5G could change the economics of manufacturing

Thursday, 10 October 2019

Three benefits of 5G technology (video first published in 2019).

The industrial heartland of Europe in north-west Germany isn't beating with quite the vigour that it once did.

In Duisburg, a mothballed steel factory has been turned into a tourist attraction and occasionally provides an impressive backdrop to touring heavy metal bands.

Tourists who clamber up the steel ladders to gawk at the rusting edifice will still be able to pick out dozens of smoke stacks rising from working steel mills on the grey horizon, but there used to be hundreds.

Now, it may be the car industry's turn to suffer the palpitations, and Germany's challenge could even prove to be an opportunity for New Zealand.

* Electricity billionaire is building the Tesla of Thailand

E.Go's cars have been designed from the start from the point of view of affordability.

* Kiwi-made driverless car maker Ohmio collaborates with Spark's 5G innovation lab**

Germans still tailgate at frightening speeds on the autobahn, but fewer among its increasingly environmentally-conscious youth aspire to a BMW as a status symbol, if they want to own car at all.

E.GO's electric vehicles retail for the equivalent of about $20,000, after subsidies that are available in Germany.

That's a problem for North Rhine Westphalia, the most populous of Germany's 16 states and home to much of the country's traditional industry.

The state is in no danger of turning into a museum, but unemployment is running at an uncomfortable 6.6 per cent and poverty is also now above the national average.

Start-ups are more likely to set up shop in Berlin or Munich, which are bigger drawcards for university graduates pondering where in Germany to start their careers.

Tourists can clamber around a sprawling disused steel works in Duisburg that serves as a potent reminder of what can happen if an industry gets left behind.

Vodafone, which employs 5000 people at its campus in the state capital of Dusseldorf, hopes 5G technology will provide a much needed shot of adrenalin.

One of its most enthusiastic poster-boys is electric vehicle manufacturer e.Go, which epitomises the opportunities and the dilemmas in front of German manufacturing.

E.Go is banking on an innovative EV chassis and digital technology, including 5G networking, to build a global franchise.

It will never be a mass employer on anything like the scale of the region's industrial mammoths, which include Bayer and ThyssenKrupp.

But in 2015, it employed 20 staff and now that has risen to more than 500 at its factory in near Aachen.

Car plants typically cost €1 billion (NZ$1.75 billion) and turn out several hundred thousand cars a year, but e.Go's factory required an investment of only €35m.

'Head of visitor experience' Olaf Wendt explains it is aiming for an annual production run of 10,000 to 30,000 for its diminutive city runarounds which are built to retail in Germany for €12,000 to €16,000.

That is after EV subsidies worth €4000.

E.Go has embraced new technology to get its prices down to that level.

Robotic platforms guided by a low-latency 5G network glide its vehicles through the assembly line.

Nuts and bolts are tightened by wireless wrenches which automatically document the torque they have applied to each component, whose own movements through the factory are tracked through an 'Internet of things' network.

One of the challenges of being a new entrant into the car market is that it is difficult to build up an after-market service operation, Wendt says.

So to overcome that, technicians can photograph any of its EVs through an app it has developed in conjunction with Vodafone that automatically recognises what model it is and then uses augmented reality to guide the repairer through the service functions they might need to perform.

The changes 5G brings are more likely to be felt by businesses than by smartphone users.

'By doing this we can very quickly step to a very high service level, without the car being widely seen,' Wendt says.

In Dusseldorf, Vodafone is counting the reasons why customers should be excited about 5G.

That is reasons beyond the obvious one of a 10-times increase in network capacity, which should translate into faster mobile and fixed-wireless broadband with high or potentially 'unlimited' data caps for consumers.

Visitors to a 5G innovation lab can play and lose table hockey against a robotic opponent that detects the location of the puck using an overhead camera.

When it uses 3G the machine is fallible, but once switched to 5G the reduced lag in detecting the puck makes it unbeatable.

Other robots demonstrate the ability of 5G, through 'network slicing' to intelligently tailor 5G networks to different applications.

Network slicing could, for example, enable 5G networks to provide the consistent performance required to help guide and control self-driving EVs, or to perform remote surgery, while still providing affordable web-browsing for smartphone users.

Robotic platforms and tools that assemble e.GO's electric vehicles at its factory in Aaachen are controlled via a 5G network.

Whether new digital technologies built on advances such as 5G will give German manufacturing a second wind, or strip it of its competitive advantage remains, to be seen.

While e.Go may be a success story in the making, the switch to EVs represents a threat to a vast supply chain that feeds the local car industry.

E.Go's cars contain only about 700 parts compared to about 2000 to 3000 for a conventional car, with about 30 to 40 per cent of their cost lying in their battery.

'Germany is a car country. It has 82 million people and 60 million cars,' Wendt says.

'Normally when you develop a car at the end the production guys have to make it affordable.

'We went the other way around and said 'what can we do with the car to save costs in production?'.'

In addition to the implications of that, Wendt says e.Go is keen to help partners set up similar factories overseas.

So its primary product could soon be its know-how in what is commonly referred to as 'manufacturing 4.0', rather than its cars themselves.

That is food for thought, perhaps, given that its 16,000-square-metre-factory in Aachen would not look at all out of place in an industrial park on the outskirts of Auckland.

Could this be just the kind of set-up to bring car manufacturing back to a small country such as New Zealand?

It is hard to see why that would be so far-fetched.

Wendt says China and Mexico are higher on his list of prospects as franchise destinations, but he hands over his business card and says he is happy to hear from potential partners.

Tom Pullar-Strecker travelled to Germany as a guest of Vodafone New Zealand.