The industrial manufacturing industry is entering a new era that is often referred to as Industry 4.0, hinging on automation, machine learning, artificial intelligence, and the Industrial Internet of Things (“IIoT”).

Enormous productivity gains such as increased operational visibility, cost savings, and faster production times are expected as adoption of cutting-edge technology is implemented. However, adoption of these technologies is also expected to present challenges to different constituencies:

• Who reaps the rewards? The most prominent benefactors of Industry 4.0 may be large companies that can standardize technology across a consolidated platform and bear the meaningful expenses to upgrade outdated technology. Conversely, smaller firms with limited scope may be at a disadvantage from a resource perspective but may be able to outmaneuver larger companies that are not as nimble.
• How do we regulate Industry 4.0? Economic and political history are always linked, however, regulatory frameworks generally lag industrial revolutions. An example of this political-economic dynamic is the rise of big business from technological innovation starting at the end of the 19th century which prompted a drastically different political paradigm after the Great Depression. In the era of Industry 4.0, a new political paradigm may be on the horizon as current political structures struggle to handle industries that no longer need human workers or companies that have large and unchecked amounts of individual customer's data.

Looking ahead, an increased effort to adopt Industry 4.0 is imperative for manufacturers to stay ahead of peers, a trend exacerbated by national economies morphing into a single global economy. Those who integrate Industry 4.0 technologies into ongoing operations will not only win the technology race but ascend toward the top of the valuation continuum.

Historically, one of the most important facets of an industrial manufacturer has been access to a steady workforce. As Industry 4.0 technology proliferates, the interplay between workers and technology will continue to shift. Below are a few hypotheses of how this phenomenon is evolving:

• In the nearer term, as the industry becomes more productive and efficient, industrial jobs will primarily transition rather than be lost to technology. For example, the utilization of machine learning to provide safer working conditions with transform but not eliminate the need for safety department professionals.
• Industries are now more productive with less workers versus historical periods. Fears of an aging workforce as baby boomers reach retirement are overblown given how technology can and will replace archaic labor-production relationships.
• Almost all jobs at some level are at risk of being superseded by technology at some point. Functions that are based in critical thinking or management-level decision making are less likely to be replaced by technology alternatives in the near or medium term.
• Workers will need to adapt to supplement and enable technology rather than vice-versa – soon AI and other next-gen technology will be the irreplaceable ingredients.
• Job roles will change more frequently, and successful employees will be able to swiftly navigate between roles throughout a career to help supplement the latest innovations.
• Efforts to effectively market open positions to individuals with coding, data, and additive manufacturing backgrounds will pay dividends as the industry continues to evolve in the near to medium term as they seem to be highly relevant in the early innings of Industry 4.0.

To this point we have looked at how technology is shaping the industrial manufacturing sector. Equally as important are external factors in the form of political agendas and / or economic policies that can disrupt the condition of the sector and offset the efficiency gains from technological innovation.

These trade distractions create uncertainty and reticence among industrial manufacturing executives with regards to current negotiations and future actions. Forethinking companies actively manage the ongoing, volatile trade environment to preserve margins and supply chain surety.

Savvy industrial manufacturers utilize the following tactics to increase transparency and predictability:

1. Working with suppliers to identify potential supply chain bottlenecks and implementing technology to mitigate the related supply chain risk.
2. Utilizing cloud-based commerce networks as well as demand sensing technology to facilitate pricing awareness and gain deeper supply chain visibility.
3. Inorganic growth through mergers and acquisitions, affording manufacturers greater market share and pricing power required to pass tariffs onto end consumers.

Through the implementation of these strategic initiatives, industrial manufacturers are creating formidable operating procedures able to withstand the tumultuous conditions that are likely to persist.

Based on the topics covered in this piece, below are a few quick hits for industrial manufacturing companies to consider as they think about how their business may be viewed in the M&A and capital raising marketplace of tomorrow:

• Technology utilization: Buyers and investors seek a complete technology-enabled platform that not only is utilized to increase topline revenue but also employed to increase efficiencies that optimize cost structures as an enterprise scales.
• Global capabilities: In an increasingly global economy, a company that can serve domestic and international markets with a sophisticated supply chain rooted in leading technology will serve an attractive, global addressable market.
• Customer proximity: From both a sales (direct sales to end users) and a geographic (optimizing logistics and delivery) perspective, significant margin pickup can be realized through getting “closer” to the customer.
• Agile operations: With technological progress accelerating every day, companies that can swiftly adopt advantageous technology will reap the benefits of these early and ongoing investments.
• Data capture: In an economy where data and other intangible assets are becoming more valuable than fixed assets, knowing your customer and tracking pertinent data will enhance a company’s ability to monetize this proprietary information.