The Next Industrial Revolution

The following sections are included:

• Foreword
• About the Author
• Contents

The following sections are included:

• Stating the Obvious
• Navigating the Upcoming Industrial Revolution
• References

The following sections are included:

• A Framework to Assess Industry Inefficiency
• Different Drivers of Inefficiency
• Major Opportunities Exist in All Sectors
• Opportunities for More Efficient Operations Exist in Logistics, Too
• The Biggest Inefficiency of All: Consumption
• The Industry Sector Is Ripe for Big Efficiency Gains
• References

In the previous chapter, we explored the first driver of innovation: the permanent quest for building faster, cheaper, and better in order to save time and money and create greater abundance. The twentieth century, in this regard, is likely to be remembered in the distant future as the land-mark of such progress. Building on innovations that thrived in the late nineteenth century, the tale of the last decades has been one of spectacular wealth creation, fueled by access to more affordable goods, once available to only a small minority. To a large extent, this tale has been that of a middle class that could increasingly live like the upper class, climbing the social ladder at rocket speed…

So far, I have reviewed two of the three key drivers of innovation I introduced earlier. I first described the massive opportunities for industry efficiency, stemming from a variety of possible optimizations in energy and material supplies, capital and labor productivity, supply chains, transport, and consumption. Energy and material supplies optimization appears to be a significant opportunity in most sectors, mostly in primary industries, which by nature are more energy- and resource-intensive. Capital productivity is another opportunity and a complex undertaking in a context of varying demand and the necessary flexibility that industrial operations must maintain as a result. And so is labor productivity, the development of which in the last decades was largely a result of offshoring industrial operations to countries with lower labor costs. Integrated supply chains also play a critical role, as industries are largely interconnected with one another. A final good is often the complex assembly of a variety of intermediary products, which have to be manufactured themselves. Transport systems are also unevenly optimized across regions. Finally, and maybe even more importantly, the biggest inefficiency in our industry is the way we consume goods, literally throwing away billions of dollars in landfills every year…

The twentieth century has been a true miracle, lifting billions out of misery and generating a wealth that past generations could not have imagined. This happened, to a large extent, because of innovations in our industrial system (with ripple effects throughout living settings, mobility, and of course agriculture). We can ask ourselves whether such spectacular transformations will continue and what they will look like. Innovation is fueled by technology but more importantly by human ingenuity, in a permanent quest for greater abundance. Human ingenuity is not in short supply (unlike what some might think!), and new technologies (digital, energy, and atomic-scale) offer promising prospects. What we can bet on is that all these resources will be devoted to capturing the opportunities ahead while coping with the challenges at hand…

In the previous part, I explored key drivers of change that will influence the way our modern access to goods and services operates. I followed a simple frame, looking at efficiency opportunities, resiliency concerns, and environmental degradation issues, including climate change. We first realized that our industrial setups still have massive opportunities for greater efficiency in their operations. This depends on energy and material intensities of production, labor and capital productivity, the optimization of supply chains and logistical costs, and finally, the way products reaching end of life are handled. We also came to terms with concerns about resources’ scarcity. Modeling resources demand to 2050 and beyond, we realized that — unlike what is commonly thought — the world is in general not close to running short on most resources, with the exception of certain metals such as copper, nickel, or lithium (and growing constraints on cobalt and zinc) if the world were to keep running things the way it has in the past. We however understood that, due to the unequal distribution of these resources across the planet, resource dependencies are likely to be heightened in the coming decades, with its impacts on geopolitical bargains and possible disruptions in supply. Fossil fuel dependencies on the Middle East and Eurasia have been known for decades, if not centuries. The dependency on precious resources from the Pacific, Africa, and Latin America, on the other hand, is on the verge of emerging as a new critical choke point in the global resources trade. We also discovered that trade dependencies in goods manufacturing materialized between affluent economies from the Western world and those from East Asia, with China playing a pivotal role in all these exchanges. Finally, we understood the essential role that our modern industry plays in overall pollution issues, including the mother of all problems, climate change. Industry is not only directly responsible for around 30 percent of greenhouse gas emissions globally, but it is also — in how it consumes resources and designs our modern goods, shelter, and mobility infrastructure — at the center of all greenhouse gas emissions of our modern services and those associated with the energy we use to run them. An integrated approach showed that our need for food, shelter, and mobility each takes up 20 percent of global emissions, while our consumption of modern goods accounts for around 35 percent. And our modern industry acts as the underlying machinery that designs and delivers all these essential services. The same applies to pollution issues, with industry having a notable role in water (possibly responsible for up to 50 percent of overall pollution) and soil pollution (industrial waste is 18 times larger than solid municipal waste, and the lack of handling of products reaching end of life poses a serious environmental threat in many regions of the world)…

