Why this is important to Wisconsin businesses: Wisconsin companies are at the forefront of advanced manufacturing systems, and the state’s education system is known for workforce training in engineering, manufacturing and the Internet of Things.
Southeast Asian countries are taking steps to bring manufacturing into the digital age, with the goal of improving the productivity of that major economic sector.
Two countries, Singapore and Malaysia, embarked on new initiatives in 2021, and a third, Thailand, has been working in that direction for several years.
- Singapore announced Manufacturing 2030, a 10-year roadmap that aims to grow the manufacturing sector by 50%.
- Malaysia plans to increase industrial productivity by 30% by 2030.
- Thailand’s government launched Thailand 4.0 in 2016. The 20-year national development masterplan aims to transition Thailand into an innovation-driven economy.
Labor costs in Southeast Asia are generally lower than those in China, but productivity lags, and that is prompting the move toward Industry 4.0, also known as the Fourth Industrial Revolution. It involves equipping factories with advanced sensors, software and robotics that analyze data and promote greater efficiency.
A 2018 survey by McKinsey & Co. showed that the addition of Industry 4.0 smart technology could add $216 billion to $627 billion a year in productivity gains to Southeast Asia by 2025.
Singapore is the region’s leader, so far, in advanced manufacturing technologies. Key sectors include semiconductors, medical technology, marine and aerospace. Rolls Royce’s Singapore factory already has adopted the Internet of Things (IoT), which connects its equipment and allows systems to share data.
One of the key initiatives of Singapore’s Manufacturing 2030 is the Jurong Innovation District, a one-stop advanced manufacturing hub. In January 2022, Hyundai Motor Group said it has signed an agreement with JTC, the government agency that oversees Singapore’s industrial progress. They will collaborate on transportation and logistics for Singapore’s next-generation industrial parks, such as the Jurong Innovation District.
In Malaysia, manufacturing is dominated by palm oil production, electronics, pharmaceuticals and medical technologies. Mass production has been moving from intensive manual labor to the use of robotics. To accomplish that, SIRIM, the government-owned industrial and research technology company, collaborates with multinational corporations operating in Malaysia to identify affordable, appropriate information technology solutions for them. Those companies, in turn, work with local businesses to update their adoption of advanced technology.
For instance, Motorola in Malaysia conducts joint product development with local suppliers and helps them work toward lean manufacturing and automation. Many of these suppliers have adopted Industry 4.0 upgrades to meet Motorola’s product standards and to increase production.
Thailand, a top producer in the automotive, food processing and electronics sectors, already has seen gains in manufacturing over the past several years as a result of its Thailand 4.0 strategy. Bosch, the German home appliance and vehicle company, opened a $91 million smart factory and research and development center for injection technology in Thailand in 2017. Thailand also has a strong robotics industry, valued at more than $20 billion. With 45 industrial robots for every 10,000 employees in 2019, Thailand was the second-largest market for robotics and automation in the region, after Singapore.
The trend toward advanced manufacturing and Industry 4.0 in Southeast Asia can provide opportunities for Wisconsin businesses in that field, particularly with potential export partners in Singapore, Malaysia and Thailand.