Chapter 10. An international review of emerging manufacturing R&D priorities and policies for the next production revolution

O’Sullivan Dr Eoin

Director, Centre for Science, Technology and Innovation Policy (CSTI), Institute for Manufacturing (IfM), University of Cambridge

López-Gómez Dr Carlos

Head, Policy Links Unit, Institute for Manufacturing Education and Consultancy Services (IfM ECS), University of Cambridge

This chapter presents a review of emerging trends in manufacturing research and development (R&D) relevant to the next production revolution. It is based on analysis of national government policies, foresight exercises and research strategies in selected OECD countries and other major economies. The review highlights growing attention to the themes of convergence (of research disciplines, technologies and systems), scale-up (of emerging technologies), and national economic value capture (from manufacturing innovation). These policy themes have in turn resulted in manufacturing research programmes and institutions adopting a broader range of innovation functions (beyond basic research), creating closer linkages between innovation system actors, and providing new types of innovation infrastructure (tools, enabling technologies and facilities). Case studies of selected initiatives illustrate the varieties of approaches and contexts across countries. The chapter aims to help inform discussion and stimulate debate about the design and management of manufacturing research institutions and programmes for the next production revolution.

Introduction

This chapter reviews recent trends in national government-funded efforts to support manufacturing R&D. The trends are assessed in terms of: technology research priorities, key themes influencing policy design, and developments in the modus operandi of research institutions and programmes. The chapter is based on a systematic analysis of selected national government policies, foresight exercises and research agency strategies.

The chapter highlights that in designing manufacturing R&D strategies for the next production revolution, policy makers have not only been making decisions about prioritising particular technology research domains but are also designing institutions, programmes and initiatives in an effort to ensure that research results are developed, demonstrated and deployed in industrial systems. The chapter identifies that, in this context, there is growing attention to the themes of convergence (of research disciplines, technologies and systems), scale-up (of emerging technologies), and national economic value capture (from manufacturing innovation). These policy themes have in turn resulted in manufacturing research programmes and institutions adopting a broader range of research and innovation functions, beyond basic research, creating closer linkages between key innovation system actors, and providing new types innovation infrastructure (tools, enabling technologies and facilities) to support convergence and scale-up.

There is increased recognition among policy makers of the need to better understand the forces influencing the future of manufacturing, the consequences for national competitiveness, and the implications for policies to support manufacturing-based economic growth (O’Sullivan et al., 2013). In particular, there is renewed interest across OECD countries to better understand how government-funded manufacturing R&D investments, institutions and initiatives can most effectively drive innovation in the context of the next production revolution. The attention given to manufacturing has grown significantly in recent research and innovation strategies in countries like the United States (NEC and OSTP, 2015), Germany (BMBF, 2014a, 2014b), Japan (CSTI, 2015), the People’s Republic of China (hereafter “China”) (People’s Republic of China, 2016), and multilateral organisations such as the European Commission (EC, 2011). National manufacturing foresight studies and strategies have been recently published in e.g. Sweden (MEI, 2016; Teknikföretagen, 2013), Australia (CSIRO, 2016), and the United Kingdom (Foresight, 2013; BIS, 2012). In-depth roadmaps and strategies for individual high-priority manufacturing technologies have also been produced in countries including Japan (CRDS, 2015), the United Kingdom (AMSG, 2016), the United States (PCAST, 2014), the Netherlands (Holland High Tech, 2015a, 2015b, 2016) and China (MIIT, 2016). Major national manufacturing initiatives are also receiving significant policy attention, including Germany’s Industry 4.0 (Acatech, 2013), the United States’ National Network for Manufacturing Innovation (AMNPO, 2013), Japan’s Robot Strategy (RRRC, 2015); and China’s Made in China 2025 (State Council, 2015).

Manufacturing technology research priorities for the next production revolution

The range of technologies that could significantly transform manufacturing is broad and their specific effects remain uncertain (OECD, 2016). However, there is some degree of consensus internationally around broad categories of key emerging technologies with the potential to drastically reshape manufacturing as we know it (IDA, 2012; Dickens, Keely and Williams, 2013; López-Gómez et al., 2013). Technologies such as biomanufacturing, nanomanufacturing, advanced manufacturing information and communication technology (ICT), advanced materials and novel production technologies (e.g. 3D printing) are receiving particular attention in recent governmental studies and strategies. However, identifying specific priorities and designing implementation mechanisms for government-funded research programmes and initiatives is challenging due to the convergence of technologies and the complexity of modern manufacturing. Many of the technology families listed above have a variety of subdomains, draw from diverse academic disciplines, and have a large variety of potential industrial applications. Not only are important emerging manufacturing research domains intrinsically multidisciplinary, but new science and engineering breakthroughs have the potential to drive disruptions across entire value chains. As exemplified later in the chapter, the variety of potential manufacturing technology targets for policy is, therefore, diverse and interrelated.

Government manufacturing research priorities and the approaches to institutional design adopted in different countries vary, reflecting differences in industrial and research strengths (O’Sullivan, 2011, 2016). In Germany, for example, emphasis has been placed on the integration of digital technologies into industrial production machinery and “smart factories”, with particular attention to embedded systems, cyber-physical systems1 and the Internet of Things (IoT) through the high-profile Industry 4.0 initiative (Acatech, 2013). In Japan, the central government has recently placed emphasis on the integration of advanced robotics and artificial intelligence (AI), and the integration of capabilities across specialist supply chains (METI, 2015a, 2015b; CSTI, 2015). In the United States, particular attention has been given in recent national policy documents to accelerated deployment of advanced manufacturing products and processes, often highlighting the importance of emerging science-based technologies (PCAST, 2011, 2014).

Key manufacturing policy themes shaping R&D priorities

Furthermore, a number of “megatrends” – e.g. globalisation of value chains, accelerated production life cycles, digitalisation, and changing consumer habits – are acting on manufacturing systems, constantly redefining the sources of competitiveness (Dickens, Kelly and Williams, 2013; López-Gómez et al., 2013). The increasing global demand for customised manufactured products, for example, offers market advantage to those firms with flexible production systems capable of satisfying the requirements of both low and high-volume markets while keeping costs competitive (Brecher, 2012, 2015).

In this increasingly complex and changing industrial context, there is growing policy attention to the themes of convergence, scale-up, and the location of production in high-wage economies. These policy themes are in turn influencing government-funded R&D programmes, public-private partnerships, and the missions of new R&D institutions.

Emerging policy responses to the next production revolution

Common emerging features in new government-funded manufacturing R&D institutions, programmes and initiatives reviewed in this chapter include the adoption of innovation support functions beyond basic R&D (e.g. prototype demonstration, skills training, supply chain development) and an increased focus on “grand challenges” (related e.g. to issues such as sustainable manufacturing, nanomanufacturing, and energy storage). There is also increased emphasis on forming new research partnerships and linkages within the innovation system, with R&D programmes and initiatives, making more explicit requirements for interdisciplinary and inter-institutional collaborations. Similarly, there are increased efforts to improve inter-institutional collaboration and alignment.

The chapter presents a selection of case studies to illustrate the variety of themes and approaches, and to highlight features of high-profile initiatives in some of the countries surveyed. The case studies reviewed are the following: the Cluster of Excellence Integrative Production Technology for High-wage Countries (Germany), the High Value Manufacturing Catapult network (United Kingdom), the Singapore Institute of Manufacturing Technologies (SIMTech, Singapore), the Intelligent Technical Systems OstWestfalenLippe initiative (It’s OWL, Germany), the Cross-Ministerial Strategic Innovation Promotion Program (SIP, Japan) and the Pilot Lines for Key Enabling Technologies initiative (European Union, including cases from Sweden and a Belgium-led consortium).

The final section of this chapter presents a summary of key policy themes, approaches and lessons. In this regard, it is emphasised that many research challenges critical to the next production revolution are increasingly multidisciplinary and systemic in nature. Accordingly, policy needs to take account of the increasingly blurred boundaries across fields of manufacturing research. For example, many important research challenges will need to draw on a number of traditionally separate manufacturing-related research domains (such as advanced materials, production tools, ICT, and operations management). Mechanisms should be put in place to support multidisciplinary challenge-led endeavours. Government-funded research institutions need the freedom and mandates to adopt relevant complementary innovation activities or connect to other innovation actors.

Some of the novel policy and institutional approaches responding to the next production revolution have only emerged in the last five years and have not yet been evaluated (or the evaluation results are not in the public domain). Policy makers should design key success metrics for manufacturing R&D programmes and carry out systemic evaluations. In this connection, issues of technology scale-up, technology and research convergence, and system complexity, raise important questions about the choice of evaluation metrics. Traditional metrics may not adequately incentivise efforts to enhance linkages, interdisciplinarity and research translation. Evaluations of institutions and programmes may need new indicators (beyond traditional measures such as numbers of publications and patents) in areas such as: successful pilot line and test-bed demonstration, development of skilled technicians and engineers, repeat consortia membership, small and medium-sized enterprise (SME) participation in new supply chains, and the attraction of foreign direct investment (FDI).

Policy makers also need to be aware of the manufacturability challenges associated with the scale-up of science-based technologies. Investments in applied research centres and pilot production facilities focused on taking innovations out of the laboratory and into production are often essential. Developing linkages and partnerships between manufacturing R&D stakeholders is also critical. This is because of the scale and complexity of innovation challenges in the next production revolution. Meeting these challenges requires diverse capabilities and infrastructure which may be distributed across a wide range of innovation actors. For example, some manufacturing R&D challenges may need expertise and insight from a range of industrial actors, not only manufacturing engineers and industrial researchers, but also designers, suppliers, equipment suppliers, shop floor technicians, and users.