At the time of writing, I have landed in Boston, Massachusetts, for a little over a month. I live in a nice neighborhood of Cambridge, not far from the prestigious Harvard University. The house we chose is an old renovated home, with a little bit of the Nantucket style to it, as stated by the rental agency. Its walls are lined with wood tiles and the house is surrounded by trees and a small garden occupied by a few rabbits and a couple of squirrels. A quiet place to live, and convenient for thinking through and writing this book! Well … not quite! Right next door, a new house is being built on the remains of an older home that was demolished. The structure is made of wood and the roof of solar photovoltaic tiles, and, from what I have been able to understand, this remarkably large mansion (probably twice the size of mine, which is already too large!) is supposed to be a net-zero carbon house, full of technologies and environmentally friendly features. I cannot wait to meet the owner, whom I understand made a fortune (he must have!) in technology start-ups. Fancy stuff! Yet, the construction process is far from being fancy. From Mondays to Fridays, 7 a.m. to 5 p.m., the place is filled with groups of workers, large and noisy machines excavating soil, sand, and gravel. I have been here for over a month, and at times I look out the window to see what it is that they do to make so much noise. The reality is that they do not seem to do much. In fact, it has been a month and I have not seen dramatic progress in the construction. The foreman comes and goes, driving a huge pickup truck, shouts some orders, and things go on. I cannot help but think that all this does not look to be too efficient, and I wonder if the project will ever be finished and if I will be able to enjoy the quietness of the surroundings…

Time to embark on another journey and explore the automotive industry innovation landscape. I focus first on manufacturing sectors, since they represent the last mile at the very end of our globally interconnected industrial setup, before goods are used and consumed in our modern economy. There is a reason for this. As I have argued all along, innovations primarily emerge to seize opportunities or solve challenges that affect living standards. Human ingenuity is first devoted to increasing abundance. Transformations thus emerge from the consumer side, through consumers’ ability to access existing services in a more convenient way or at a fraction of their past cost, or to access new services that have not been invented yet. And as these transformations materialize, their effects are felt all along the value chains that supply these services, all the way up to resource extraction and production. Failing to apprehend these changes leads to misinterpretations of upcoming evolutions and poor forecasting (see also Petit, 2021). In a world now poised to decarbonize at a rapid pace in order to mitigate the worst impacts of climate change in the long run, I find it pretty terrifying that we define pathways that overlook these transformations. Indeed, several may in fact accelerate and benefit from the transition toward a zero-carbon economy, while others could drag the whole effort down. This is why we need to first comprehend these changes in order to prepare for them more rationally…

One major breakthrough of the industrial revolutions was the generalization of mechanization in our daily lives. The big machinery of the late nineteenth century that enabled stunning progress and considerable achievements fed the imagination of cohorts of people, young and adults. Jules Verne, who was passionate about geography, imagined a world of explorations now possible thanks to these technological developments. He led his characters to the center of the Earth, to the moon, and to the bottom of the ocean. What is remarkable is that, on the one hand, most of his creative thinking turned into reality in the twentieth century, and on the other, his work continues to inspire the young generation today, a century later. In fact, the universe he created has not aged one bit. While we do not necessarily know much about all the underlying foundations of modern machinery, it continues to galvanize the young generation. Put a novel by Jules Verne in the hands of a 10-year-old, and you will see him or her begin to invent a whole range of new machines to solve some of the problems humanity has not been able to crack yet. I have verified this many times. Machines are thus more than a means to an end; they represent ultimate progress, and the fact that they inspire the young generation so much says a lot about human ingenuity. It is also striking to see how this natural and innocent passion tends to fade away as years pass, something that largely remains a mystery to me and that should be the subject of a book, but not this one!…

The invention of the first analog computer is traced back to the beginning of the first century BC. In ancient Greece, the Antikythera mechanism, a mechanical model of the solar system — discovered in a shipwreck off the coast of Antikythera island in 1901 — was used to predict astronomical positions and eclipses and track the four-year cycles of the Olympic Games. Yet, it took centuries for such mechanical devices to once more emerge in Europe, toward the end of the seventeenth century. In 1861 and 1862, the famous Scottish mathematician James Clerk Maxwell developed a set of laws (Maxwell’s equations) that proved that electricity, magnetism, and light were all manifestations of the same phenomenon: electromagnetic radiation. This discovery, called the second great unification of physics (after Newton’s work), led a bit less than a century later to the invention of the transistor, in 1947, by John Bardeen, Walter Brattain, and William Shockley from Bell Labs in the United States. Geared devices could then be replaced by electric currents and “switches” (transistors), which performed calculations. Solid-state electronics research then expanded at a rapid pace. Mohamed Atalla and Dawon Kahng invented the metal oxide semiconductor field effect transistor (MOSFET) in 1959, the most widely used type of transistor. The integrated circuit was developed by Jack Kilby at Texas Instruments in 1959 and followed by the invention of the microprocessor by Ted Hoff, Federico Faggin, Stanley Mazo, and Masatoshi Shima from Intel in 1971. This score of inventions led to the development of the modern electronics and information technology industry. Electronics pervaded every application, and the rapid development of consumer electronics and personal computers did the rest. To this date, 13 sextillion MOSFETs are thought to have been manufactured, a figure that simply surpasses one’s imagination. In fact, this series of developments was even called the third industrial revolution, which followed the steam (and coal) revolution in the early 1800s and that of electricity at the dawn of the twentieth century…

