The Appliance of Science for “Industry 4.0”

Brazil’s industrial heartland is making a determined push to escape from the “rich commodity producers’ poverty trap” by expanding its engineering and high technology capacity, creating new opportunities for researchers.

Playing catch-up in order to climb aboard the “fourth industrial revolution” (known as Industry 4.0) now sweeping the world with the help of advanced manufacturing processes and robot-assisted technology, is the nation’s best chance of finding the antidote to continued underdevelopment and  rising social tension.

Focused R&D  means robots, the ‘Internet of Things’ and artificial intelligence must take the place of Brazil’s mountains of  soybeans and iron ore.

While Brazil regularly tops the international charts for exports of base minerals or agricultural products and is close to self-sufficiency in oil, its value-added industries have disappointed for decades with just a tiny handful of world-beating engineering businesses led by Embraer, the aircraft frame manufacturer. This in turn has weakened attempts to build a vibrant knowledge-based economy.

While management of an effective national strategy might be expected to fall to Brazil’s National Development Bank, BNDES, and its Innovation Agency FINEP, these federal agencies have – just like all of Brasilia’s government – now become partly paralysed by the traumas and political uncertainty triggered by huge corruption scandals likely to drag on until at least 2019, when a new president takes office.

Yet development cannot stop while Brasilia’s politicians wrangle. Which is why São Paulo – Brazil’s industrial powerhouse responsible for one third of GDP – has taken the issue in hand with initiatives to tighten the links between advanced manufacturing and academic research, in order to generate future revenues though the appliance of science.

São Paulo economic powerhouse filling  gaps in federal funding.

São Paulo economic powerhouse filling gaps in federal funding and policy shortfalls.

The latest initiative is led by the São Paulo Research Foundation, FAPESP, which already has a strong track record in working with industry to transfer knowledge from universities to factories. São Paulo’s trophy initiative is the establishment of Advanced Manufacturing Engineering Research Centers. Rather than reinventing the wheel, São Paulo has carefully studied worldwide developments in this field, taking a special interest in Germany’s Industry 4.0 program and advanced manufacturing initiatives in the United States.

But there is plenty of catching up to do.

Over the last decade the value of commodity sales has quadrupled to contribute 50% of the value of exports. But manufacturing exports – crucial to sustainable development and a vibrant knowledge-based economy, to innovation and indirectly to increased investments in R&D – have dwindled. Furthermore, Brazil’s artificially-strong commodity-backed currency, the real, has helped a boom in manufactured imports (particularly from China) that has been fateful for local industry, according to the respected America’s Quarterly. World Bank data shows Brazil’s share of high tech exports has declined from a peak of 19% in 2001 to just 12% in 2015.

Historically, this cultural reliance on commodities and failure to generate a coherent industrial policy has led Brazil to punch far below its economic potential, when compared to South East Asian nations such as Korea (whose 2016 GDP per capita of US$27,663 was treble Brazil’s US$8,727). Worse, the consequences are felt in education, as measured by the international PISA score. Brazil performs below the average in mathematics (ranks between 57 and 60), reading (ranks between 54 and 56) and science (ranks between 57 and 60) among the 65 countries and economies that participated.

Soybean harvest: bumper crops bring welcome balance of payments cash, but where's the technology?

Soybean harvest: bumper crops bring welcome balance of payments cash, but where’s the high technology?

Likewise, a commodities –based industrial strategy with its requirement for large volumes of semi-skilled labor, has indirectly helped to reinforce other distortions in Brazil’s social makeup – notably its stubbornly high GINI coefficient (the index of social inequality) which in 2015 the World Bank estimated at 51.5. (A value of 0 represents absolute equality, a value of 100 absolute inequality.)

São Paulo is not the whole country, but its industrial initiative could do much to make up for Brasilia’s policymaking shortfalls.

Notably, federal government policy (funded by BNDES) of creating just a handful of “national champions” in a restricted number of industrial sectors has created some ungainly behemoths. One example is JBS, which as well as being the world’s largest meatpacking company, is also now at the center of the government’s current political transparency woes.

Funding a national champion for meat   exports come at a price - as teh government discovered with JBS  has

Funding a national champion for meat exports come at a price – as the government discovered with JBS.