Manufacturing R&D infrastructure also requires the right combinations of tools and facilities to address the challenges and opportunities of convergence and scale-up. Advanced metrology, real-time monitoring technologies, characterisation, analysis and testing technologies, shared databases, and modelling and simulation tools are just some of the tools and facilities concerned. Also needed are demonstration facilities such as test beds, pilot lines and factory demonstrators that provide dedicated research environments with the right mix of tools and enabling technologies, and the technicians to operate them. An example of efforts to provide new innovation infrastructure to address scale-up and convergence challenges is the Pilot Lines for Key Enabling Technologies programme funded by the European Commission.

Emerging manufacturing technology priorities for the next production revolution

There is some degree of consensus internationally around broad categories of key emerging technologies with the potential to drastically reshape manufacturing as we know it (IDA, 2012; Dickens, Kelly and Williams, 2013; López-Gómez et al., 2013). Technologies such as biomanufacturing, nanomanufacturing, advanced manufacturing ICT, advanced materials and manufacturing, and novel production technologies (e.g. 3D printing) receive particular attention in recent governmental studies and strategies across OECD countries. In the context of the next production revolution, identifying more specific priorities for government-funded research programmes and initiatives is particularly challenging due to the convergence of technologies and the increasing complexity of modern manufacturing systems.

Not only are important emerging manufacturing research domains intrinsically multidisciplinary, but new science and engineering breakthroughs also have the potential to change the dynamics of competitiveness across and within industries (OECD, 2016). Solutions to industrial challenges driving productivity and industrial competitiveness will increasingly come from combinations of technologies and involve multiple research domains (OECD, 2016; O’Sullivan, 2011). For example, making next-generation aircraft lighter, quieter and more fuel efficient will require integrated R&D efforts across areas such as high fidelity aerodynamic models, additive machining, advanced composite materials, advanced high-rate airframe production systems, advanced systems integration, advanced batteries and fuel cells, among others (AGP, 2013; NASA, 2016).

Moreover, R&D breakthroughs in particular technologies have the potential for a broad range of impacts across industrial and innovation activities, sectors and application domains. For example, ICT-based research themes are relevant across all levels of manufacturing systems: material modelling and simulation and smart components; smart factories and additive manufacturing; Industrial Internet and advanced enterprise resource planning; digital manufacturing and design, and big-data analytics. Similarly, R&D in additive manufacturing may underpin engineering solutions for other emerging technologies (from tissue engineering to novel printed electronic devices), and have a range of industrial applications, from health care to aerospace, automotive to creative industries (AMSG, 2016).

Adding to the complexity is the fact that many of the families of technologies listed above have a variety of subdomains and draw from a variety of academic disciplines. Advanced materials research, for example, is an intrinsically multidisciplinary domain with contributions from disciplines including condensed matter physics, chemistry, biology and manufacturing engineering. The list of potential topics for materials research is diverse depending on combinations of material type (e.g. alloys, semiconductors, ceramics), material properties (e.g. optical, magnetic, electric and tensile), the scale at which materials are engineered (e.g. nano-, micro-materials), and the applications or sectors within which the materials technologies are intended to be deployed (e.g. aerospace materials).

Not surprisingly, manufacturing research priorities approaches adopted in different countries (and different national R&D agencies) vary, reflecting differences in industrial and research strengths and priorities (O’Sullivan, 2011; 2016).2 To illustrate differences in characterisation, language and emphasis found across countries Boxes 10.1 to 10.2 present some recent examples of national manufacturing priority setting. At the end of the chapter, case study examples of recent national programmes and initiatives are presented.

In the United States, the discourse on manufacturing has been largely dominated recently by discussions of “advanced manufacturing” often highlighting the importance of manufacturing information technology (IT) systems or emerging science-based technologies (O’Sullivan and Mitchell, 2012). There is an emphasis on next-generation materials (and novel materials engineering) for manufacturing. United States strategies also highlight nanomanufacturing and “materials genome” multiscale modelling. In an effort to enhance co-ordination across federal agencies and provide a foundation of priorities for public-private collaborations, the United States government has attempted to summarise research on advanced manufacturing technology domains across government agencies, as summarised in Box 10.1 (NTSC, 2016). The exercise included an analysis of technical challenges and opportunities across each technology, and a sampling of current and planned federal programmes and initiatives, with emphasis on promising technologies, defined as “those that suffer from gaps in support for the pre-competitive R&D requisite to unleashing new industries” (NTSC, 2016). Further policy discussion and analysis of strategically important manufacturing technology areas for the United States can be found in various reports of the President’s Council of Advisors on Science and Technology (e.g. PCAST [2012, 2014]) (see also Chapter 11).

In the United Kingdom, a study commissioned by the government identified key manufacturing technology areas around which research efforts in the country could be aligned (IfM, 2016). The study was based on a broad consultation with manufacturing stakeholders from academia, government (including government-funded R&D centres), and industry. A novel characterisation of priority manufacturing research domains was used, which distinguished between: i) product technology; ii) materials; iii) management/operational supply chain; iv) enabling technology; v) production technology; and vi) system engineering and integration (Box 10.2). Additional discussion and analysis of important manufacturing technology areas for the future of manufacturing in the United Kingdom has been offered by the Government Office for Science’s Future of Manufacturing foresight exercise (Foresight, 2013).

Box 10.1. Manufacturing R&D priorities in the United States

The report “A Snapshot of Priority Technology Areas Across the Federal Government” summarises the following priority advanced manufacturing technology domains of the US Government.

Manufacturing technology areas of emerging importance:

advanced materials manufacturing
engineering biology to advance biomanufacturing
biomanufacturing for regenerative medicine
advanced bioproducts manufacturing
continuous manufacturing of pharmaceuticals.

Manufacturing technology areas of established importance, including the mission themes of the US National Manufacturing Innovation Institutes:

additive manufacturing
advanced composites
digital manufacturing and design
flexible hybrid electronics
integrated photonics
lightweight metals
smart manufacturing
revolutionary fibres and textiles
wide bandgap electronics.

Further technical areas of interest identified by the US Department of Defense include:

advanced machine tools and control systems
assistive and soft robotics
bio-engineering for regenerative medicine
bioprinting across technology sectors
certification, assessment and qualification
securing the manufacturing digital thread – cybersecurity for manufacturing.

Technical areas identified as being of interest by the US Department of Energy include:

chemical and thermal process intensification
sustainability in manufacturing
high-value roll-to-roll manufacturing
materials for harsh service conditions.

Source: NSTC (2016), “Advanced manufacturing: A snapshot of priority technology areas across the federal government”.

Box 10.2. Manufacturing R&D priorities in the United Kingdom

The report “High Value Manufacturing Landscape 2016”, commissioned by the government, attempts to provide a framework to “align manufacturing research efforts in the United Kingdom”. The report identifies the following priority cross-sector themes and manufacturing technology areas:

Product technology:

electronics
photonics and power electronics
power-generation technologies
sensor technologies
advanced and autonomous robotic technologies.

Materials:

nanomaterials and nanotechnology
new composites
lightweight materials
biomaterials

other new materials and materials science.

Management/operational supply chain:

supply chain and business model innovation.

Enabling technology:

software development and management
(big) data management and analytics
IoT
autonomy
measurement, metrology, assurance and standards.

Production technology:

additive manufacturing/3D printing
advanced assembly
tooling and fixtures
surface engineering (finishing and coating)
remanufacturing
volume composite manufacture
biological and synthetic biology processing
process engineering, capability and efficiency development; control systems.

System engineering and integration:

integrated design and manufacture
systems modelling and simulation
human-machine interface.

Source: IfM (2016), “HVM Landscape 2016”.

In Japan, the central government has emphasised in recent policy documents the integration of advanced robotics and AI (METI, 2015a; RRRC, 2015). In this context, the Japanese government has identified a strategic opportunity to lead the world with “robots in the IoT era” and has accordingly focused manufacturing innovation policies to address: global standards for common infrastructure (e.g. operating systems) for robots in manufacturing sites; the utilisation of robots and accumulation of data in various fields such as infrastructure; and relevant AI technologies for robotics which may create value opportunities from accumulated data (RRRC, 2015). Emphasis has also been placed on the importance of innovative design and production methodologies that provide customers with superior levels of customer satisfaction (CSTI, 2015). The manufacture of new products for an ageing population has also been highlighted as providing potential opportunities for Japanese firms (METI, 2015b). Box 10.3 presents key manufacturing R&D priority areas defined in recent national policies by the Japanese government. Further policy discussion and analysis of strategically important manufacturing technology areas for Japan can be found in the various annual manufacturing (“Monodzukuri”) reports produced by the Ministry of Economy, Trade and Industry, and analyses published by Japan’s Science and Technology Agency (see e.g. METI [2015a]; CRDS [2015a]).

Box 10.3. Manufacturing R&D priorities in Japan

One of the themes within Japan’s Cross-Ministerial SIP programme is a project called Innovative Design/Manufacturing Technologies, which identifies the following priority manufacturing-related R&D clusters and themes:

Optimised design/manufacturing:

idea support for general view and product design
upstream design based on topology optimisation
bio innovative design
3D-anisotropy customised design and manufacturing
rubber 3D printing and value co-creation.

