Manufacturing requires radical rethink in post-Covid era

The survey of 100 German manufacturers and German students found that disruptive technologies such as artificial intelligence and intelligent automation are changing production processes, sparking a fresh industrial revolution - commonly referred to as Industry 4.0. Meanwhile, the green agenda and pressure from consumers are accelerating the transition to low carbon business models.

The research also found that macroeconomic pressures such as Brexit, and now Covid-19, will cause global supply chains to fragment.

German employment law expert Kathrin Brügger of Pinsent Masons said the sector had struggled through the coronavirus pandemic.

“In the last months, the production in the manufacturing industry was nearly standing still in many areas throughout Germany. Covid-19 led to severe restrictions and many companies introduced short-time work,” Brügger said.

“In the last few weeks, step by step and in accordance with hygiene concepts operations have now restarted. For most employers, the main focus is to decide when and how to restart production, generate turnover and save jobs,” Brügger said.

While the strategic priorities for German industrial businesses included improving use of technology and improving sales, a minority of respondents rated themselves as well-prepared for Industry 4.0. Only 42% said they were well-prepared to keep pace with the next wave of digitisation.

In contrast, 76% of students said it was either ‘very important’ or ‘indispensable’ that the organisation they join at the cutting edge of new technology.

Climate change was also likely to have an impact on business, with 38% of companies saying it would have a significant impact on production.

Employers said they were making changes to their talent development initiatives. For example, over 50% of respondents either had, or were planning to, make significant changes to internal training. Meanwhile, 23% had made changes to their agile working environment, and a further 23% had planned to make changes to agile working.

German employment law expert Lara-Christina Willems said both employers and employees were looking forward to going “back to normal”, but manufacturers were asking what “normal” after Covid-19 would mean.

“What are the challenges with and after Covid-19? How can companies strengthen themselves, their company and their employees to remain competitive? What can we learn from the crisis for the future, also with regard to the war for talent and the aim to be an attractive employer for the next generation?” Willems said.

Pinsent Masons UK manufacturing law expert Rob Childe said firms could take the opportunity to prepare themselves for the future.

“Those plans will inevitably involve workplace reorganisation and job cuts. However, there is an opportunity for manufacturers to also use this time of lockdown to draw up a plan for the skills they will need in the future and to upskill key workers now whilst they are on furlough leave, to ensure that they emerge from the current pandemic in as strong a position as possible,” Childe said.