5G and AI: drivers of reindustrialisation in developed countries

Global, Oct 16, 2023

Article by Rodrigo Parreira, CEO LATAM, Logicalis

View original article on Digitizeme

It's not futurism. Emerging technologies, such as 5G, IoT and Artificial Intelligence (AI), have the potential to promote profound transformations in the way global industry is organised. Integrated with robotics, these innovations enable a potential drastic reduction in the volume of labour involved in manufacturing in general and can drive a strong reindustrialisation movement in developed countries, impacting the entire organisation of global production chains and also the global geopolitical dynamics itself.

This change means the potential reversal of a phenomenon that began in the 90s. With labour costs reduced in certain regions, such as Asia, we have seen an intense movement of migration of manufacturing production, which changed the global economic organisation and promoted a a hitherto unlikely reality: the industry's separation from major consumer hubs, namely the United States and Europe.

Over the decades, China and other Asian countries have gained more and more space on this industrialisation map. Furthermore, supported by diversified manufacturing and with the ability to operate at very low costs, the Chinese took a step forward and large marketplaces with global operating capacity emerged, thus also shaking the foundations of international retail.

Now, technology can change this scenario by making the industry less dependent on labour and allowing manufacturing plants to return closer to large consumer centres. The advancement of 5G has everything to do with this transformation.

5th generation mobile networks provide very high data transmission speeds and very low latency (response time). This translates into faster communication between machines, which begin to work more autonomously and collaboratively. Artificial Intelligence, in turn, is capable of automating repetitive tasks, increasing their accuracy, anticipating possible failures and reducing them. Robots, already present in the industry, gain agility and, by integrating with these platforms, become capable of “making decisions”, becoming much more efficient and expanding the range of tasks they can perform.

Geoeconomic impacts

A major hub of factory production, Asia is not standing still and has already accelerated its pace in the technological race, investing heavily in robotics and research, and development to ensure its competitiveness in the new scenario that is emerging. Data from the International Robotics Federation illustrate this effort and show, for example, that South Korea has the highest density of robots in the world, with 1,000 pieces of equipment for every 10,000 employees, leading the list of countries with the most automation in manufacturing. The number is almost double that of second place, Singapore, which has 670 robots per 10,000 employees. Among the highlights are Japan, Germany and China. The latter made a big leap, moving from 20th to 5th position between 2018 and 2021.

In this scenario of redesigning global logic based on industrialisation, where is Latin America? How will she position herself? Would the region, which has been experiencing a process of deindustrialisation for some time, be left with basic industry? Will we play the role of producer of commodities, perpetuating the challenges of maintaining a positive trade balance? There are plenty of questions, but no answers. And Latin American governments still seem to be trapped in debates that refer to the industry of the past and not the industry of the future, in which the ability to innovate will be a decisive factor in success. In this context in which technology promotes profound changes, a major challenge is the qualification of the workforce that will carry out this change. In this new scenario, if on the one hand there will be a potentially reduced demand for workers for the factory floor, on the other we will have to rely on specialised professionals to operate these innovations and monitor their evolution.

The Future of Jobs report, published in May by the World Economic Forum, also highlights the increasing urgency for the reskilling revolution, with companies reporting that skills gaps and the inability to attract talent are key barriers to transformation . Six in ten workers are expected to need training before 2027. At the same time, the study estimates that, on average, 44% of an individual worker's skills will need to be updated.

Transforming this scenario requires coordinated action from governments, companies and workers. The discussion must involve everyone's participation in the search for models that, far from perpetuating traditional social and economic inequalities, can be aimed at sustainability and a fairer income distribution. On the right path, technology is capable of taking the entire society to a new level of efficiency and prosperity.

 

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