Upstream delightful design1/manufacturing:

advanced 3D modelling technology platform
delightful design platform
interactive upstream design management
new manufacturing by additive manufacturing.

Innovative materials and 3D moulding:

molecule adhesive agent
designable gel 3D printing
fluidic material 3D printing.

Innovative complex modelling:

nano-assembly technique of advanced materials
multiscale/multi-material manufacturing
high-value ceramics modelling technology
high-value laser coating
glass component advanced processing technology.

Combined and intelligent machining technology:

intelligent machine tool by CAM-CNC integration
next-generation electrochemical machining
multi-turret integrated processing machine.

Field-oriented R&D:

fusion of data mining, GA and rapid prototyping
snow sports gear using computational chemistry
metal surface processing based on actual work.

← 1. Research in this field focuses on flexible design and production methodologies that deliver products and services offering superior (“delight”) levels of quality and performance to the consumer.

Source: CSTI (2015), “What is the Cross-ministerial Strategic Innovation Promotion Program?”, www8.cao.go.jp/cstp/panhu/sip_english/46-49.pdf.

A major recent initiative unveiled by China’s State Council, Made in China 2025, is a national plan aimed at the integration of IT and industry that will focus on ten key sectors (State Council, 2015). Made in China 2025 will include measures to eliminate outdated manufacturing activities and promote greater energy efficiency, environmental protection and utilisation of resources (Wübbeke et al., 2016).

The Made in China 2025 strategy is heavily influenced by Germany’s Industry 4.0 initiative, and the Chinese Government is exploring co-operation with German institutions to deliver the goals of the strategy (Wübbeke et al., 2016). Contained within the Made in China 2025 initiative is the establishment of national manufacturing innovation centres based on the model of the National Network of Manufacturing Innovation (NNMI) of the United States. Box 10.4 lists the key sectors and manufacturing technology domains prioritised in the Made in China 2025 strategy. Further discussion and analysis of strategically important manufacturing technology areas for China can be found in reports by the Chinese Academy of Sciences and the Ministry of Industry and Information Technology (MIIT, 2016) (see also Chapter 12).

Box 10.4. Manufacturing R&D priorities in China

Made in China 2025 establishes ten key priority technology domains:

New generation IT:

integrated circuits
ICT equipment
operating systems and industrial software
intelligent manufacturing core information equipment.

High-end computerised machines and robots:

advanced numerical control machine tools
robotics.

Space and aviation:

aircraft
engines
airborne equipment and systems
aerospace equipment/infrastructure.

Maritime equipment and high-tech ships:

ocean engineering equipment and high-tech ships
critical systems and components.

Advanced railway transportation equipment:

advanced railway transportation equipment.

New energy and energy-saving vehicles:

energy-saving vehicles
new energy vehicles, including batteries and motors
intelligent vehicles.

Energy equipment:

power-generating equipment
electricity transmission and transformation equipment.

Agricultural machines:

agricultural equipment.

New materials:

advanced basic materials, e.g. textiles and steel
essential strategic materials, e.g. special alloys and high-performance fibres and composites
cutting-edge new materials, e.g. 3D printing materials and metamaterials.

Biopharma and high-tech medical devices:

middle and high-end medical equipment.

Source: State Council (2015), 中国制造2025 (Made in China 2025).

Key manufacturing policy themes shaping R&D priorities and programme design for the next production revolution

Besides the manufacturing R&D themes above, in the context of increasingly complex modern manufacturing systems, some common policy themes shape national research policies for the next production revolution. These include: the convergence of research domains, technologies and systems; the scale-up of emerging technologies; and production in high-wage economies.

The industrial systems context in which new technologies are being developed and used is also becoming increasingly complex. Such systems involve multiple interdependencies between activities, firms, technologies, components and subsystems which interact to produce products and services (PCAST, 2011; Tassey, 2010; Brecher, 2012). As such, delimiting the boundaries of manufacturing has become increasingly complex.3 Unlike the vertically integrated configurations of manufacturing in the 20th century, modern manufacturing is characterised by increasingly complex interdependencies distributed across a range of industries firms, technologies, subsystems and components (PCAST, 2011; Tassey, 2010; Brecher, 2012). This growing complexity means that the scope for innovation in manufacturing is becoming broader, and the ways in which value can be captured from manufacturing more diverse. For example, modern cars are becoming complex electronic systems, including many dozens of microprocessors and other ICT components (Kurfess, 2011), and many millions of lines of code (METI, 2010). This means that non-traditional suppliers of technologies such as embedded systems are capturing increasing amounts of value not only in the automotive sector, but across a range of industrial sectors (ARTEMIS, 2011).

A number of megatrends are acting on these systems, dynamically redefining the sources of competitiveness for manufacturing firms (Dickens, Kelly and Williams, 2013; López-Gómez et al., 2013). These megatrends include phenomena affecting industrial activity at large, such as the increasingly complex and globalised nature of manufacturing; the dramatic reduction in manufacturing timescales associated with the acceleration of technological innovation; and the growing need for sustainable, resource-efficient production. As noted earlier and illustrated later in the chapter, the increasing global demand for customised manufactured products offers market advantage to firms that can develop and deploy flexible production systems capable of delivering products for both low and high-volume markets (Brecher, 2012, 2015).

This system complexity and the relative immaturity of the different enabling technologies pose new challenges for the manufacturing scale-up and industrialisation of new products and related services. Policy makers need to design institutions, programmes and initiatives to ensure that research outputs are developed, demonstrated and deployed in increasingly complex industrial systems. The challenge is not only to pursue emerging high-value opportunities driven by the convergence of technologies and systems, but to ensure that research outputs are scaled up and translated into industrial systems, while also ensuring that domestic industrial systems are able to capture value.

Convergence

In national manufacturing research and innovation policies and strategies, the role of convergence is receiving increasing attention. The term is, however, used to refer to a variety of converging elements, including the convergence of: research domains; emerging technologies; elements of entire industrial systems; and the convergence of the cyber and physical worlds. Box 10.5 discusses the variety of uses of the term “convergence” in the context of the next production revolution and reflects briefly on the implications for policy makers.

One of the most high-profile convergence themes identified in this review is that related to ICT-enabled technologies and systems. Particular emphasis is being placed on the integration of cyber- physical systems (embedded software and sensors, and advanced measurement and control systems), and the IoT, to manufacturing operations and systems. New “smart manufacturing” systems can be co-ordinated via the Internet throughout entire value chains, allowing rapid development of new products, more efficient logistics, and more customised products and services.

Box 10.5. “Convergence” in the next production revolution

The convergence of research disciplines has received significant attention from innovation policy makers, most notably the convergence of research at the nanoscale level of materials science, condensed matter physics, and biology (Roco et al., 2002). In recent years the convergence of technologies, in particular key enabling technologies such as nanotech, biotech, advanced materials, and ICT, has led to integration at the device-level with technologies combined in ways that offer new functionalities and novel applications (Roco et al., 2013; EC, 2015a). The convergence of systems, in particular the novel networking and integration of different elements of industrial and infrastructural systems (e.g. transport, energy grid, factories and production networks) has been enabled by the convergence of information and communications technologies. While the concept of convergence is an established part of the broader science, technology and innovation policy discourse (G20, 2016; Midest, 2016; OECD, 2015), the role of convergence in the next production revolution has only recently started to receive attention. In the context of the next production revolution, the following convergence themes have important implications for public manufacturing R&D priorities and programmes.

The convergence of key enabling technologies (and the challenges of their manufacturing scale-up). Many future high-value products and manufacturing systems will depend on a range of technologies (e.g. advanced materials, nanotech, biotech and novel ICT). The combination and integration of these technologies has the potential to enable a range of novel applications and new markets. Some of the potentially most disruptive technologies are based on convergence, e.g. quantum technologies (combining digital IT and advanced materials) and synthetic biology (digital IT and biosciences). The system complexity and immaturity of such technologies poses new challenges for the industrialisation of new products. While converging technologies may offer novel functionality, these functionalities may be challenging to maintain using conventional manufacturing processes or at high production throughput. Technology policies (and analysis) and innovation infrastructure investments (e.g. pilot lines) for the next production revolution will have to address these complexity, scale-up and manufacturing readiness issues.
The convergence of production technologies (within hybrid manufacturing systems) has the potential to underpin high-value manufacturing in high-wage economies. In particular, advanced systems which combine multiple process steps or deploy different production technologies can be used to manufacture products for both niche high-value markets and mass markets by achieving economies of scope and planning. Such hybrid systems can shorten value chains, replacing several production steps with single hybrid processes, and reduce organisational effort by using a single production process. Such hybrid systems are made up of combinations of different technologies, e.g. material engineering technologies (cutting, turning, forming, pressing); and ITC, mechatronics, measuring and sensing technologies. For advanced economies, manufacturing policies and R&D prioritisation should account for the potential of R&D investments to support hybrid manufacturing systems which can be competitively located in high-wage economies.
The convergence of manufacturing systems (enabled by advanced ICT and cyber-physical systems) offers the potential to more effectively integrate and connect manufacturing systems, suppliers and customers. Such convergence will enable more rapid development of new (often “smarter”) products, more efficient logistics, and more customised products and services. Advanced ICTs are enabling the integration and convergence of activities along and between three manufacturing dimensions: i) vertically – integrating e.g. tools, unit processes and production lines (often discussed in terms of “smart factories”); ii) horizontally – integrating inter-company value chains and networks (or “smart supply chains”); and iii) along product life cycles – integrating digital end-to-end engineering activities across the entire value chain of a product. R&D policies for the next production revolution will have to consider these system convergence issues when assessing emerging national industrial opportunities, strengths and gaps in relevant innovation capabilities, and the implications for research prioritisation.

