5G impact: $739Bn increase in global manufacturing GDP by 2030
Fancy Wang
Helping Global Enterprises Optimize Network Performance | Ethernet Card & Switch Solutions
Fancy Wang 0901 2020
The following part comes from STL Partners
5G has the potential to grow global manufacturing Gross Domestic Product (GDP) by 4%, or just under$740 billion, by 2030. This forecast is driven by new use cases and improvements in existing applications that 5G uniquely brings compared to other technologies, and how these improvements will impact productivity.
The assumptions and analysis were informed by interviews with manufacturing and telecoms industry representatives and a survey of over 100 manufacturers worldwide to validate the benefits of 5G.
By looking at the impact of these use cases on aggregate and forecasting adoption over a 10-year period, 2020-2030, we estimate that in 2030 world manufacturing GDP (Gross Domestic Product)would increase by $591 billion.
Assuming other use cases would also have an impact, making up a further 20% of the total potential impact, the overall impact on manufacturing GDP increases to $739 billion. representing a 4% uplift on expected GDP in 2030.
Precision monitoring and control has the highest impact on manufacturing GDP by 2030 at $295 billion, unsurprising given its revolutionary nature in changing the way in which production facilities optimise performance of machines and processes. However, adoption of the use case is slower than that of the other use cases. Firstly, this is because it requires sophisticated technologies, such as digital twins and machine learning to enable predictive models, and a high degree of integration into a manufacturer’s core processes.
The other factor that will impact adoptions if the fact that this use case requires ultra-reliable low latency 5G for real-time identification of problems and this capability will not be available until later stages of 5G.
As seen below, the benefits are initially skewed towards higher income countries, given that these will generally deploy 5G faster and be earlier to adopt new technologies. However, as the applications mature in the early adopting countries, other markets will adopt at faster rates once 5G is in place.
Nonetheless, it is countries that have a strong manufacturing industry that will benefit most. Just under 75% of the impact in 2030 is from the ten largest benefiters. China and the U.S. constitute approximately 41% of the benefit alone and are both countries that are set to be early adopters of 5G.
This is further emphasised in the regional breakdown. East Asia & Pacific have the highest share of the 5G benefits in 2030 at $352 billion, as well as other regions with strong manufacturing markets,such as North America and Europe & Central Asia. In some areas, such as Sub-Saharan Africa and
South Asia, the impact on manufacturing GDP as a percentage is relatively lower because penetration of these use cases would not have reached maximum by 2030 in certain countries within these markets.
It’s not just about money: 5G’s socio-economic benefits
The ability for the manufacturing industry to leverage 5G to enhance connectivity and enable new use cases has a socio-economic impact, in addition to improving productivity, efficiency and industrial growth. One of the overarching benefits of 5G is increasing access to information – in real-time, more reliably and from many more devices. These insights can be used to automate decisions that benefit
society more broadly.
1. Speed up digital transformation
As with each generation of mobile technology, 5G will push the price of a gigabyte of data even lower than it is today and improve access to internet connectivity, particularly in developing countries. In areas where fixed line infrastructure is lacking, 5G offers a viable alternative and provides the same level of bandwidth that comes with fixed access. Factories who have not been able to digitalise as quickly because of suboptimal network infrastructure can now leapfrog with 5G and use connected technology to enhance their operations.
2. Improve use of resources
Some of the use cases we analysed previously in the report will enable more responsible consumption of resources. We have already examined the impact of advanced predictive maintenance on extending the lifetime of capital assets.
In sectors which use perishable materials, predictive maintenance reduces waste that occurs from unplanned downtime incidents where raw goods are discarded if notused in good time. Separately, implementing precision monitoring and control reduces the number of defects by adapting processes in real-time that may have otherwise caused machines to produce faulty output that would have been wasted.
3. Share production facilities
5G will be a key enabler for creating a sharing production economy in the manufacturing sector. In a similar way to what we have seen in consumer markets through Uber and Airbnb and business through WeWork, manufacturers will benefit from being able to share resources more easily and implement new business models that are capital-light, such as manufacturing-as-a-service.
As processes and intelligence move to the cloud, manufacturers are less tied to their physical assets and more mobile. It makes it much easier to produce highly customised products or pivot to new products without needing to use additional capital resources. Taking this a step further, companies like Startup
Factory in China are creating shared factory spaces, where European manufacturers can set up shop in China and share space and equipment. However, this relies on IoT and all machines to be connected centrally, which is where 5G plays a part.
4. Optimise energy usage
The use of IoT and sensors to monitor the manufacturing plant will also allow plant operators to optimise the use of energy and reduce the amount used where possible. 5G assures more granular analysis of shop floor processes by proliferating the number of sensors that can be used in a single location.
The huge increase in the amount of data, coupled with machine learning and advanced analysis, means that the amount of energy demanded by the plant can be predicted in advance,making it easier to use renewable energy sources. Other sources of impact on energy usage include adopting remote working more effectively, for example a technician on-site can carry out tasks with the expert looped in remotely via AR headsets to avoid skilled technicians travelling long distances.
5. Close the skills gap
5G use cases can help grow economic productivity by complementing human processes with technology. Augmented reality headsets linked to remote experts will quickly upskill workers and enable them to use technology and machine tools more effectively. This reduces barriers to
THE IMPACT OF 5G ON THE MANUFACTURING INDUSTRY: A $740BN OPPORTUNITY | OCTOBER 2019
© STL Partners EXECUTIVE BRIEFING 31
employment in the manufacturing industry and is hugely beneficial given the increasing skill gap. Plus,
it allows manufacturers to more easily move to new markets and employ the local workforce there.
6. Improve health and safety
Working conditions can be made safer by removing humans from dangerous areas through automation and remote operations via 5G networks. Mitigating risks related to health and safety is a challenge in the manufacturing industry relative to other sectors. The chart below shows that it constituted the largest proportion of non-fatal work injuries in the EU in 2016 (20%) and about 16% of fatal injuries across all industry sectors. An example of using technology to reduce the number of work-related injuries and health problems includes drones to inspect equipment that is too high to reach safely or contains hazardous materials.
Similarly, by monitoring conditions in the plant continuously, any warnings can be flagged to a worker wearing AR headsets in real-time on the display,such as in an incident where a machine a technician is working on is starting to malfunction.
These benefits can be summarised in four of the United Nations’ sustainable development goals (SDGs). Most of the impact from 5G in manufacturing manifests itself in improving infrastructure and accelerating industrialisation (SDG 9) and ensuring consumption and production are more sustainable (SDG 12.)