Albeit on a smaller scale, Sao Paulo favours a very different policy of stimulating smaller companies and industry clusters, seeking to promote an evolutionary ecosystem of innovation reminiscent of California’s Silicon Valley. This is the spirit of the FAPESP initiative.

FAPESP already supports seven Engineering Research Centers, in partnership with Peugeot-Citroën, BG/Shell, GlaxoSmithKline (GSK) and Natura in biofuels, natural gas, green chemistry, drug molecules, and human well-being respectively. It recently also signed partnership agreements with Statoil and BG/Shell to establish two research centers, focusing on oil and gas reservoirs with the former and new energy carriers with the latter.

Now FAPESP plans a further string of Advanced Manufacturing Engineering Research Centers, which it will co-fund with private enterprises. It is putting out bids to industry to and consortia of companies interested in signing scientific and technological cooperation agreements to establish the centers have until August 8, 2017, to submit their proposals.

“Advanced manufacturing is vitally important to the competitiveness of industry and its entire value chain,” said FAPESP CEO Carlos Américo Pacheco during the International Machine Tool & Industrial Automation Fair (EXPOMAFE) hosted by ABIMAQ, the Brazilian association of machinery and equipment manufacturers, as well as other industry associations.

As each new Center is established, the sponsors and FAPESP will issue a joint call to select proposals from higher education and research institutions. In this way, benefits will filter straight down to Brazil’s hard-pressed academic research community, currently reeling from a swingeing federal budget cuts at the ministry of science, technology and innovation (now merged with the telecoms ministry) You can read an earlier SFB article about these cuts by clicking here.

Any company or consortium that is selected will sign an agreement to host the Advanced Manufacturing Engineering Research Center. Pacheco said technology parks will be able to help form consortia, as will ABIMAQ’s advanced manufacturing group, which will also be available to host meetings with interested companies.

The activities of each center will be funded for ten years by FAPESP, the selected company or consortium, and participating universities and research institutions. Partner companies will participate in the management of each engineering research center and periodically evaluate its R&D activities jointly with FAPESP.

High stakes.

While the economic slowdown in China certainly delivered a wake-up call to Brazil — which had become increasingly dependent on commodity sales to the world’s leading buyer — the country urgently needs to adapt its whole outlook, warned José Goldemberg, the country’s best-known scientist and a former government minister.

FAPESP's Goldemberg:  time for focused R&D to further national goals

FAPESP’s Goldemberg: time for focused R&D to further national goals

Goldemberg, who is currently President of FAPESP warned: “If Brazil doesn’t participate in this new technological revolution, its industry will rapidly become obsolete. Hence the importance of investing in advanced manufacturing research centers,” he said.

The call for proposals specifies a number of areas on which these research centers will be expected to focus, such as digitization technologies, cyber-physical systems (information and communications technology integrated with mechanical/electronic systems to monitor industrial processes throughout the value chain), and value-added processes such as 3D printing and hybrid manufacturing.

Other key areas of advanced manufacturing to be covered by the centers include robotics, development of sensors and trackers, the Internet of Things (IoT), advanced materials, artificial intelligence, augmented reality, predictive analytics, high-performance computing, and big data.

Carlos Henrique de Brito Cruz, FAPESP’s Scientific Director, underscored the importance of the centers. “FAPESP’s Engineering Research Centers Program permits research collaboration between private enterprise and universities and/or research institutions to carry out cutting-edge research for internationally competitive innovation,” he said. “The long-term nature of these projects, initially ten years, and integration between researchers in private enterprise and visiting researchers in universities or research institutions are drivers of genuinely collaborative research rather than mere service provision, expediting the utilization of results by partner companies and at the same time posing novel challenges in advanced research for the researchers and students involved. Few countries have programs of this kind.”

In announcing the call for proposals at EXPOMAFE, Pacheco emphasized the need to convert investment in science into innovation and cited FAPESP’s efforts in this direction, such as its Innovative Research in Small Business (PIPE) and University-Industry Cooperative Research (PITE), as well as the Engineering Research Centers Program.

FAPESP’s call for proposals to establish Advanced Manufacturing Engineering Research Centers can be read in Portuguese at fapesp.br/10988.

To read a detailed article on this topic by the director of FAPESP’s Communications Department, Graça Mascarenhas, click here.

 

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