The digitalisation of manufacturing is not just about the introduction of new manufacturing-related ICT technologies. Rather, it is a cross-cutting theme disrupting industrial systems at all levels while bringing manufacturing firms, technologies and capabilities closer together. More intense use of digital technologies across manufacturing systems is making more data available and opening new business possibilities for manufacturers. Manufacturing research is also benefiting from new research tools made available by new ICT applications.

Scale-up of novel technologies

An important theme in international manufacturing (and manufacturing innovation) policy documents reviewed in this chapter is the scale-up and industrialisation of novel technologies (PCAST, 2014; EC, 2015b). There are policy implications for a range of different innovation activities related to the term “scale-up”, including the engineering scale-up of a novel technology, the production scale-up of a technology-based product, the operational and organisational scale-up of a manufacturing business, or even the scaling up of product value chains or markets. Furthermore, policies related to these different aspects of scale-up have traditionally been treated separately, with programmes typically implemented by different agencies. One of the striking features of some of the emerging programmes addressing scale-up (and illustrated in a number of the case studies in the following section) are the efforts to integrate support, and facilitate linkages and alignment, between different innovation activities.

The term scale-up is used in a variety of ways in the policy documents reviewed as part of this chapter, with different emphases on particular innovation and industrial activities. The semantics of scale-up are discussed in Box 10.6, including suggestions for a broader, unifying conceptualisation of scale-up which could facilitate policy making in this area. A useful and concise definition of scale-up is offered by the influential US report “Accelerating US Advanced Manufacturing” (PCAST, 2014):

“Scale-up can be defined as the translation of an innovation into a market. There are significant technical and market risks faced by new manufacturing technologies during scale-up. The path to successful commercialization requires that technologies function well at large scale and that markets develop to accept products produced at scale. It is a time when supply chains must be developed, demand created and capital deployed.”

Box 10.6. “Scale-up” in the next production revolution

The review of recent international manufacturing R&D policies and programmes suggests the need for a broader conceptualisation of “scale-up” and increased efforts to align and synchronise policy efforts addressing distinct aspects of scale-up. In particular, the review suggests that there is merit in distinguishing between the following dimensions of scale-up conceptualised in Figure 10.1:

Technology development scale-up. For many of the most promising emerging technologies highlighted in international manufacturing research strategies (e.g. synthetic biology, quantum technologies and graphene), the development of novel products faces significant technical uncertainties and risks in the process of transforming a laboratory prototype into an integrated and packaged product demonstrator with the potential for full-scale production. In particular, there are a series of technology readiness levels (TRLs) that need to be achieved.1 This development process can be especially challenging for devices based on integrated converging technologies, as production processes appropriate for one technology may impact the functionality of another.
Process/production scale-up. Scale-up R&D is not just about product technology innovation, significant R&D effort is also required for novel production/process technologies (e.g. additive manufacturing and laser-based processing) or for adapting processes and techniques for the manufacture of novel key enabling technologies. In particular, many novel production technologies and processes require demonstration of their functionality, applicability and cost-effectiveness at greater production volumes, higher throughput rates and realistic process-line factory environments. In this context, there is a potentially significant role to be played by pilot line programmes, demonstration and testing infrastructure, and intermediate R&D institutes.
Business scale-up. As emerging technology innovation efforts evolve from prototype development to niche/specialist applications to ever larger markets, firms have to expand their technical and operational capabilities, and organisational structures. This can be particularly challenging for smaller innovative firms. A scale-up firm has been defined (Coutu, 2014) as an enterprise with average annualised growth in employees or turnover greater than 20% per year over a three-year period (and with more than ten employees at the beginning of the observation period). Particular scale-up challenges facing rapidly growing manufacturing businesses include “finding employees to hire who have the skills they need; building their leadership capability; accessing customers in other markets/home market; accessing the right combination of finance; navigating infrastructure” (Coutu, 2014).
Value-chain scale-up. The effective industrialisation of an emerging technology also requires the development of new value chains – developing and redistributing manufacturing-related capabilities to support new products, business models and markets. In the next production revolution, manufacturing scale-up innovation may require co‐operation across the entire industrial value chain with suppliers of input materials (and components/subsystems) and equipment/tool vendors needing to synchronise their innovation efforts, engaging closely with end users. In this context, there is a significant role to be played by linkage programmes, institutions and diffusion mechanisms (e.g. intermediate R&D institutes, technology diffusion organisations and technology roadmaps).

← 1. The approach involving TRLs is often used to communicate the readiness of a technology (EC, 2015b). Of particular importance to scale-up are TRLs 4-7, which include R&D efforts including technology validation in a relevant manufacturing environment, prototype demonstration in a relevant manufacturing environment, system prototype demonstration in an operational environment.

The scale-up of emerging technologies (advanced materials, biotech, nanotech, etc.) is a common manufacturing research priority in the policies of all the countries reviewed in this study. Many emerging government programmes to support the scale-up of disruptive science-based technologies focus on manufacturability challenges that may require new R&D-based solutions, and novel tools, production technologies and facilities to develop, test and demonstrate emerging applications. In particular, a number of countries are investing in applied research centres and pilot production facilities focused on taking innovations out of the laboratories and into production. Examples of such investments include facilities within the Manufacturing USA institutes, the High Value Manufacturing Catapult Network in the United Kingdom, and the Pilot Lines for Key Enabling Technologies (KETs) funded by the European Commission. The characteristics of some of these institutions and programmes are discussed as part of the case studies in the following section.

The attention given to scale-up is likely to increase due to the competition and the pace of technological change in the next production revolution, which is creating greater urgency among policy makers to “reduce the gap between R&D and deployment of advanced manufacturing innovations … and facilitate rapid scale-up and market penetration of advanced manufacturing technologies” (PCAST, 2012). This in turn is driving the need to more efficiently demonstrate technical feasibility and manufacturability of products embodying novel technologies. The need to bridge the gap between knowledge generation and commercialisation of advanced product and manufacturing-process innovations is high on the international policy agenda. Some of the United Kingdom’s Catapult Centres, for example, have been established to address scale-up challenges in areas such as high-value manufacturing, cell therapy and satellite applications and “increase the scale, speed and scope of commercialisation” (Innovate UK, 2015; Hauser, 2010, 2014).

Manufacturing in high-wage economies

Recent national analyses of manufacturing have given careful attention to identifying those elements of modern manufacturing systems with the potential to capture significant value for the domestic economy. Particularly in OECD countries, there have been discussions on the characteristics of production technologies and systems needed to keep manufacturing competitive in high-wage economies.

In addition to automation and the application of advanced ICT across manufacturing systems, the convergence of technologies in the next production revolution is offering new possibilities to drastically increase factory productivity and reduce the length of supply chains (Schuh et al., 2014). New production technologies that combine multiple production steps, for example, can significantly reduce production times. An example of this is hybrid machining centres which can perform laser heat treatment in addition to a machining process during the same operation, drastically reducing changeover times (RWTH, 2015). Applications of selective laser melting (SLM) combined with advanced design tools are enabling the manufacture of small size batches without the high costs associated with traditional process-line set-up and changeover times. Such approaches are particularly important in the context of the growing demand for individualised products (Brecher, 2015; Klocke, 2009), and are expected to enable certain production activities to be retained in high-wage economies. As discussed later in the chapter, a key motivation behind Germany’s Cluster of Excellence Integrative Production Technology for High-wage Countries is to develop production technologies that make it feasible for high-value manufacturing operations to remain in high-wage economies like Germany (RWTH, 2015).

Another topic highlighted by some government documents is the potential of some emerging technologies to disrupt the way manufacturers distribute their products, interact with customers and carry out transactions. In particular, Internet-based platform businesses (e.g. those provided by Google or Amazon) are expected to play an important role in capturing value from manufacturing. Such businesses may emerge as potential competitors and/or partners of traditional manufacturing firms (CRDS, 2015b). Efforts have been made by the Japanese government, for example, to identify multidisciplinary research efforts that will be necessary to understand and define platform businesses that allow Japanese manufacturers to capture value from their domestic operations (CRDS, 2015a).

It is important to note that some policy documents point out the potential of technology breakthroughs related to the next production revolution to drive value capture opportunities not only in so-called high-technology sectors, but also in more traditional industries (IDA, 2012). Through adoption of new technologies, it is expected that some of the latter remain viable in high-wage countries even in the face of growing international competition. A good example of research efforts to exploit technologies related to the next production revolution in traditional sectors is provided by the It’s OWL consortium discussed later in the chapter.

Emerging policy responses to the next production revolution

The review of policy responses to the next production revolution reveals some emerging trends in the design of major new programmes, institutions and initiatives to tackle increasingly complex manufacturing R&D challenges. Such trends include: increased innovation mission scope (to include innovation activities beyond basic technology research); greater emphasis on new research partnerships and linkages (to pursue synergies between research actors and engage a greater variety of manufacturing stakeholders); and more attention to new innovation infrastructure (to assemble the necessary combination of tools, equipment and facilities required by the next production revolution). Following a brief discussion of these trends, case study examples of selected initiatives are discussed below to illustrate the varieties of approaches and contexts across countries. It is hoped that these examples will help inform discussion and stimulate the debate about the future design and management of manufacturing institutions and programmes for the next production revolution.

