5G and manufacturing: the missing link to drive Industry 4.0?

5G can help transform the manufacturing industry.

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Mobile network operators are well on their way in the UK to developing 5G connectivity by upgrading existing 4G infrastructure, bringing super-fast connection speeds. The benefits of the upgraded networks go far beyond just providing mobile phone customers with a boost in connection speeds, 5G has real potential to transform the way people live and work, with many new use cases being developed every year.

In the summer, DLA Piper published its European Technology Index report based on a survey of 350 senior business executives working in technology, financial services and the public sector across Europe. One in five (22%) saw 5G’s greatest growth potential in smart city applications, with only 3% of respondents believing that manufacturing offered the biggest opportunity.

It is surprising that respondents to the Technology Index did not know more about 5G opportunities in manufacturing, as we believe this is one of the most exciting areas to leverage the technology. Manufacturing should be considered one of the growth industries for 5G investment as it has the potential to create the most value, have a healthy ROI and realizable benefits, thereby stimulating demand. Here are some of the reasons why we believe this is indeed the case.

Huge growth potential

A November 2020 report commissioned by Analysys Mason, Ericsson and Quantum Technologies, estimates that smart manufacturing enabled by 5G connectivity has the greatest growth potential in the UK compared to the use of 5G connectivity in other industries and regions. In the report, it is estimated that an additional £5.2 billion in GDP could be generated by 2025 based on all standalone 5G deployments in factories, accounting for three quarters of the total additional economic growth expected from all 5G infrastructure deployed globally.

In another study by Huawei on the impact of 5G on manufacturing, based on a model derived from more than 100 interviews with senior executives in the manufacturing industry, it was found that 5G connectivity could unlock $740 billion in manufacturing value worldwide by 2030. The main countries include China, the United States and Japan, which are global manufacturing hubs.

5G in manufacturing supports use cases with real industrial benefits to stimulate demand and cover deployment costs

Manufacturers are in the best position to take advantage of and get the most out of the key capabilities offered by standalone 5G deployments, namely ultra-low latency and high capacity. 5G connectivity in factories can support technologies and use cases that will revolutionize manufacturing, including automation and robotics, artificial intelligence, and augmented reality operation of equipment. Connected factories can also support greater data flow between people and machines, allowing for enhanced monitoring capabilities. This can reduce downtime and increase the potential for predictive maintenance - both of which can increase productivity and reduce costs.

In addition to these economic and productivity advantages, the Analysys Mason Report also recognizes environmental advantages. Due to the ability to enhance information sharing and real-time monitoring, 5G in manufacturing can reduce energy consumption and make equipment more efficient, thereby extending the life of the equipment. This not only benefits the environment, but also reduces costs and improves productivity.

Several trials have also been conducted in Europe to demonstrate the real-life benefits of 5G connected facilities and how use cases can be achieved. For example, Worchester Bosch is trying to use 5G connectivity to support the use of sensors inside factories to improve factory output (through predictive maintenance and robotics), resulting in a 2% increase in factory output.

There is no getting around the fact that 5G standalone deployments will involve significant upfront investment, but it is clear that the costs could be covered by the value that will subsequently be generated. Ericsson reports that applying the technology in factories leveraging 5G connectivity could potentially generate a 10 to 20 times return on investment for factory owners through cost savings.

The importance of 5G in manufacturing is already on the UK government’s radar

The UK government is keenly aware of the opportunities and importance of 5G in the manufacturing sector, given that the UK is one of the world’s largest manufacturers. However, it also recognises that there are barriers to ready adoption, including a lack of understanding of the value 5G can bring. To address this, the government earlier this year committed £3.8 million of DCMS funding to the 5G ENCODE project, which involves building a 5G-powered smart factory to clearly demonstrate its benefits to others.

The manufacturing industry itself recognizes the need for a “reset” to improve competitiveness and productivity

Make UK, the representative body for UK manufacturers, has recognised that manufacturing has taken a hit due to COVID-19 and will not return to pre-COVID-19 levels until 2022. In its report ‘Responding, Resetting and Reshaping UK Manufacturing Post-COVID-19’, it states: “Manufacturers need to invest time and resources in innovation, research and development to increase the productivity of the sector and strengthen our international competitiveness.” For investors, now is a great opportunity to work with the industry to achieve this reset through 5G.

Taking all of the above into account, the most likely standalone 5G infrastructure deployments are likely to be commercially funded through the creation of private networks rather than relying on public mobile networks. Beyond deploying the network, further work will need to take place at the factory level to upgrade to technologies that take advantage of 5G. As a manufacturer, you can seek financial support to invest in these private networks and new technologies, but it will also be important for investors and telecom operators to work with manufacturers to help them understand the opportunities and benefits for their business. Given that telecom operators are likely to continue to build private networks, there is also a clear opportunity for the telecom industry to work with investors or factory owners to build, deploy and manage standalone 5G private networks, which could represent a long-term revenue stream.

Despite growing evidence of the benefits and returns 5G can bring to manufacturers, current adoption rates remain disappointingly low. What is needed is for governments, telecom companies and investors to work together and educate manufacturers and work with them to encourage investment in this exciting space. Once the first few early adopters demonstrate the reality of the benefits, the floodgates will open.