Mis apuntes sobre geoestrategia: THE FITH INDUSTRIAL REVOLUTION

THE INDUSTRIAL REVOLUTION 5.0.

We live in a turbulent world in which AI, IoT, Fortnite and advances in biotechnology and personalized medicine coexist with hunger, drought, war, boats, infant mortality in Africa and the Gulags of the Arctic. Never in history has the distance between welfare and discomfort been so widened. The question to be resolved is whether the former will prevail as the Renaissance in Florence emerged from obscurity or if discomfort will prevail as it did with the fall of the Roman Empire.

These advances are the product of innovation, which is something very recent in the history of humanity. Without it, we would still live in caves. Let's look at just two facts to understand it. Between the birth of Jesus Christ and the appearance of the steam engine in the second half of the 18th century, GDP per capita, that is, the wealth of the planet's inhabitants, did not grow. It is true that there were significant discoveries and inventions, but nothing substantial happened that improved people's lives. The necessary energy came from wind, water, animals or the strength of man. Another very relevant fact: between the year 1 and the year 1800, the world population grew by 800 million people, and in the following 220 years, by 7,402 million. The history of this impressive change is that of the industrial revolutions.

The first industrial revolution, born at the end of the 18th century in England, was associated with the steam engine and therefore with a source of generable and controllable energy that allowed, for example, the birth of machines for agriculture, the textile or glass industry, the railway and caused the birth of urban societies.

The next step towards the manufacturing industry between 1871 and 1914 was born from electrical energy and oil and it was called Industry 2.0, which allowed a faster transfer of people, between sectors and territories, and of innovative ideas, thanks to the appearance of new means of transportation and communications and the launch of large-scale production. This second revolution lasted until 1970 and gave industrial activity the primary role in modern economies.

Industry 3.0, known as the information society revolution, began in the sixties with the boom in integrated circuits, although it was born in the forties with the invention of the transistor. Today a chip can contain more than 10,000 million transistors, which has allowed highly miniaturized electronics. Computer science revolutionized the processing of information and introduced the robotization of factories, allowing more quantities to be manufactured faster, without any other considerations.

The current Industry 4.0 is characterized by the convergence of the physical, digital and biological spheres and is driven by digital technologies and the convergence of three powerful forces: internet, e-commerce, and the development of new technologies (AI and IoT).

The success of the fourth industrial revolution has been based on a combination of technologies such as: Internet of Things (IoT), Big Data, Artificial Intelligence (AI), cloud and edge computing, digital twins, advanced robotics, cybersecurity, automation 3D printing, which have transformed all productive activity, and much more important, consumer habits.

The explosion of the 4.0 revolution has been tremendous in the last twenty years. Currently, of the 100 companies with the largest market capitalization, one third, which represents 50% of the total value, are related to information technologies. None of the current 10 largest companies existed or were relevant in 1990, when their total value was $315.26 billion; today those 10 companies are worth $2,468,040 million, less than Apple or Microsoft. The Big 5 IT companies have gone from a value of 3,068,910 million dollars in December 2018 to 10,506,000 in December 2023.

The expansion has been so fast and so easy that the entire planet is imbued with the phenomenon of connectivity and apps. A few data are enough to attest to the impressive phenomenon. The average American checks his or her phone 262 times a day and there are 6.5 billion smartphone users in the world and by the end of the decade there will be 8 billion, that is, the entire planet. 2 million new applications were launched in 2021 alone. Every year 255 billion mobile applications are downloaded worldwide. Mobile advertising spending amounts to more than $350 billion and there are more than 2.6 billion mobile gaming users worldwide and this market is expected to exceed $116 billion this year. Asia with 1.3 billion and Europe with 550 million users lead the world ranking.

However, the fourth industrial revolution involved an enormous relocation of industry to emerging countries with lower costs and fewer environmental restrictions. The great development of countries like China, Taiwan or Singapore has nothing to do with internal demand but with exports of products and services for Western demand that benefited from very competitive prices. Thousands of companies moved their production centers to China or Korea; from semiconductors to textiles, decapitalizing European society, which is becoming poorer by leaps and bounds. If before engineers had to be in factories or public works, now they work from Bangalore for the whole world with salaries of $500. The brutal increase in purchasing power and new individual habits have revolutionized the world of travel with a very negative environmental footprint for the ecosystem in which we live.

The fifth industrial revolution, consists mainly of the commitment to value industries, centered on humans and the effective interconnection between processes, systems and machines. This new milestone will play a key role in providing solutions to the problems experienced by society, such as: climate change, unemployment due to the automation of processes, lack of resources, etc.

The fifth industrial revolution promotes more sustainable and human-centered production. In addition, it allows both employees and companies to improve their productivity, be more efficient and face adverse situations with greater resilience. This new step focuses on greater and better collaboration between human and machine. An idea that has gained momentum in recent years, in part because it aligns with a refreshing and at the same time alarming new vision about business and the economy. It emphasizes the importance of social value, rather than profit, so that new industries will need to lead the human, digital and green transitions.