Functions of manufacturing R&D institutes beyond basic research

A striking feature in recent national manufacturing R&D policies and strategies is the creation of programmes and institutions which carry out a wider range of functions than basic research. Some of these functions include: development of advanced skills, access to specialised equipment and expert advice (particularly for SMEs), provision of test beds for new production processes and products, and stakeholder engagement and networks formation. In addition, some of these institutions, in collaboration with economic development agencies, use their technical capabilities as a means to attract FDI and support regional development.

The choice and combination of new functions and activities adopted by national manufacturing R&D institutions is determined by their missions. Because there is a trend for such missions to be more challenge-led, their activities increasingly go beyond addressing only the research component of that challenge. For example, solutions to socio-economic challenges such as ageing, sustainability, energy, and mobility, which are the focus of some recent innovation strategies and manufacturing R&D institutions,4 require not only research but a wider range of complementary innovation activities.

There is also increasing emphasis on ensuring that manufacturing research addresses industry-relevant problems whose solutions involve more than just research. An example of an institutional response of this type is the Aerospace Technology Institute (ATI) recently established in the United Kingdom. As described in Box 10.7, to help address sector-level innovation challenges, ATI’s functions go beyond the funding of R&D (BIS, 2016; ATI, 2016).

Box 10.7. The United Kingdom’s Aerospace Technology Institute (ATI)

The ATI was created in 2013 as part of the government’s industrial strategy at the time (BIS, 2016; ATI, 2016). This strategy targeted aerospace as one of the strategic priority sectors to receive co-ordinated government support for R&D, skills, access to finance, and public procurement. The ATI is a virtual centre of academic researchers and industry experts, supported by a small central office team, with the mission of driving UK innovation leadership in key areas of aerodynamics, propulsion, aerostructures and advanced systems. The ATI runs a research and technology programme (ATI R&T programme) which represents a joint government and private sector investment in supporting the United Kingdom’s competitive position in aerospace design and manufacture, mainly focused on large-scale technology and capability challenges over the medium to long-term. The ATI was also tasked with supplying industry and government with high-level technical analysis. Under the ATI research and technology programme, the government provides grant funding for research projects up to 50% of the total project value, and for capital investment projects up to 100% of the total investment value.

Source: ATI (2016), “Raising ambition: Technology strategy and portfolio update 2016”.

The selection of functions that national institutions adopt depends, of course, on the particular national innovation system context and specific technological and manufacturing system challenges. For example, in countries without major national metrology laboratories, new institutions may have to develop their own advanced measuring and testing functions. Similarly, countries without established manufacturing advisory service organisations (such as the United States’ Manufacturing Extension Partnership) may, to support their broader innovation mission, elect to offer advisory services to small manufacturing firms (e.g. advice on innovation strategies, process improvements, workforce development and navigating standards).

An example of new functions in national institutions is the increased emphasis on industrial skills development in government-funded research centres, such as the United Kingdom’s Catapult Centres and the Manufacturing USA institutes. This includes the training of young scientists and the training of company staff. Some programmatic initiatives have been put in place to develop aspects of graduate school-like experience in important emerging science and engineering domains (e.g. the United Kingdom’s Centres for Doctoral Training and the German Excellence Initiative Graduate Schools).

Linkages and partnerships between manufacturing R&D stakeholders

While public-private partnerships have received attention from research and innovation policy makers for many years, in recent public manufacturing research programmes and initiatives there is increasing emphasis on the need to enable linkages with relevant actors across manufacturing systems.

Given the scale and complexity of innovation challenges in the next production revolution, the diverse capabilities and infrastructures to address a particular challenge are likely to be distributed across a wide range of innovation actors. Although a number of individual technology domains are important drivers of the next production revolution, the revolution will also be enabled by the convergence of many of these technologies (OECD, 2016). In this context, many recent manufacturing research policy efforts are focused on the design of new programmes and institutions which can bring together the right mix of research and innovation capabilities, facilities and partnerships.

Some manufacturing R&D challenges may require expertise and insights from a range of industrial actors, not only manufacturing engineers and industrial researchers, but also designers, suppliers, equipment suppliers, shop floor technicians, and users. Similarly, some research challenges may require a range of facilities, tools and expertise beyond the scope of any individual research group or institute, but which can be obtained through collaborative linkages with a range of research actors (including e.g. university research centres, national laboratories, research and technology organisations [RTOs], and metrology labs). For example, the United Kingdom’s High Value Manufacturing Catapult allows the integration of different centres with diverse areas of technological specialisation to collaborate around important complex challenges that require a mix of technologies and capabilities.

Furthermore, interdisciplinary partnerships across a broader range of research disciplines may also add value to manufacturing research, not only across engineering and the physical sciences, but with business schools and social scientists to ensure that the potential commercial and societal implications of technological development are understood. For example, recent studies in Japan highlight the importance of co-operation between scientists in various fields including engineering, humanities and social sciences to understand and develop future platform businesses to deliver manufacturing products and related services (CRDS, 2015a). Some newer programmes, such as the Japanese Centers of Innovation (COI), are expected to develop multidisciplinary research agendas as part of the socio-economic orientation of their missions and, where appropriate, mission goals, to develop collaborations with social science and humanities researchers (JST, 2014).

Likewise, renewed efforts are observed to improve inter-agency and inter-institutional collaboration and alignment. Several university-based research centre programmes, e.g. the United Kingdom’s Centres for Innovative Manufacturing, explicitly require that funded centres work collegiately with other relevant major institutions (e.g. manufacturing R&D institutes, such as the Catapult Centres, national laboratories and national standards bodies) and influence and work with other stakeholders to ensure acceleration of impact (EPSRC, 2014, 2015). Similarly, programmes, such as the German Research Campus initiative are specifically designed to bring university researchers together with public research institutes and industry in “critical mass”5 joint research endeavours (Koschatzky and Stahlecker, 2016).

Manufacturing R&D infrastructure: tools, enabling technologies and facilities

Increased attention is being given to ensuring that manufacturing research programmes and institutions provide the right combinations of tools and facilities to address the challenges and opportunities presented by convergence and scale-up. In particular, scaling up of emerging technologies such as advanced materials and synthetic biology and new ICT‐enabled manufacturing systems requires a mix of tools and enabling technologies including: advanced metrology, real-time monitoring technologies, characterisation protocols, analysis and testing tools, open databases (e.g. material property databases), and modelling and simulation tools. Importantly, R&D is also required to improve some of these tools, because new research demands improved functionalities and higher levels of precision. For example, some of the key manufacturing R&D themes in the United Kingdom’s prioritisation exercise presented in Box 10.2 are categorised as enabling technologies.

Similarly, the European Commission-supported initiative Factories of the Future (EFFRA, 2013) highlights the importance of developing new types of metrology and modelling, simulation and forecasting methods and tools. Some of the prioritised research themes in the initiative include: virtual models spanning all levels of the factory and its life cycle; and modelling and simulation methods for manufacturing processes involving mechanical, energetic, fluidic and chemical phenomena. Innovations across all of these tools and enabling technologies are expected to enable factories to take advantage of the next production revolution (EFFRA, 2013).

As manufacturing R&D progresses to greater scale and levels of complexity, there is often a need for demonstration facilities such as test beds, pilot lines and factory demonstrators that provide dedicated research environments with the right tools and enabling technologies, along with the technicians required to operate them. Such facilities often conduct technical research and demonstration activities, including not only the development of prototypes but also the demonstration and deployment operations at appropriate scale required to validate them. Technology testbeds can help de-risk the adoption of emerging technologies, particularly for smaller manufacturers (PCAST, 2014).

Similar to the discussion of the multiple functions of the manufacturing R&D institutes presented above, such demonstration facilities may also engage in organisational and market-related activities to help firms and other stakeholders in the value chain prepare for the full-scale commercial production of new products based on research outputs (e.g. by informing product design based on insights from pre-commercial manufacturing demonstration activities and facilitating the development of market relationships with lead customers).

Case studies of manufacturing R&D institutions and programmes: a variety of missions, functions and linkages

Institutional forms and practices are shaped by a range of contextual issues including national innovation priorities, historical strengths and the particular characteristics of the institutional infrastructure in each country (O’Sullivan, 2011, 2016). A range of institutions – including universities, science and economy ministries, intermediate research institutes, R&D agencies and standards development bodies – play critical roles in delivering national manufacturing R&D agendas, both individually and collectively. These institutional actors in different countries vary significantly in configuration, mission, the scale and scope of their activities, and their interconnectedness.

In order to illustrate some of the approaches discussed earlier in the chapter and the diversity of contexts and responses across the countries surveyed, this section presents examples of major institutions, initiatives and programmes responding to trends related to the next production revolution. The case studies presented below are the following: the Cluster of Excellence Integrative Production Technology for High-wage Countries (Germany), the High Value Manufacturing Catapult Centres (United Kingdom), the Singapore Institute of Manufacturing Technology (SIMTech, Singapore), the Intelligent Technical Systems OstWestfalenLippe initiative (It’s OWL, Germany), the Cross-Ministerial Strategic Innovation Promotion Program (SIP, Japan), and the Pilot Lines for KETs initiative (European Union, including cases from Sweden and a Belgium-led consortium).