In the previous chapters, we have explored upcoming transformations in a variety of industries. All these industries provided us with a glimpse of what is likely to change in the manufacturing of modern goods. I obviously could not be exhaustive for all sectors of activity, but I found that these four sectors (construction, automotive, machines, and electronics) were most representative of all others in the manufacturing space. These industries indeed show relatively similar opportunities, albeit in their own context. There is a significant potential for higher productivity in every sector, which is notably magnified by digital technologies. Additive manufacturing also raises some hopes that disruptions in production could be within reach, and this could be further enhanced by the use of alternative materials with designed-for-purpose characteristics. More importantly, the way these products are effectively used in modern life is also ripe for change. The dematerialization of many services and the rise of new business models will be two of such key transformations, fueling a more efficient but also more circular economy by extending the lifetime of goods and optimizing the production of virgin materials. An increasingly digitized economy will also enable a refoundation of supply chains with end-to-end traceability and greater customer engagement services, while design tools will help accelerate the development of complex products and assets that will become easier to service, reuse, and recycle. A key finding is that all these changes appear to be inevitable. Many rely on technology developments that are almost already here and simply require further diffusion and scale. Other transformations might take more time, but again one should realize that nowadays, technology knows no frontiers. A clear paradigm shift of the last century has been the internationalization of science. As Louis Pasteur said (Quote park, n.d.): “Science knows no country, because knowledge belongs to humanity, and is the torch which illuminates the world”…

Time to continue our journey to another sector. Here, I follow the thread of what is generally classified as the nonmetallic minerals industry. In fact, this is not a homogenous industry but rather a broad group that encompasses the production of brick, cement, lime, and a variety of mortars, as well as glass and ceramics. This industry group is primarily dedicated to construction but also engages in adjacent activities, notably glass and ceramics, which are much more broadly used as we will see later…

I am now reaching the last unexplored territory of my detailed review of key innovation dynamics in industry and will follow my thread (“FRED”) through the mining and metals industries. Mining obviously does not apply to metals alone. As I explained in the first part of this book, only 10 billion tons of around 100 billion tons of material extracted per year concern metals. The vast majority consists of quarrying for minerals. However, there are intimate ties between metals mining and metals processing, and, unlike quarrying, metal mining is a complex and growingly difficult and intensive process, which probably requires specific attention. I will focus on the three most important metals of today in this chapter: iron and steel, aluminum, and copper (steel demand is around 1,800 million tons a year, far ahead of aluminum, at 60 million tons, and copper, at around 19 million tons, but all three are fascinating objects of research and key constituents of our modern economies; see Loibl and Tercero Espinoza, 2021; United States Geological Survey, 2021a, 2021b; World Bank, 2017). This is not to discard the others, but an entire book would probably not be enough to accommodate every single peculiarity of every metal on Earth, an otherwise fundamental and fascinating topic…

This chapter closes the second part of this book, where we traveled through a variety of sectors, following the thread of innovation in each of these and exploring what the future of the industry could look like. Before I make sense of it all in the last part of this book, it is important I pause for a second and summarize some of my key findings and where we stand at this stage of advancement…

I now enter the last part of this review of the innovation landscape of industry. In the previous two parts, I have first described key drivers of innovation for industry in detail, revolving around efficiency opportunities, resiliency, and environment-related challenges. I then journeyed across each sector and identified how an emerging new technological toolbox, made of digital, atomic-scale, and new energy technologies, could provide the ground for rapid transformation. Now is the time to assess how and at which pace these innovations could unfold within the global industry landscape and what some of the major roadblocks to their implementation are. This will give us a better perspective on what to expect going forward…

It is now time to approach the critical question I posed at the end of the previous chapter. After this long review of all the innovations that could materialize in a variety of industrial sectors, we now need to ask ourselves if all of this will ultimately happen, and if so, at which pace. In short, what is the likelihood of this unfolding (as the title of this chapter suggests)? To quote Jules Verne, we are entering the dangerous territory of the unknown (one that is vast), where every abrupt assertion may become prey to a significant challenge, as opinions here will matter and are always some-what subjective.

Now the time has come to make sense of what we have discussed above. A considerable potential for a unique moment of innovation in industry exists, with promising opportunities and pressing challenges fueling research and development in every sector, with a new technological toolbox emerging at the same time, further extending the reach of possibilities. As we have seen, many of these innovations are interlinked (what I called the butterfly effect), and, combined, they could drive significant paradigm shifts that would change our industrial system into one that is more circular and distributed, relying on a more distributed and electric energy system and alternative fuels and materials. Yet, success in the unfolding of these innovations will depend on key enablers. Policies and technology maturity will both play a fundamental role, which is well known. They will not be sufficient to drive change, however. A rearchitecting of competencies and business models will be needed, too. More importantly, a new narrative is also crucial, one that has a positive view of the future. This could well come from new economies, which will follow a different route than their affluent counterparts…

The following sections are included:

• Do We Still Have Time?
• Lead by Hope
• References

The following section is included:

• Index