector Education and Training Authority (SETA) who told delegates that artisan development had become a national priority.

John Matthews, President, Master Builders South Africa

He said that government recognition of the country’s enormous shortage of artisans had resulted in the Minister of Higher Education signing an agreement to produce 30 000 skilled artisans by the end of 2030.

It was, he said, necessary to make artisan development non-sector based so that all the SETAs could contribute funds and ensure that we train artisans and reduce unemployment.

This is of course a positive step but there remain numerous hurdles to jump before that full complement of artisans is delivered, more than ten years from now.

And then, those many years on, will the young people trained by standards set here in 2018, be up to the mark dictated by the onset of the fourth industrial revolution? This phenomenon has, in the current and developing environment, spawned revolutionary technologies like robotics, the Internet of Things and other trends that are changing the way we live and work.

The World Economic Forum has been quoted as estimating that 65 per cent of children today will end up in careers that don’t even exist yet.

The foundation, while citing literacy, numeracy and scientific knowledge as critical, revealed that when top executives from leading world companies were asked what they thought the most important job skills would be in 2020, they all quoted “complex problem solving”. Other skills on their top ten list included critical thinking, creativity, collaboration and emotional intelligence.

Will our young South African artisans who now find themselves the beneficiaries of this government-driven renewed training initiative meet the challenges of a work environment set to change, in some ways, beyond recognition?

To ensure they will be able to, a great deal more than government grants will have to be applied to artisan training over the next decade and more. Particularly in our industry, where those who have chosen construction as their career will have to go far beyond the “bricks and mortar” of their trades and embrace the almost unimaginable changes that this phase of our world industrial development will throw at them.

It’s hugely exciting if approached with the right attitude, not only by the apprentices, but more critically by the responsible government departments, employers, industry leaders – and essentially, their teachers, instructors and mentors. The need to instil a culture of broad-thinking, and a holistic approach to the industry at all levels, including financial management, is essential to its on-going health.

John