Cluster of Excellence Integrative Production Technology for High-wage Countries (Germany)

One of the flagship research centre initiatives of the German Research Foundation (DFG) related to manufacturing is the Aachen Cluster of Excellence Integrative Production Technology for High-wage Countries. The cluster’s research focuses on the potential of integrating multiple production technologies (often with advanced ICT) into hybrid manufacturing systems which produce customised products at cost levels close to those of mass production (RWTH, 2015).

The cluster’s activities reflect the importance attached to maintaining production technology leadership within a high-wage economy, as discussed above. Its mission is to develop promising, sustainable production technologies and insights which can make a substantial contribution to maintaining production which is relevant for Germany’s high-wage labour market.

The initiative brings together 19 professors from the Department of Materials and Production Technology, and affiliated research institutes, including neighbouring Fraunhofer Institutes. Research projects include virtual, hybrid and self-optimising production systems, and individualised production processes and strategies. The research agenda also aims to develop fundamental insights underpinning a theory of production science. This strand of research brings together aspects of physical production technology and processes with management and economics concepts into a holistic framework to help German firms implement competitive production strategies (RWTH, 2015).

One approach in the theme of individualised production systems is the use of SLM, an additive manufacturing process originally used for generating prototypes, to enable small-batch series production. SLM and similar processes allow the production of parts and components with shapes and geometries not possible with traditional machining methods, thus allowing the manufacture of highly individualised products (RWTH, 2016).

Another key area of research is hybrid production systems that allow various process steps to be carried out on a single machine set-up. A laser heat treatment, for example, can be performed in addition to a machining process in the same machine, thereby eliminating steps, reducing changeover times, and shortening the supply chain (RWTH, 2015). Such integrative approaches have the potential to dramatically improve the productivity of factory operations (RWTH, 2016).

One research area in the cluster that exemplifies the convergence of advanced ICT and production technologies is virtual production. Research projects in this area include efforts to mine, process and visualise data related to all system levels of the factory – from the behaviour of the work pieces in individual manufacturing processes to factory-level logistics – in order to support production managers with decision making.

It is worth noting that although this initiative has been operating for around a decade, its research output and funding has continued to grow following favourable evaluations (RWTH, 2015). This initiative also continues to be at the forefront of digital and networked manufacturing research, and has evolved into one of the major initiatives contributing to the Industry 4.0 agenda in Germany.

High-value Manufacturing Catapult Centres (HVM Catapult), United Kingdom

The United Kingdom’s Catapult Centres are applied R&D organisations set up to promote research and innovation through business-led collaboration between scientists, engineers and industrialists (Innovate UK, 2015). Catapult Centres are comparable to the United States’ NNMI or Germany’s Fraunhofer Institutes. They carry out applied engineering-related R&D in areas such as: high-value manufacturing, satellite applications, offshore renewable energy, the digital economy, transport systems, and energy systems. In addition to their core technology R&D activities, many of the catapults also have a range of other innovation activities, informed and supported by their research capabilities and insights. These complementary innovation activities include: development of supply chains, demonstration and scale-up support, and specialised technician training.

The High Value Manufacturing Catapult (HVM Catapult) is a network of seven centres with distinct but complementary expertise and facilities: the Advanced Forming Research Centre (AFRC), which focuses on metal forming research; the Advanced Manufacturing Research Centre (AMRC), which focuses on advanced machining and materials research; the Centre for Process Innovation (CPI) which focuses on demonstration and scale-up of manufacturing processes for sectors such as pharmaceuticals, biotechnology and printable electronics; the Manufacturing Technology Centre (MTC), which focuses on development and demonstration of new production technologies on an industrial scale; the National Composites Centre (NCC), which focuses on research on technologies for the design and rapid manufacture of high-quality composite products; the Nuclear Advanced Manufacturing Research Centre (NAMRC), which focuses on nuclear and materials technology research; and the Warwick Manufacturing Group (WMG) which focuses on topics such as low-carbon mobility.

This network configuration of the HVM Catapult allows the different centres to form partnerships and research linkages to collectively tackle complex next production revolution challenges requiring a mix of technologies and capabilities. For example, the HVM Catapult has a large-scale, cross-centre project addressing challenges related to high-rate composite automotive component production, bringing together the collective capabilities of the NCC, WMG, AMRC and MTC (HVMC, 2016).

The HVM Catapult has significant demonstration facilities relevant to the next production revolution. For example, in 2014, it launched the United Kingdom’s first digital factory demonstrator at the MTC (MTC, 2015). This demonstrator takes the form of an immersive, 3D virtual reality environment which allows users to interact with a “living laboratory” modelled from existing machines. The demonstrator mimics a continuous production environment and allows university researchers, engineers from manufacturing firms, and other manufacturing stakeholders to work collaboratively. The aim of such collaborations is to develop manufacturing innovations to improve productivity, quality and energy efficiency.

The HVM Catapult also offers manufacturing firms access to scale-up facilities (and technician support) which they can use to scale-up and prove-out high-value manufacturing processes (Innovate UK, 2015). For example, in 2016 the HVM Catapult opened the National Biologics Manufacturing Centre, led by the CPI, to help manufacturing firms translate their ideas, research, know-how and market insights into commercial business propositions. The National Biologics Manufacturing Centre offers open access facilities and expertise to help manufacturers develop, prove and commercialise new and improved processes and technologies for biologics manufacture (HVMC, 2016).

The HVM Catapult has a significant supply chain development function building on its manufacturing R&D expertise and insights (Innovate UK, 2015). Not only does the HVM Catapult help develop next-generation supply chains through its strategic support for SMEs, it also offers access to its network of leading suppliers who contribute to key industrial supply chains. For example, the HVM Catapult’s NAMRC runs a “Fit for Nuclear” (F4N) service to help UK manufacturing firms prepare to bid for work in the civil nuclear supply chain. F4N lets companies measure their operations against the standards required to supply the nuclear industry and identify necessary steps to close any gaps in technologies and capabilities. F4N was developed with the support of industry leaders such as Areva and EDF Energy, who use F4N to identify potential partners for their own supply chains (HVMC, 2016).

Skills development is an important part of the HVM Catapult’s mission (Innovate UK, 2015). New Training Centres have been established at the AMRC and MTC to develop new cohorts of technologists and engineers with the latest cross-sector design and manufacturing skills, based on the latest technologies and techniques, and focused on the management and delivery of innovation. The HVM Catapult is working with all its centres to develop a unified skills development offering for UK industry (HVMC, 2016).

A recent independent review highlighted the Catapult Network’s positive contribution to industry in the United Kingdom and called for the establishment of additional centres (Hauser, 2014). In 2016, the government announced its intention to double the funding of the HVM Catapult Network with the aim of expanding its activities to additional areas of the United Kingdom economy (Hauser, 2014; HVMC, 2016).

Singapore Institute of Manufacturing Technology (SIMTech), Singapore

SIMTech is a key actor in the Singaporean manufacturing research and innovation landscape. SIMTech’s stated mission is to develop high-value manufacturing technology and human capital to enhance the competitiveness of Singapore’s manufacturing industry (SIMTech, 2012). SIMTech specialises in manufacturing-related technologies and themes including: forming, mechatronics, joining, precision measurements, machining, surface technology, and planning and operations management. It collaborates with companies in sectors including: aerospace, automotive, marine, electronics, semiconductor, and medical technology.

One of the most striking features of SIMTech is that, in addition to its core research function, it provides a diversity of complementary innovation services to Singapore-based firms. Some of these include: support to SMEs to develop R&D capabilities; collaborative R&D projects and consortia; supplier development programmes; and the provision of case study-based continuing education courses. Companies can also access the comprehensive array of diagnostic and measurement equipment housed at the institute. SIMTech’s mix of services caters for the more immediate needs of the industry while maintaining significant research activities (Yong, 2014).

A particularly interesting feature in the context of the next production revolution is SIMTech’s initiatives to help SMEs adopt new technologies, develop new capabilities, and venture into more sophisticated industries. Dedicated supplier development initiatives have been established to help SMEs venture into a selected number of high growth industries where opportunities for local suppliers have been identified. Supplier development efforts typically involve a combination of joint research projects, advisory support and consultancy (including support to adopt relevant industry standards), and access to specialised testing equipment. SIMTech has launched initiatives based on its manufacturing research expertise to develop local suppliers in aerospace, medical technology, oil and gas, complex equipment, and heat treatment industries, among others (SIMTech, 2012).

SIMTEch’s centres of innovation are organised around cross-cutting challenges, such as productivity and sustainability, which are central to the next production revolution. These centres aim to engage firms in innovative activities by showcasing the benefits of technology adoption and offering technology transfer services, with a focus on SMEs. One of the centres focuses on cross-cutting precision engineering technologies which are of crucial importance to a range of sectors including electronics, aerospace, automotive, marine, oil and gas, and medical equipment. The centre offers firms access to a range of enabling technologies for measurement and diagnostics, including: optics design and simulation, optical system integration and characterisation, machine vision systems, image processing, 3D surface measurement, 2D and 3D defect inspection, and thermal analysis (PE COI, 2016).

