An introduction class to the Industry 4.0: notion, pillars and a preliminary overview of the implications from a legal perspective

The first chapter of your journey with Portolano Cavallo in the Industry 4.0

The value added by new – and constantly developing – technologies to the industrial world has been so disruptive in the last years: it creates a clean break from the realm of the third industrial revolution and has created what is now known as “Industry 4.0 phenomenon”. Indeed, in a world where technology is key, the ability to swiftly adapt to the new technological developments has become a decisive factor for companies to maintain their competitive edge on the market. Nowadays, this dynamism can be achieved through the implementation of new technologies in – almost all – the steps of the manufacturing chain.

The term Industry 4.0 is, therefore, used to indicate the rise of the new digital industrial technology which is transforming industrial production through data collection and analysis and enabling faster, more efficient and more flexible processes to produce higher quality goods at a lower cost.

Know the past to understand the future

To properly understand this “fourth industrial revolution”, one must primarily appreciate the different steps that led manufacturing to current times. From the first industrial revolution (1784), driven by the mechanization of manufacturing through steam power, passing by the second industrial revolution (1870) occurred through the implementation of electricity in mass production and assembly lines, to the third industrial revolution (1970) which saw the implementation of first generation ICT in production chains, the fourth industrial revolution is now poised to become the new era of industrial production. By taking what was initially started during the third industrial revolution, the Industry 4.0 is now enhancing the production processes with smart, communicating, autonomous systems which are fueled, inter alia, by data and machine learning.

The nine pillars of the Industry 4.0

The driving force behind the Industry 4.0 are nine foundational technological advances which connect the different elements of a value chain (machines, IT systems, sensors, etc.) and enable them to communicate, ultimately, leading to decision making without human intervention. These nine pillars are: I) IOT – Internet of things: the ability of everyday objects to connect to internet and to send and receive data; II) Big Data: the vast amount of data that is now created and collected through IOT devices; III) Cloud Computing: the connective tissue of the Industry 4.0 which enables data storage and sharing beyond company boundaries; IV) System Integration: the possibility to create stronger cohesion between departments (e.g. engineering, production, product quality) to synergistically exploit the potentials of a single plant; V) Cybersecurity: the system(s) implemented to ensure secure and reliable access and communications to and between the data owned by the company; VI) Augmented (Virtual) Reality: the enrichment of human sensory perception through information which improves decision making and work procedure; VII) Simulation: the creation – in a testing environment – of a model of reality that allows to evaluate and predict the dynamic development of events and processes; VIII) Autonomous Robots: which can undertake a vast array of activities including completing assignments without human intervention, interacting with one another and working safely along with humans; IX) Additive Manufacturing (e.g. 3D printing): the possibility to create a product “layer by layer” instead of using traditional printing methods.

The level of implementation of the Industry 4.0: an international overview

Although, at a first glance, the Industry 4.0 may seem a futuristic concept which has yet to find practical implications, numerous industries already began the implementation process. Indeed, technologies such as autonomous robots have already been implemented in storage facilities (e.g. Amazon), manufacturing and final assembly and additive manufacturing has found vast implementation, among others, in the biomedical, aerospace, agriculture (bioeconomy), engineering and architecture fields. To the more, technologies such as augmented reality and simulations are now being used in repair & maintenance, design & modeling, business logistics as well as to train employees and to speed production processes. The impression is that we are just scraping the surface of a phenomenon that is poised to disrupt the manufacturing processes to which we have become accustomed to.

As far as the implementation status of the Industry 4.0, from a geographical standpoint, a first distinction can be made between early/aggressive adopters and laggards. The former includes countries like the U.S., Canada, Japan and South Korea which have anticipated other markets and began implementing these technologies at an early stage. The latter includes countries like Austria, France, Italy and Spain which have yet to take decisive steps towards ret-thinking their production chain. In between these categories lie countries which began implementing Industry 4.0 technologies early but at a slow pace and countries which have yet to begin embracing this change. Interestingly, one of the key factors that has driven a wedge between early adopters and laggards is related to labor law. Indeed, countries with a more relaxed labor regulation have been able to implement new technologies at a higher pace if compared to countries with a more rigid regulatory framework.

This is a clear reminder that, although technological developments are the key driver in manufacturing innovation, companies wishing to implement new technologies must always keep the regulatory framework of reference in the rear view.

Industry 4.0. in Italy: a brief overview on the current implementation

As mentioned above, Italy falls within the category of countries which have slowly began implementing an Industry 4.0 strategy. The project began in September 2016 when the government presented its plan for the Industry 4.0. The project aimed at mobilizing, in 2017, additional private investments for EUR 10 billion and spending EUR 11,3 billion of private funds in research, development and innovation with a focus on Industry 4.0 technologies, with an additional EUR 2,6 billion for early stage private investments. The measure included tax incentives, venture capital support and education from schools to universities with an aim of encouraging and incentivizing companies to adapt to the fourth industrial revolution.

Interestingly, the plan also focused on creating s.c. “Competence Centers” (composed by the primary Italian universities) with the aim of intensifying the relations between research and industry. The Competence Centers were given the task of providing guidance and training to companies, as well as, supporting the implementation of innovative projects, industrial research and experimental developments. These activities are aimed at creating or improving new products, processes and services through the advanced technologies characterizing the Industry 4.0.

According to the data provided by the Italian Industry 4.0 Observatory, the measures adopted have indeed helped companies to begin investing towards the implementation of Industry 4.0 technologies in their corporate structure. For this reason, any government that followed since the adoption of the first program in 2016 has always introduced further measures aimed at supporting the growth of the Industry 4.0 in Italy.

The legal implications stemming from the Industry 4.0

Companies wishing to use the vast array of technologies currently being developed on the market will necessarily have to come face to face with the regulatory framework. Indeed, the implementation of new and, in some circumstances, invasive technologies in industrial production not only impacts the economic world but has also deep ramifications from a legal standpoint.

The labor law implications, which have/will become relevant once companies begin substituting human workforce with “machines”, appear to be just the tip of the iceberg. Data Protection/Privacy rules will require the implementation of strong compliance programs by companies when addressing issues such as employee remote monitoring, data ownership and data transfers just to mention a few. The ability of automotive companies to collect drivers’ data has also led to several implications from an antitrust standpoint and is currently disrupting the value chain of the industry (further information, please see this article). Such implications also affect other companies that are playing in different business areas, such as, inter alia, engineering manufacturing, transportation and retail. Moreover, 3D printing is leading to litigation for trademark infringement as well as the need of the companies to secure its IP rights (e.g. the protection of software and its relation to economic development and licensing in the software industry).

Notwithstanding the above, the legal frameworks should never be understood as a limit to innovation but should rather be seen as a tool to ensure that every step towards progress is taken correctly, without sacrificing individual and collective rights.

We strongly advise you to stay-tuned to our Industry 4.0 upcoming initiatives in which we will discuss more about the industry and provide guidance on the most relevant legal aspects that companies should assess when considering the implementation of the new technologies the market has to offer.

Seguici su