Partner of FCB Workplace Law, Matthew Robinson, examines the Industrial Revolution 4.0 through the lens of Australian Employment law and Industrial Relations impacts on the Manufacturing Industry.

The emergence of the Industrial Revolution 4.0 will transform not only the manufacturing processes for products of the future but the business models that underpin them. Australian workforces will be reskilled, retooled, relocated and restructured, requiring business owners to exercise foresight into how existing industrial relations models will need to adapt to the technological changes on the horizon.

In this three part series, the FCB Group will explore the employment and industrial relations implications of the Industrial Revolution 4.0 on the Australian working landscape. This first article will examine how the Industrial Revolution 4.0 will impact the type of work performed in the Australian manufacturing sector. Our second article will consider the impact of Enterprise Bargaining, workplace flexibility, independent contracting and the influence of the Australian Union movement. Finally, the third article in this trilogy will discuss how Australian advanced manufacturers can take steps to protect their intellectual property, confidential information and workforce from external competitors.

Industrial Revolution 4.0

Coined in 2011, the term Industrial Revolution 4.0 describes the next evolutionary step in manufacturing, enabled through the rise in computing power and device connectivity. The previous Industrial Revolutions were marked by the ability to harness steam power, the advent of the production line and later, automation in manufacturing. Now, we have arrived at the Industrial Revolution 4.0 characterized by pivotal developments in the advanced manufacturing process including:

  • The collection of digital data for aspects of the production process, warehousing and distribution networks.
  • Digital connectivity between the production machinery, logistics equipment and computing systems
  • The analysis of data received from the networked machinery & equipment to report the production cycle and distribution networks driving productivity and efficiency improvement;
  • The ability to use creative thinking to rapidly implement changes and improvements within the production cycles & distribution networks on the back of the analytical reporting.

In addition, the Industrial Revolution 4.0 has introduced new tools and methods for production such as autonomous robots, additive manufacturing (3D Printing), 3D modeling & design and augmented/virtual reality which are instrumental in reforming the labour market.

What are the Impacts on the Australian Labour Market?

The Industrial Revolution 4.0 provides Australian manufacturers with huge innovative opportunities, ranging from new manufacturing materials, new production techniques, increased efficiencies and greater connectivity to warehousing and distribution networks. However, change will not occur overnight. Any savvy manufacturer is unlikely to toss out their existing machinery and completely retool. Rather, existing manufacturers will take intermediate steps to trial efficiency gains before large-scale CAPEX projects are launched while new entrants to the market may leap straight into using modernized machinery. Therefore, impacts of the Industrial Revolution 4.0 will initially be gradual but increase rapidly as greater awareness of the benefits and market forces takes hold.

Soon, changes in production will accompany changes to the labour structures that undertake and support this new work. Likely changes include:

  • Necessity for an upskilled labour force, however employees at the lower end of the skills spectrum will likely lose their positions to automation.
  • A reduction in the density of machine operators, warehousing and maintenance workers along with a corresponding increase in necessary skill levels (including robotics, additive printing) and flexibility to undertake the work. A machine operator’s work will have increased complexity and could be potentially tasked with overseeing the operations of multiple machines. These workers will need to have a higher skillset including a greater understanding of more complex PLC interfaces, data sensing systems and networking equipment. Job attrition will be in the C14-C10[1] end of the spectrum with an increased job density towards the C6-C5 Advanced Engineering Tradesperson levels. The result will be a smaller, more technically capable workforce but with a higher average labour cost, which will clearly have impacts on the traditional heartland for the Australian union movement (see Article 2).
  • Digitization of production and analytical reporting from “big data” will reduce middle management (replaced by management software & reporting) and increase the need for digital analysts and data scientists to manage and gain business value from the reports
  • An increased need to retain a highly skilled creative workforce in graphic design, 3D modelling, augmented reality and software engineering. This workforce will transform the manufacturing “idea” into a digital blueprint. For small to medium sized manufacturers, where the costs of these skills cannot be financially justified to be retained in-house (or for large manufacturers cannot who cannot recruit and train due to labour supply/skills shortfalls) specialist contractors will have increased demand.

The Industrial Revolution 4.0 is set to impact all stakeholders in the manufacturing industry, including the size, composition and location of your workforce. Information is the best defense in ensuring your company is able to adapt its industrial relations strategies to capture and drive the business opportunities presented by these changes. Look out for Article 2, which will discuss how these changes are likely to result in manufacturers having to adopt changes to their current industrial relations strategies, including the negotiations of Enterprise Agreements, impacts on the Union movement and the growing importance of employment contracts.

To see original article's footnotes please click the link

[1] C-14-C10 classifications of the Manufacturing & Associated Industries & Occupations Award 2010 [MA000010]