Another activity to support technological upgrading of SMEs is the secondment of research scientists and research engineers to local firms through government-supported industry attachment programmes. Such exchanges of personnel help local enterprises identify critical technologies and build in-house R&D capabilities relevant to their operations (SIMTech, 2012). Furthermore, SIMTech also organises a number of seminars, workshops, fora, and conferences as a way to communicate the latest advances in technology and generate awareness about their potential benefits. In some of these events, larger companies brief SMEs on current and future opportunities for local suppliers.

In terms of skills development, SIMTech offers, in collaboration with the Ministry of Manpower and its agencies, certified case study-based training for manufacturing specialists, engineers, managers, and other industry professionals and executives. These courses draw extensively from the institute’s in-house manufacturing expertise and specialised facilities.

SIMTEch’s relationship with universities has been strengthened through the establishment of joint research laboratories. Over the last few years, joint laboratories have been established with local universities in emerging areas such as advanced robotics, natural fibre composites, 3D machining, and precision motion systems. Post-graduate research training is offered at these joint laboratories in selected research topics relevant to industry (SIMTech, 2012).

Finally, a particularly interesting feature of SIMTech is the role it plays as an attractor of FDI. In collaboration with the Economic Development Board, SIMTech has engaged with firms considering the establishment of operations in Singapore to develop prospective collaborative R&D programmes as part of the country’s value proposition. Some of the latest FDI attraction efforts of this type have focused on the aerospace industry.

Intelligent Technical Systems OstWestfalenLippe (It’s OWL), Germany

The It’s OWL consortium represents one of the largest investments associated with Germany’s Industry 4.0 initiative (It’s OWL, 2016a). It’s OWL is an alliance of over 170 businesses, universities and institutes, funded through the German Federal Ministry of Education and Research’s (BMBF) Leading-Edge Cluster programme. The initiative is hosted at the OstWestfalenLippe region, which has particular manufacturing strengths in mechanical engineering-related sectors and domestic appliances (It’s OWL, 2016b).

The focus of It’s OWL is on key digitalisation topics at the heart of the next production revolution. The consortium uses the concept of intelligent technical systems to describe systems that arise from the interplay of engineering and ICT. Such systems autonomously adapt to the environment and the needs of users, cope with unexpected situations, are energy-efficient, and reliable (It’s OWL, 2016a). It’s OWL carries out research projects in areas including: self-optimisation, human-machine interaction, intelligent networking and energy efficiency. Solutions emerging from the consortium’s research are expected to impact not only production processes but also the development, deployment, maintenance, and life-cycle management of new products and systems (It’s OWL, 2016b).

It’s OWL’s projects also reflect the pervasiveness of next production revolution technologies across emerging and traditional industries. In addition to research projects with applications in interactive robotics, electric and hybrid vehicles, and intelligent machine tools, the initiative includes projects in areas such as self-optimising solutions for the industrial laundry and furniture industries. Research focused on industrial laundry, for example, aims to improve the interaction between machinery and processes in industrial laundries by using self-optimisation methods and intelligent gripper robots. It is expected that this will increase the productivity of laundries and reduce consumption of energy, water and detergent by around 50% (It’s OWL, 2016b).

It’s OWL’s activities also offer continuous education programmes aimed at updating the knowledge of manufacturing workers in emerging technologies. Older engineers and young professionals are the key target groups. Initiatives include a summer school for graduates and young professionals, and a staff development programme for experienced professional engineers.

Cross-Ministerial Strategic Innovation Promotion Program (SIP), Japan

The Cross-Ministerial SIP programme of the Japanese Government is a national project for science, technology and innovation, spearheaded by Japan’s Council for Science, Technology and Innovation (CSTI), Cabinet Office. The SIP is a cross-ministry programme which consists of ten funding strands aimed at revitalising Japan’s society and economy, and at enhancing the global standing of Japanese manufacturing industries. Some of these strands focus on manufacturing-related themes, including: innovative design/manufacturing technologies, next-generation power electronics, and structural materials for innovation (CSTI, 2015).

An interesting aspect of the above-mentioned innovative design/manufacturing technologies strand is a research focus on convergence between ICT, design tools and production technologies. Research in this field focuses on flexible design and production methodologies that deliver products and services offering superior (“delight”) levels of quality and performance to the consumer. Research projects include production technologies for non-conventional functions or shape, and the application of digital tools (IoT, cyber-physical systems and big data) for developing new prototyping systems for minimising time and costs for product R&D and production (Sasaki, 2015).

Research also aims to improve the linkages between innovation efforts in upstream activities (including R&D on materials and components) and downstream activities (including R&D on products, services and systems), to more quickly respond to the needs of businesses and consumers (CSTI, 2015). It is intended that research results are tested in production quickly in order to accelerate design improvements.

An interesting feature of the SIP programme is that each funding strand is led by a programme director, many with significant private sector experience, responsible for guiding their project from basic research to practical application and commercialisation. In order to access capabilities dispersed across various actors, research projects are encouraged to build linkages between companies, universities, and public sector R&D institutions.

Pilot Lines for Key Enabling Technologies (KETs), European Union

The European Commission’s pilot line initiatives for KETs are one of the most high-profile examples of emerging approaches to R&D programmes addressing scale-up and convergence challenges.

The European Commission has identified six KETs as crucial to the further development of the European economy and society – micro- and nanoelectronics, nanotechnology, industrial biotechnology, advanced materials, photonics, and advanced manufacturing technologies (EC, 2012). An important innovation challenge facing KETs is bridging the so‐called “Valley of Death”, in particular scaling up new KET-based prototypes to commercial manufacturing. The report of the EU High Level Group on KETs called for an EU strategy to support manufacturing-related demonstration pilot line activities for KETs (EC, 2015a) which have: (i) prototyping facilities to enable the fabrication of a significant quantity of innovative product prototypes arising from KETs; and (ii) demonstration and deployment operations at scales appropriate to establish prototype product validation in terms of user performance (EC, 2015b).

In addition to technical research and demonstration activities, pilot lines may also engage in organisational and market-related activities to prepare and inform firms and other value-chain stakeholders for the full commercial production of new KET-based products (e.g. by informing product design based on pre-commercial manufacturing, and facilitating the development of market relationships with lead customers).

A recent example of an EU KET pilot line, funded under the Horizon2020 programme, is the photonics PIX4life facility (PIX4life, 2017) which focuses on the demonstration and scale-up of silicon nitride (SiN) photonics life science applications. The technical goals for the pilot line initiative include establishing a validated SiN-based technology platform for complex densely integrated photonics-integrated circuits (PICs), and demonstrating the performance of the pilot process in scaling life science applications such as multispectral sources for super resolution microscopy, cytometry and 3D tissue imaging. In addition to its R&D and demonstration activities, the initiative also has some capability-building and supply chain development goals, including the development of a supply chain to integrate mature semiconductor laser sources and complementary metal oxide semiconductor (CMOS) detector arrays with the SiN PICs, and establishing appropriate design kits and tools for the emerging industry.

Technology convergence is also an important issue in the European Commission’s KET and pilot line policies. The European Commission has also identified the importance of multi-KETs (mKETs) – i.e. technology applications which integrate and “cross-fertilise” multiple KET and have unique technological functionality or product properties which could not have been obtained with single technologies. Examples of emerging multi-KET application areas are biophotonics, nanomaterials and photo-sensory systems. The mKET pilot line study (EC, 2015b) highlights the innovation challenges of transitioning mKETs from R&D to pilot and industrial scale production, in particular maintaining the functionality of the integrated technologies when produced in high volumes and rates of throughput.

The mKET Pilot Line study highlights the Swedish pilot line Acreo Printed Electronics Arena (PEA) as an mKET Pilot Line Demonstrator (EC, 2015b; PEA, 2017). Acreo is a Swedish ICT research institute which carries out applied research within areas such as photonics for telecoms and nanoelectronics. Acreo’s PEA initiative focuses on accelerating the commercialisation of printed electronics and organic bioelectronics. PEA has a pilot production facility called “PEAManufacturing” which provides firms and start-up companies with a manufacturing-like environment where they can learn how to produce printed electronics and organic bioelectronics, test the technologies in their own prototype products and start pilot production. Firms can get access to equipment, pilot process lines, expertise (in a range of scientific, manufacturing engineering areas and project management) as well as links to the regional research and business ecosystem. PEA also acts as start-up facilitator, offering advice, training and micro-production support to new start-up ventures.

Concluding observations: Emerging policy themes, approaches and lessons

This section presents a summary of key policy themes, approaches and lessons relevant to the next production revolution identified in this review of national government policies, foresight exercises and research agency strategies in selected OECD countries and other major economies.

In the context of the next production revolution, manufacturing research policy needs to account for emerging high-value opportunities driven by: the convergence of technologies and systems; the challenges of scaling up and translating research outputs into industrial systems; and the potential to capture value in the national economy. National manufacturing policies and strategies reviewed in this chapter are placing increasing emphasis on manufacturing research programmes and institutions which adopt a broader range of research and innovation functions (beyond basic research); pursue closer linkages between key innovation system actors; and provide new types of innovation infrastructure and facilities to support convergence and scale-up.

