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Mexico’s Industry 4.0 Revolution: Challenges and Opportunities

By Filiberto Tamez - Car Fast Automotores


By Filiberto Tamez | CEO - Wed, 06/07/2023 - 11:00

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In the last five years, I have had the opportunity to attend and be invited to multiple events related to technology in Mexico, both face-to-face and digital. The last one, the Mexico Aerospace Fair (FAMEX), organized by the Mexican Armed Forces, focused on new technologies from the aerospace industry. I had the opportunity to participate as a guest of the automotive industry through the first electric vehicle assembly company in Mexico, Zacua, where I collaborate in different areas. When talking and sharing points of view with visitors and exhibitors, I was able to hear once again a term that continuously arises  at each of these technological events: Industry 4.0. Although for someone involved in the country's manufacturing sector the term is not unknown, for many professionals in other business sectors and civil society in general, it is unfamiliar, without knowledge of the escalating impact it has had on the lives of all Mexicans.

I want to share not only some of the challenges and opportunities that Industry 4.0 represents for our country and its main actors, but also a more particular vision, focused on those who are unaware of the term.

I am convinced that the democratization of the term, the positive narrative and its implications in the public and private sectors and for civil society, as well as the implementation of new technologies in our country, will be key factors for the modernization of industries as well as small and medium businesses.

What Is Industry 4.0?

Through different eras, industries have suffered a constant evolution accompanied mainly by great technological, political, social, and economic events, which caused industrial disruption in each era. These disruptive technological evolutions have been called “industrial revolutions.”

There were three great industrial revolutions prior to our time:

First Industrial Revolution: Marks the beginning of mechanical production. Dated in the 18th century.

Second Industrial Revolution: Mass production. Dating from the mid-19th century, it is characterized by technological advances, such as electricity and its application in industrial use.

Third Industrial Revolution: Digital or computer revolution. Characterized by the drive toward aviation and aeronautics, work was done in the use of electronics, cybernetics, even atomic energy. Dated from 1920.

Fourth Industrial Revolution: Based on the digital revolution. It is characterized by having a more ubiquitous and mobile internet, according to smaller, more powerful and cheaper sensors, the age of artificial intelligence (AI) and machine learning.

According to Erik Brynjolfsson and Andrew McAfee, from MIT, this era is also called "the second machine age." The term "Industry 4.0" was coined at the Hannover Fair in Germany in 2011 to describe how it will revolutionize the organization of global value chains through the creation of "smart factories." The keyword is convergence — of technologies, of human machines and of resources.

This phenomenon is transforming the way products are made and supply chains are organized. Mexico, as part of this global movement, has begun to adopt these technologies to improve its competitiveness and productive capacity through the private, public, and academic sectors.

Technologies Driving Industry 4.0

Industry 4.0 involves the convergence of multiple digital, physical, and biological technologies to transform the way companies operate and deliver value to customers.

Some of the key technologies driving Industry 4.0 are:

• The Internet of Things (IoT) and sensors.

• Artificial intelligence and machine learning.

• Robotics and automation.

• Augmented and virtual reality.

• Cloud computing and edge computing.

• Big data.

• Cybersecurity, 3D printing, among others.

The Manufacturing Industry in Mexico

It is almost impossible to talk about Industry 4.0 without talking about the manufacturing industry. This puts into perspective the present and future potential of Industry 4.0 in Mexico, which is a key pillar of the country's economy. In 3Q22, manufacturing boosted Mexico’s gross domestic product (GDP) by MX$5.51 billion (US$313 billion) , which represents an increase of 3.4% compared to the previous quarter and around 18% of overall national GDP. The sector also employs more than 9.59 million people in our country, according to data from the National Institute of Geography and Statistics (INEGI).

In Mexico, manufacturing covers a wide range of sectors, among the most prominent of which are the automotive sector, the electronics sector, aerospace, food and beverages, pharmaceuticals, textiles, and even the electrical and electronic products industry. These examples show the diversity and scope of the manufacturing industry in our country.

Industry 4.0 in Mexico

Industry 4.0 in Mexico is a phenomenon that has gained strength in recent years. With the arrival of nearshoring, economic growth has been driven toward digital transformation and the adoption of advanced technologies.

I4.0's own technology has been widely adopted in the automotive sector, especially compared to other sectors. Companies like Audi, BMW and General Motors have invested in the creation of highly automated production plants in the country. These plants employ cutting-edge technologies, such as collaborative robotics and artificial in

intelligence, allowing companies to improve the efficiency and quality of their products.

Companies like Metalsa have 99% automation, thanks to the 1,100 robots with which they manufacture chassis for brands like Stellantis, Toyota, and General Motors.

Although foreign companies have the economic capacity to integrate 4.0 technology in their production, not all companies in our country can do it immediately. There are great challenges in Mexico that will force a gradual implementation of I4.0. In my opinion, some of the main challenges in our country are:

• Lack of specialized human capital: The adoption of Industry 4.0 technologies requires highly trained human capital in areas such as engineering, programming, and data analysis. The demand for specialists in these fields exceeds the current supply of trained professionals.

• Digital divide: The lack of access to the internet and electronic devices in some marginal rural and urban areas limits the adoption of Industry 4.0 in the country. This digital divide also affects training and education in advanced technologies, which can lead to inequality in job opportunities and economic growth, based on information from the OECD.

• Infrastructure and connectivity: The adoption of Industry 4.0 requires adequate infrastructure and high-speed connectivity to function efficiently. There are still challenges in terms of the quality and coverage of telecommunication and transport networks.

Opportunities of Industry 4.0 in Mexico

Despite the aforementioned challenges, Industry 4.0 in Mexico presents important opportunities for the country, such as:

• Increased competitiveness: The adoption of Industry 4.0 can boost Mexico's competitiveness in the global market.

• Innovation and entrepreneurship: Fostering the creation of new companies and the development of proprietary technological solutions.

• Sustainable development: Contributing to sustainable and environmentally friendly economic growth in Mexico.

Vision for  the Future

As a country, we are in a privileged position to make the most of the benefits offered by new technologies and advanced production processes. To achieve this, it is imperative to continue investing in technological infrastructure, training talent, and developing a favorable business environment, the latter being a key point. Both digitalization and automation, which are the essence of Industry 4.0, have the potential to transform the manufacturing industry in Mexico and other industrial sectors; however, for this transformation to be successful, it is crucial that companies and workers are equipped with the necessary skills and knowledge to manage and benefit from these new technologies.

Industry 4.0 not only implies the adoption of new technologies, but also the ability to innovate and develop new solutions and business models. The promotion of a solid innovation ecosystem, which includes companies of all sizes, research institutions and academia, will be a key driver for the advancement of Industry 4.0 in Mexico.

The development of public policies that support the adoption of new technologies, talent training and innovation, as well as collaboration between companies and research institutions, can facilitate the transition toward Industry 4.0 and maximize its benefits for the economy and society.

With the right strategies and policies, the country can continue advancing in the adoption of industry 4.0 and make the most of its benefits, boosting economic growth, competitiveness, and social well-being.

Photo by:   Filiberto Tamez

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