There is no doubt that industries are very important for the economy of a country. They create jobs, contribute to GDP, bring innovations and provide services and products for people to consume. But the way they operate is detrimental to the planet. The manufacturing and production industry consumes 54% of the world's energy sources and is responsible for a fifth of carbon emissions. The rapid transition from the third to the fourth revolution has generated an enormous gap in terms of talent and processes. The education that the vast majority of us have received, the administrative processes, labor relations, cost management, and much more, are based on the outdated model of the third industrial revolution, and this threatens the Western model of life and leadership in the face of more dynamic economies that have made the leap much more quickly.

Industry 5.0 is set to return to the days before industrialization, when handmade products were made by people who knew the process personally and gave them a human touch. This new paradigm will represent a regression with respect to the mass production that we have known throughout the last century.

But there is no industrial revolution without the support of disruptive technologies, and this new one is based on the discoveries that science is making: intelligent autonomous systems; smart materials that will repair themselves like the human body; creation and regeneration of organs and personalized medicine; solid artificial intelligence, whether general or superintelligence that will surpass that of humans, allowing the machine to replace man in all tasks and process information in an infinitely more precise and complex way; collaborative robots with men; quantum in the cloud that will allow us to process almost infinite information that will open up possibilities that today seem remote to us; the exploitation of space; hydrogen as an inexhaustible source of energy; and photonics that will revolutionize fields such as the diagnosis and treatment of diseases, the development of energy sources such as fusion and the implementation of Smart farming solutions, to name a few fields. A whole catalog of disruptive technologies that will modify our way of life like never before.

The main characteristics of this new revolution can be summarized as follows:

Autonomous manufacturing. The benefits of autonomous manufacturing are many. They will increase productivity and reduce costs by eliminating repetitive tasks that can be scheduled offline and executed on their own. The machines can work 24/7 without rest, which will increase production. As automation 5.0 improves productivity, workers will focus on strategic tasks and where human treatment is productive and efficient or morally necessary, while robots will handle mundane tasks and repetitive.

Customer experience. The future of customer experience is changing rapidly, and it's critical for any business to keep up. It is no longer enough to offer a great product or service to a satisfied customer. Companies must differentiate themselves by offering a better experience. As the world becomes increasingly competitive, a customer experience-driven approach is an increasingly important differentiator for brands. Word of mouth travels quickly and customer expectations are increasing exponentially, so a bad customer experience can be very costly.

Hyperpersonalization. Increasingly, consumers demand products and services that are personalized and unique to them. New manufacturing technologies are at the heart of Industry 5.0, where companies will use the latest innovations to meet the needs of each individual. New technologies will evolve from the large homogeneous production lines to the personalized manufacturing of large quantities.

In the age of hyper-personalization, it is important to remember that human touch and attention cannot always be replaced by technology. Companies must be able to combine a mix of human touch and a variety of technologies to meet unique customer needs.

Responsive supply chain. A responsive supply chain is a flexible business approach that is designed to meet the demands of a wide range of companies and will be able to adjust quickly to changes in demand, production volume or weather. This will involve collaborating with new partners, such as logistics service providers and retailers, to increase flexibility and reduce costs across the entire supply chain.

Resilient. In today's world, a company's ability to survive and thrive in an ever-changing world is critical. It is a necessary skill to integrate man and machine in an increasingly complex and diversified business ecosystem. In such an unstable environment, organizations must be able to plan for potential disruptions to their value chain, supply chain, and transportation channels. In fact, the benefits of resilience in Industry 5.0 should be felt in every part of a company's value chain.

Sustainable. This new revolution provides a common language to discuss issues such as social value, pollution and resource depletion. Considering the enormous and serious pressing effects of climate change and global warming, sustainable approaches are becoming an unavoidable priority.

Craftsmanship (human touch). There are many benefits that have to do with having a qualified workforce in industry 5.0. When workers are well trained and know how to do their jobs correctly, they can produce high-quality products and give them a compelling personal touch. This also leads to fewer errors and less time spent fixing them, which in turn saves money for the company. The benefits of craftsmanship go beyond aesthetic appreciation. The activity can foster a necessary community and friendships, which will replace the current impersonal industrial ecosystems. Crafting will involve a creative outlet and can even create emotional support for people in the value chain. In general, having a qualified workforce brings creativity and is a key factor in the success of any company.

In a world that will suffer environmental and demographic tensions until the end of the century, Europe needs to get ahead of this phenomenon since it will be the first to suffer accelerated population reduction and aging and traditional models will not serve to solve these new challenges. Hence the importance of adapting as soon as possible to this new milestone in economic and technological history.

Global Top 100 December 2023. Market value

(The logo of the largest company by sector and the percentage of the total are indicated)