Context: the system nature of the next production revolution

Identifying priorities for government-funded manufacturing research programmes and initiatives is increasingly challenging due to the convergence of technologies and the growing complexity of modern manufacturing. Not only are important emerging manufacturing research domains intrinsically multidisciplinary, but new science and engineering breakthroughs also have the potential to change the dynamics of competitiveness across and within industries. Many of the most important research challenges critical to the success of the next production revolution are increasingly multidisciplinary and systemic in nature, involving converging technologies and manufacturing systems, and engaging a variety of innovation and industrial system actors. In order to assess the impact of R&D investments – and decide where policy efforts should focus – policy makers need to take account of the increasingly blurred boundaries among manufacturing research domains.

In particular, technology R&D programme missions can be too “siloed” if mechanisms are not put in place to support multidisciplinary challenge-led endeavours. For example, many of the most important research challenges will need to draw on a number of traditionally separate manufacturing-related research domains (e.g. advanced materials, production tools, ICT and operations management). Similarly, many government-funded research institutions and programmes have often been constrained to only carrying out research activities without the freedom or mandate to adopt additional relevant innovation activities or connect to other innovation actors. As a result, many government-funded research institutions and programmes are often unable to bring together the right combination of capabilities, partners and facilities to address scale-up and convergence challenges relevant to the next production revolution. As discussed in the case studies and summarised below, some emerging approaches are designed to address these concerns.

Issues of scale-up, convergence and system complexity also raise important questions about the design of key performance indicators (KPIs) and evaluation metrics for manufacturing R&D programmes. Traditional KPIs and metrics may not adequately incentivise efforts to enhance linkages, interdisciplinarity and research translation. Different challenges relevant to the next production revolution will require different research and innovation inputs depending on a range of factors such as industry and technology maturity. For more effective evaluations of the success of institutions and programmes, policy makers may need to develop new indicators beyond traditional KPIs (e.g. numbers of publications and patents) in areas such as: successful pilot line and test-bed demonstration, development of skilled technicians and engineers, repeat consortia membership, SME participation in new supply chains, and contribution to attraction of FDI. Policy makers should avoid one-size-fits-all KPIs that do not account for the systemic nature of the next production revolution.

Convergence

Major technologies such as advanced ICT (cyber-physical systems, big data, the IoT), industrial biotechnology and nanotechnology have the potential to radically reshape global manufacturing systems in the coming decades (OECD, 2015, 2016). Convergence is also occurring between production technologies, manufacturing systems, and industry sectors. It is the convergence between all of these technologies and systems that is likely to drive the next production revolution. In designing research programmes and initiatives, policy makers need to be aware that convergence is opening new manufacturing R&D opportunities and challenges, with increasing scope for innovation in manufacturing and more diverse ways in which value can be captured from it. The European Commission’s research programmes addressing so-called “multi-KETs” (i.e. multiple key enabling technologies) are examples of explicit efforts to pursue new manufacturing R&D opportunities driven by convergence.

Scale-up of manufacturing R&D

The system complexity and relative immaturity of many of the key technologies driving the next production revolution pose significant challenges for the manufacturing scale-up and industrialisation of new products. These converging technologies may be integrated in ways that offer new product functionalities and/or improved performance. However, it may be challenging to maintain these features during production at industrial scale using conventional manufacturing tools and processes. Policy makers need to be aware of the manufacturability challenges associated with scale-up of disruptive science-based technologies which may require new R&D-based solutions and novel tools, production technologies and facilities. Investments in applied research centres and pilot production facilities focused on taking innovations out of the laboratory and into production are one common approach to tackling these challenges. Examples of such investments include facilities within the Manufacturing USA institutes, the HVM Catapult Centres in the United Kingdom, and the Pilot Lines for KETs funded by the European Commission.

Capturing value from the next production revolution

In many OECD countries, manufacturing R&D strategies are placing increasing emphasis on identifying new opportunities for value capture in the domestic economy being created by the next production revolution. For example, there is interest in hybrid production technologies and systems able to produce customised products at mass production prices. The promise of productivity gains driven by the next production revolution (notably Industry 4.0 and, in particular, ICT-enabled advanced manufacturing systems) is also attracting significant attention. Similarly, there is interest in the potential of Internet-based platform businesses to capture value from the online delivery of goods and services and the interactions with customers. Germany’s Cluster of Excellence Integrative Production Technology for High-wage Countries, for example, focuses on multiple approaches to make it feasible for high-value manufacturing operations to remain in the country (RWTH, 2015, 2016).

Functions of manufacturing R&D institutes

A striking feature emerging from this review of recently established national manufacturing R&D institutions is that, in addition to their core activities related to technology research, they also carry out a range of complementary innovation activities. These complementary activities include: advanced skills development, access to specialised equipment and expert advice (particularly for SMEs), provision of test beds for new production processes and products, and stakeholder engagement and network formation. In addition, some institutions, in collaboration with economic development agencies, use their technical capabilities as a means to attract FDI and support regional development. Singapore’s Institute of Manufacturing Research (SIMTech) is a good example of an institution that has built on its core research function to provide a broader range of complementary innovation functions.

Linkages and partnerships

Given the scale and complexity of innovation challenges in the next production revolution, the diverse capabilities and infrastructure to address a particular challenge may be distributed across a wide range of innovation actors. While public-private partnerships have received attention from research and innovation policy makers for many years, there is increasing emphasis in recent public manufacturing research programmes and initiatives on establishing effective linkages with relevant actors across manufacturing systems. For example, some manufacturing R&D challenges may require expertise and insights from a range of industrial actors, not only manufacturing engineers and industrial researchers, but also designers, suppliers, equipment suppliers, shop floor technicians, and users. Similarly, some research challenges may require a range of facilities, tools and expertise beyond the scope of any individual research group or institute, but which can be obtained through collaborative linkages with a range of research actors including e.g. university research centres, national laboratories, RTOs and metrology labs. Furthermore, partnerships across a broader range of research disciplines may also add value to manufacturing research, not only across engineering and the physical sciences, but with business schools and social scientists to ensure that the potential commercial and societal implications of technological development are adequately understood. For example, the United Kingdom’s HVM Catapult allows the integration of different centres with diverse technological areas of specialisation to collaborate around important complex challenges requiring a mix of technologies and capabilities.

Manufacturing R&D infrastructure for the next production revolution: tools, enabling technologies and facilities

There is increased policy attention on ensuring that manufacturing research programmes and institutions invest in the right combinations of tools and facilities to address the challenges and opportunities presented by convergence and scale-up. In particular, there is emphasis on enabling technologies for manufacturing innovation, including advanced metrology, real-time monitoring technologies, characterisation, analysis and testing technologies, shared databases, and modelling and simulation tools. There is also emphasis on demonstration facilities such as test beds, pilot lines and factory demonstrators that provide dedicated research environments with the right mix of tools and enabling technologies, and the technicians required to operate them. An example of efforts to provide new innovation infrastructure to address scale-up and convergence challenges is the Pilot Lines for KETs programme funded by the European Commission.

Some of the novel approaches responding to the next production revolution highlighted in this chapter have only emerged in the last five years and have not yet been evaluated (or the results of their evaluation are not in the public domain). Early examples of KPIs and evaluation metrics specifically designed for advanced manufacturing research institutes are being developed (see e.g. AMNPO [2015] and BIS [2016]) and some early evaluation is being carried out (see e.g. Hauser [2014]). It is important that policy makers design key performances indicators and success metrics and systematically evaluate and review new manufacturing institutions, programmes and initiatives, in particular those with features relevant to the next production revolution of the types discussed in this chapter. Future work should focus on building the evidence base, with particular attention given to the appropriate role for government in supporting innovation through manufacturing R&D.

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Notes

← 1. Embedded systems are electronic products, equipment or more complex systems containing computing devices that enable everyday objects to communicate (with other “smart objects”) either directly or via a network, such as the Internet. Because embedded systems bridge the gap between the cyber space and the physical world of real things, they are considered to form the “edges” of the IoT (ARTEMIS, 2011).

← 2. To some extent, manufacturing research portfolios and the terminology associated with manufacturing-related research of a particular country reflect national industrial and innovation strengths and structures (O’Sullivan, 2011).

← 3. Manufacturing has typically been defined in terms of the process of “converting materials into usable products through human skill and knowledge” (NAE, 2012). Establishments in the manufacturing sector are commonly characterised as those engaged in the “mechanical or chemical transformation of material substances, or components into new products” (NAICS, 2007). Broader definitions highlight the value chain of activities that businesses and workers perform to create a product, deliver it to market, and support it until the end of its life, including R&D, design, production, supply chain management, distribution, marketing, and after-sale services. More recent definitions reflect increasing awareness of the complex, dynamic system-nature of manufacturing. In particular, there is increasing recognition of the complex interactions and interdependencies between industries, technologies and services associated with the manufacture of many modern products, which themselves are often highly complex systems in their own right (PCAST, 2011; Tassey, 2010; Brecher,2012).

← 4. Germany’s New High-Tech Strategy (BMBF, 2014a), for example, is structured around “mission-oriented” projects addressing key societal challenges. The latter are expected to be “markets of tomorrow”, including climate/energy (e.g. CO₂-neutral, energy-efficient, and climate-adapted cities), health/nutrition (e.g. individualised medicine), mobility (e.g. one million electric vehicles in Germany by 2020), security (e.g. more effective protection of the communications network), and communication (e.g. ICT Strategy 2020).

← 5. “Critical mass”, in this context, is a relatively common funding agency term for a large research endeavour which brings together a significant number of researchers with complementary multidisciplinary expertise in order to tackle research challenges of significant scale and complexity that could not be addressed effectively with grants to individual researchers or teams of researchers.