An interview with Dr. Nicole Hoffmeister-Kraut, Baden-Wuerttemberg Minister of Economic Affairs, Labor, and Housing
Big data, digital solutions, and networking are all terms that reflect a trend toward what many Germans now call Industry 4.0. What they don’t express is how comprehensive and radical this structural change will be for the economy, not to mention society in general. TRANSFER magazine spoke to Dr. Nicole Hoffmeister- Kraut, the Baden-Wuerttemberg Minister of Economic Affairs, Labor, and Housing, about the opportunities and threats of Industry 4.0.
Hello, Dr. Hoffmeister-Kraut. You’ve highlighted Industry 4.0 as a key issue for economic policy in the years to come. Where do you think we are on the map at the moment? Thinking in particular about the Mittelstand, the 500,000 small and medium-sized companies in Baden-Wuerttemberg, how are they faring with digital transformation and networking? What do you see as the opportunities for such firms?
Indeed, I do see the topic of digital transformation as a key area of economic policy. Lots of firms in Baden-Wuerttemberg are already making good progress with digital transformation and networking. Our economy is highly diverse and the same is true for the level of digital transformation: These companies already include a large number of digitalization pioneers, but there are also digital newcomers, plus businesses that are somewhere in the middle. The opportunities are huge, for example for new products and services, for new kinds of value chains, for efficient production and innovation processes, but also for new business fields and business models. This applies to all sectors of industry and the entire state. I see potential for industry and the manual trades, retailing, the hotel and catering sector, and the service industry. Digital solutions can also open up new opportunities in terms of the work practices, for example with better ways to achieve a work-life balance by adopting digital and flexible employment models.
Manufacturing is a pioneer of the structural change toward a digital and networked economy. Other sectors of industry such as the manual trades or retailing are only just putting the necessary processes in place. What does the state do to support these enterprises? And what sort of personal commitment do you think will also be necessary from these companies?
To support companies in the state with the digital transformation process across all sectors of industry, I’ve launched the Industry 4.0 Initiative. In collaboration with the initiative partners, we’ve agreed ten areas of action which we intend to work on together over the coming years. These include the topics of fostering innovation, supporting startups, IT security, training and continual professional development, and Work 4.0. We want to support companies with digital transformation in ways that match the target group, which means we start with the initial status and degree of digitalization.
For the digital newcomers among the small and medium-sized companies, we have our digital pilots offering initial pointers on digital transformation and providing them with help in developing individual solutions. Our offering also ranges from materials providing information to digitalization workshops and individual kick-off consultations.
Our digitalization bonus is aimed at small and medium-sized enterprises that are already one step further and have the kick-off phase of the digital transformation process behind them. This digitalization bonus is our way of providing help with the implementation of actual digitalization projects within the company, plus any related training for employees.
We have digital hubs to spread digitalization within the economy and promote ports of call for digital transformation in the different regions of Baden-Wuerttemberg. By doing this we’re making collaboration easier between established companies and startups at the grass roots level, and we’re also offering a port of call for questions regarding digitalization.
The companies are asked to become actively involved in digital transformation themselves, to exploit the opportunities it brings, and to master the challenges it involves. This is because it’s the foundation upon which the innovative power of the future will be built. Collaboration and a culture of startups are playing an increasingly important role in this.
The proponents of digital change see it as an opportunity to compensate for the skills shortfall, whereas the critics are concerned that low-paid workers or workers with qualifications that are not based on future needs will have to fear for their jobs. What changes will there be in future requirements regarding professional qualifications?
Without question, digitalization will change the world of work radically and with that, the demands placed on employees. For Industry 4.0 to work, sufficient numbers of specialists are needed with the required digital know-how. To achieve this, we have to prepare all groups of employees for the future world of work – including the semi-skilled and unskilled. For many employees, in the future they will need a strong ability to act independently, interpersonal skills, self-organization, and a knowledge of information and communication technology. The task of training and employee development today is to prepare for the work environment of the future.
The Learning Factories 4.0, which are backed by the state, can prepare apprentices – but also people on training courses – for the digital production of the future. The employee development portfolio offered in Baden-Wuerttemberg also includes several projects in the field of digital transformation, as well as continuing professional development. For example, the starting gun has already been fired for projects aimed at shaping company change processes through digitalization, as well as projects aimed at digitalizing master craftsmen training in the manual trades. There’s a vocational training contest at the moment for model project ideas; it looks at ways to introduce and implement digital curricula, how to design teaching and learning processes, and how to intensify collaboration between firms offering apprenticeships and vocational schools. By doing this, we’re laying a foundation for specific project development.
Industry 4.0 requires an understanding of and a broad public acceptance for the technologies that drive it and the business models that shape it. On both counts, people outside “the scene” seem to have a sometimes extremely ambivalent understanding and often they’re quite negative. How important was your initiative in this regard for running the Baden-Wuerttemberg 2017 Week of Industry in June of this year?
The Baden-Wuerttemberg Week of Industry stems from industry dialog. Partners from industry and the trade unions agreed a common mission statement and guidelines. Our stated objective is that Baden-Wuerttemberg should also remain a strong industrial location in the future. The industrial enterprises in our state – mostly small and medium-sized firms, and often family-run businesses – make a significant contribution to the affluence of the state and often they’re also involved in social activities and take social responsibility. The action week allowed us to show that industry is diverse and has an impact on almost all areas of life. We wanted to raise public acceptance and visibility. The large number of events that were registered confirmed that there’s strong interest among companies, research institutions, museums, trade associations, and the chambers of commerce, although this is also the case with organizations such as vocational schools. As a result, the activities were extremely multifaceted, across the entire state. There was a strong turnout for the topics of digitalization, the future, training and Industry 4.0. There were factory tours to allow people to take a peek behind the scenes. I’m certain that the Industry Week was an excellent way to show that digital transformation does not just pose a challenge, but also offers lots of opportunities for Baden-Wuerttemberg.
Change spanning different industries and technologies, as with the shift toward Industry 4.0, takes a climate which allows new ideas to be thought of, in existing and new companies, with the aim of engendering successful products and services – from (hidden) champions of industry and startups, supporting and driving change with redesigned products and services. How do you see Baden- Wuerttemberg in this regard?
In an age of digital technology there are often more young and adaptable companies, perhaps more so than previously, and they act as a catalyst of market change and innovation. This is why our many global market leaders are increasingly involved in the startup area. A fierce competition flared up some time ago in the battle for the best startups, at home and abroad. Baden-Wuerttemberg has to take on this competition even more aggressively. We want to pool our strengths more effectively as a startup region and promote this. When it comes to the development and funding of scalable business models, internationally the goal is to be on the highest echelon. And we’re not starting from zero. The number of startups may be in decline, throughout Germany and on a regional state level, but in Baden-Wuerttemberg there’s a clear trend toward new firms with innovative business concepts and the potential to grow – so this is a pleasing trend toward genuine startups. As a state, we also already have an established portfolio of proven funding programs and competition formats, for example the innovation and consultation vouchers. Recently these were added to by things like the new Hightech Digital innovation voucher. But for me it’s also about other new activities that will make Baden-Wuerttemberg even more appealing and dynamic as a startup region. That’s what the focus will be on at our startup summit on July 14 and the trade show in Stuttgart.