ING’s Senior Economist has published a report that highlights opportunities and challenges in the European manufacturing industry. The industry is changing rapidly, shifting towards a more “use” rather than “ownership” business model. Technology is playing an important role in the innovative change which should ultimately pave the way for a circular economy.
In his latest report, ING’s Senior Economist Jurjen Witteveen, looks at capital goods manufacturers, exploring the main opportunities and challenges in this rapidly changing business scenario and how this is accelerating the move towards a circular economy.
In 1995, about 66% of labour income was generated from production activities. Two decades later, this figure has declined to around 56%. Companies are becoming increasingly aware of how to capitalize on their knowledge of products and markets for their clients. By improving activities in the maintenance, marketing, financing and utilisation areas and removing excess risk, they enable their customers to concentrate on core activities.
In his analysis, Witteveen envisages a conceptual framework demonstrating how Original Equipment Manufacturers (OEMs) can evolve their business model across the so-called “stairway to circularity”:
Stage 1 – The maintenance model: building a customer relationship
- Manufacturers can progress from the basic product sales level to a maintenance model, where more technical services such as installation and day-to-day control are provided
- Technology is a key driver – the knowledge gap between the manufacturer and the customer leads to greater opportunities for service provision
- The transition is usually facilitated by an existing structural customer relationship
Stage 2 – The service model: providing the customer with a care-free solution
- Competitive pressure, critical clients and regulatory burdens means that customers are increasingly looking for “care-free solutions”, with lower risk greater access to additional services
- The service model goes beyond the maintenance solution to focus on the retention of ownership of a capital goods by the manufacturer and performance contracts
- Technology is once again an enabler – big data allows the manufacturer to perform monitoring and maintenance with optimum efficiency
Stage 3 – The circular model: the sustainable solution
- The ultimate goal is a transition to a circular model – this is a combination of greater sustainability and lower risk for the customer
- Products and materials are reused and raw materials retain their value
- This is achieved by manufacturers retaining control over the product throughout the entire lifecycle
- The trend towards a modular approach to manufacturing brings the circular economy goal closer
Jurjen Witteveen at ING Economics Department said: “The high level of potential for transformation of the capital goods industry presents significant opportunities, but also comes with challenges for the participants. It requires a consistent investment in technology, workforce and provision of liquidity.
“Despite the great benefits, the re-use and recycle of capital goods at the end of their technical life is still an imperfect process. Equally, the demand for circular products among consumers is still very limited. Nevertheless, sustainability of business models is creeping up the agenda of public authorities and large corporations, so we can expect an increasing appetite within the manufacturing industry as well.”
A Good Look At How Homes Will Become More Energy Efficient Soon
Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.
There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.
1. The Rise Of Smart Windows
When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.
If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.
2. A Better Way To Cool Roofs
If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.
Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.
3. Low-E Windows Taking Over
It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.
They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.
4. Magnets Will Cool Fridges
Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.
The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.
5. Improving Our Current LEDs
Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.
That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.
Maybe Homes Will Look Different Too
Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.
ShutterStock – Stock photo ID: 613912244
IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”
IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.
Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.
Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.
Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:
“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.
We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.
There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.
We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”