Did the Pandemic Set Industry 4.0 Adoption Back?

When the COVID-19 pandemic hit, it caused abrupt chaos. One day, factories were operating at peak efficiency; the next, it was skeleton crews trying to make the most of production capabilities as supply chains fell apart and quarantine orders took effect. Needless to say, digitizing facilities was the last thing on most producers’ minds in 2020.

Now, nearly three years removed from the peak of the pandemic, manufacturers are once again beginning to look at ways to maximize CAPEX for the future. Interest in Industry 4.0 remains strong, and for the first time in several years, producers are willing to throw money behind it.

The pandemic-induced damper on progress

The challenges of COVID-19 weren’t contained within a single calendar year. Every industry has felt, and is still feeling, the effects of the biggest health and economic crisis in recent history, manufacturing in particular. Most producers had to manage with shortages of both workers and materials, all while contending with sudden surging demand as consumers took to eCommerce channels to fulfill their needs. According to a McKinsey report, “56 percent of respondents that hadn’t implemented Industry 4.0 technologies prior to COVID-19 found themselves constrained in their ability to respond to COVID-19 in the absence of digital technologies to support them.”

During the height of the crisis, many factories were simply trying to keep up with operating demands. As budgets and cash flow suffered, many producers reevaluated and reallocated CAPEX commitments. In short, investment in the Industrial Internet of Things (IIoT) technologies were justifiably set aside — though they certainly weren’t forgotten.

Persistent interest in Industry 4.0

As producers shake off the lingering effects from the pandemic, many are now considering larger IIoT investments. There’s still a considerable need to modernize and adapt to ever-shifting economic challenges as industry evolves. Manufacturers are weighing the costs and benefits carefully.

Industry 4.0 infrastructure doesn’t come cheap: It requires significant upfront spend in the form of hardware, software, training, and more — a true CAPEX consideration. Nevertheless, tight budgets remain the norm across manufacturing. From 2020, manufacturing CAPEX is down, and spending is much more conservative. That said, analysts predict spending in Industry 4.0 investments will accelerate in the short and long term, leading to better cost savings in the manufacturing process.

New technologies are set to open up new revenue opportunities for manufacturers, helping them streamline design processes and bring products to market faster. These prospects and others are what make Industry 4.0 such an enduring CAPEX consideration, even amid persistent struggles.

The necessity of CAPEX investment, especially now

While it’s clear the pandemic set Industry 4.0 back, demand for digitization remains strong. The latest threat to the manufacturing sector — and the economy — is a looming recession. Yet, industry leaders are increasingly regarding IIoT investments as defensive CAPEX. By investing in competitive advantages, IIoT could see a boom in the next year, even as the broader economy slows down.

IIoT technologies help producers remain flexible and agile and create adaptable factories that can respond to challenging circumstances. The pandemic was proof of this need, and an impending recession will serve only to reinforce it.

Still reeling from the effects of pandemic lockdowns? You can always count on the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!
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