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What Is Industry 4.0?

Through the rise of Industry 4.0 it is said that “smart factories” will become the norm, where internal systems and processes can be self-managed remotely.

Barrie Dowsett

Chief Executive Officer


5 minute read

Industry 4.0 is in full swing, bringing with it huge opportunities and challenges for Irish businesses. Here we take a look at what exactly this latest “industrial revolution” is and how your company can meet some of the costs.

What is the 4th industrial revolution?

In essence, industry 4.0 is the trend towards automation and data exchange in manufacturing technologies and processes which include cyber-physical systems (CPS), the internet of things (IoT), industrial internet of things (IIOT), cloud computing, cognitive computing and artificial intelligence

Industry 4.0 - the Fourth Industrial Revolution - moves on from the more traditional methods still used in many manufacturing and production settings today. It challenges the use of offline, non-centralised processes and replaces them with a more joined up, integrated approach.

Through the rise of Industry 4.0 it is said that “smart factories” will become the norm, where internal systems and processes can be self-managed remotely. It brings about a more resilient way of working, relying heavily on Cloud computing and real-time data. The idea is that traditionally siloed systems and individual processes of old will instead be imported into the Cloud or connected to the Internet of Things. In turn this allows for workflows, management and maintenance of every aspect of the factory to be completed remotely.

There a four key design principles that Industry 4.0 entails

In a nutshell, these are:

Decentralisation: The ability for all the systems in the factory to work independently and to self-configure/self-optimise. Decentralisation also means that these systems can perform tasks and make decisions autonomously.

Interconnection: This allows for staff and machinery to communicate 24/7 via the use of a range of connected sensors and devices.

Real-time capability: The capacity to store and analyse data harvested in real-time, giving companies a chance to act on the findings far more quickly.

Virtualisation: This concerns the creation of “virtual factories” where development and testing can be carried out as it would in the real world but at less risk and cost.

When did Industry 4.0 start?

Industry 4.0 looks all new and shiny but it actually builds on the previous revolutions we’ve already seen; some of the technology and concepts are new but much of it is simply upgraded versions of tech we’ve had around for years.

During the 19th Century - the time of the first industrial revolution - Britain moved away from small hold farming to factory production on a larger scale. The second industrial revolution then came about from the 1850s to around 1915, with the introduction of steel and the early shoots of mass production capability.

Then, between the late 1950s and late ‘70s there came the third industrial revolution. This refers to a time where Britain moved from electronic, mechanical and analogue technology to digital technology that we’re more familiar with today.

So now we’re back to the fourth industrial revolution, Industry 4.0, and the continued moved towards full digitisation. Thanks to the Internet of Things, centralised, highly complex systems will now allow for the collection of huge amounts of data which companies can use to analyse and improve their products. Where real-time adjustments to productivity or mechanical systems are needed, Industry 4.0 allows this day or night from any location.

Going forward, we’ll see smart factories leading the way to revolutionise supply chains and production lines for vastly increased digitisation and automation. Artificial intelligence will also be used for completing highly complex tasks, bringing cost efficiencies, better quality goods and improved customer service with it.

How much is Industry 4.0 worth?

Recent figures have estimated that the component markets of Industry 4.0 will be worth over US$4 trillion by the beginning of next year. This is even higher than the predicted value of the Internet of Things (IoT) market, which is likely to be worth as much US$3.7 trillion. In the US alone, Industry 4.0 has already created approximately 175,000 jobs, which of course has a knock-on effect around the globe.

One thing’s for sure though - Industry 4.0 is only just getting started. Whatever it costs and however much it generates in the years to come, this exciting industrial step will reduce inefficiency and improve productivity at all levels, making it one of the most highly prized concepts of this generation.

Meeting the costs of Industry 4.0 via R&D

Investment into research and development is a key priority for businesses all over Ireland, particularly for those in manufacturing, logistics, pharmaceutical and tech firms. Indeed, embracing the emerging technologies of Industry 4.0 is key to the Republic’s continued success and growth in an ever-evolving world.

However, although R&D investment is incredibly worthwhile as a necessity to Industry 4.0, it doesn’t come cheap. But the good news is there are a number of government-backed incentive schemes that can help firms meet the costs of experimental R&D, including the R&D Tax Credits scheme.

What is R&D tax credits

The R&D Tax Credits scheme came about in the early 2000s as a tax-based reward for business growth and innovation. Companies based in Ireland that have developed new products, systems, processes, devices, materials or services (or improved existing ones) may well be eligible to claim.

Irrespective of whether your company is currently making a profit or operating at a loss, an R&D Tax Credits claim could still be possible - even if the project was unsuccessful. That’s because it’s all about attempting to solve a particular technological or scientific uncertainty, not necessarily the end result.

It's a generous scheme too. Qualifying R&D expenditure will bring about a 25% Tax Credit for use against a company’s Corporation Tax bill, offered over and above an existing tax deduction at 12.5%. This means that companies undergoing qualifying R&D can claim a Revenue refund of €37.50 per €100 of R&D costs.

The types of businesses and range of claimable costs is incredibly broad, and the money gained can be spent on anything, including investment in Industry 4.0 technology.

You can find more details on our R&D Tax Credits page.

Interested in making a claim? Contact us

From our base in Dublin we have helped hundreds of Irish companies receive the R&D Tax Credits they are owed. Thanks to our team of R&D specialists and accountants, the whole process is hassle-free and fast, and our 100% success rate speaks for itself.

Call us on +353 1 566 2001 or use our contact form to get in touch today. We’re working as normal throughout the COVID-19 outbreak and will be pleased to assist.

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