Industry 4.0: German manufacturers plan to rebuild workforce skills

For many manufacturers, legacy processes and ways of working have been shown to be inadequate for coping with the demands of a Covid-19 environment. The winners in its aftermath will be the manufacturers who think creatively and quickly adopt existing trends such as smart technologies, robotics and automation.

Industrial manufacturers are looking to rebuild the skills of their workforce, in particular addressing the needs and challenges of ‘generation Z’ workers now entering employment. This requires them to create talent development strategies.

Smart factories: transformational change in manufacturing

Manufacturers have been on a path towards creating truly smart factories since the dawn of Industry 4.0 nearly a decade ago. Advances in technology have enabled seamless, real-time communication between connected devices on the factory floor and factory management. This produces data and analytics that help to maximise output, reduce wastage and pinpoint opportunities for introducing process automation and simplification. 

Respondents to a survey of 100 HR and talent development professionals in German industrial manufacturing businesses and 100 representatives of Gen Z in Germany carried out by Pinsent Masons, the law firm behind Out-Law, show that most recognise the benefits smart technologies offer. A significant majority (89%) of manufacturers said using technology to improve systems and processes was one of the main strategic priorities for their company.

The pressure to embrace change is being acutely felt within the sector. Traditional manufacturers have faced growing competition from new market entrants who are unencumbered by legacy technologies. Covid-19 and its associated restrictions on how the labour force can be deployed have focused minds further.

In the automotive industry, smart factories enable manufacturers to introduce greater choice and customisation options for consumers without negatively impacting speed to market or profitability.

German automotive group BMW, for example, has been recognised by the World Economic Forum as one of its global leaders in Industry 4.0 technologies. The deployment of a new Internet of Things platform at its Regensburg plant allowed BMW to reduce the time needed to deploy new applications by 80% and resulted in a 5% decrease in quality issues. 

How well prepared is Germany compared to its global peers?

Despite recognising the benefits of Industry 4.0 technologies, some of the manufacturers interviewed were concerned about their ability to adapt to the pace of change required to stay competitive. More than a third of respondents (39%) said they felt well prepared to address the opportunities offered by Industry 4.0. Another 39% said they felt sufficiently prepared and 22% said they felt totally unprepared.       

There is no clear consensus as to whether German manufacturers see themselves more as “pioneers” or as “latecomers” for the adoption of advanced technologies. There is a risk that the sector could fall behind global peers without concerted efforts to embrace new technology.

Over half of respondents (53%) said German employers were latecomers, and that they fail to consider the changed expectations of employees and applicants resulting from digitisation. However, 47% had a different view and said Germany was a pioneer in this area.

In contrast, a majority of respondents (69%) said German industry was a pioneer in implementing internal company measures with regard to digitisation, compared to 31% who said Germany was a latecomer in this regard.

Changes to training

For manufacturers to embrace the opportunity of Industry 4.0 successfully, investing in technology alone is not sufficient. This must be accompanied with significant investment in talent, skills and training to help the workforce adapt to this new environment.

Nearly two thirds of respondents (63%) said they had deployed internal training for employees to help them adapt to new tasks required by Industry 4.0 technology. A further 18% said they had internal training planned. Only 19% said they planned no changes in this area.

External training was also popular, with 45% of the manufacturers surveyed saying they had changed or updated the training offering for staff to help them transition to Industry 4.0 skills, with a further 27% looking to invest in external training in future.

The research also suggests that leaders in talent development are giving their employees greater autonomy to define their training needs and to shape the development opportunities that work best for them. This often means offering blended learning solutions including a mix of online, classroom-based and practical learning.

Peer-to-peer learning – where organisations provide opportunities for employees to learn from each other – is also becoming an integral part of talent development programmes in the manufacturing sector. More than half (58%) of the manufacturers surveyed had introduced formal mechanisms through which employees share best practice approaches and ideas with their peers.

German manufacturer Bosch, for example, has a corporate university, Robert Bosch Kolleg, that provides development opportunities for employees ranging from formal academic qualifications and lectures from market experts, to skills-based seminars and peer-to-peer forums. Its peer learning forums offer ways for international employees across the group to connect, network and learn from each other.

Manufacturers who proactively introduce and promote their innovative talent development programmes will be most closely aligned with what the next generation entering the workforce want from their employers.

Having good internal training within the company is cited as the third most indispensable factor for Gen Z when assessing where they would like to work in future. Just under half (49%) say good internal training is indispensable, and a further 29% say this is very important to them.

Enhancing your talent development strategy

As manufacturing moves towards greater adoption of Industry 4.0 technologies, there are three actions which HR and talent professionals should explore to ensure their business is prepared for the changes ahead.

• Clarify your Industry 4.0 competency framework. Make sure competency frameworks detail the skills required for the business to address opportunities presented by Industry 4.0. Clarify how these new skills are relevant for all roles, and not just for individual in specialist technology or data roles. This will provide guidance on which topics to focus internal training initiatives;
• Adopt a blended approach to training and development: using Industry 4.0 technologies where possible. Training programmes should offer a range of learning approaches for staff, including learning from experts, self-guided learning, and peer-to-peer learning. Identify opportunities to use new technologies such as virtual reality as part of the learning experience;
• Promote the quality and depth of development offerings for current and prospective employees. A new generation of employees entering the workforce is looking for examples of training programmes offered by their preferred employers. Yet only 37% of the manufacturers surveyed say they are promoting changes to their training programmes for employees as a way to attract and retain staff.