When It Comes To Auto Industry 4.0, Separating Hype For Reality

Ron Harbour’s Harbour Report has gained a legendary reputation in the auto plant manufacturing industry. Harbour has been visiting auto plants for nearly 20 years, assessing the organization’s operational productivity and efficiency.

“Most of the manufacturers around the world participate in most of the plants. So I’ve had the chance to see most of the world’s plants, at least once or more,” Harbour tells Corporate Board Member.

Harbour, who is also on a number of public and private boards, has had a chance to see the digital transformation—at least in the auto industry—up close and personal. Harbour will speak on his observations at the Disruptive Tech Summit in Cambridge, MA, June 11 at the Charles Hotel. His panel, “Industry 4.0: How Manufacturing Will Change—and How It Won’t” focuses on how manufacturing will aim to explore the second-order implications of the changes taking place in manufacturing.

Corporate Board Member sat down with Harbour ahead of this keynote to discuss how technology is seeped into the auto manufacturing world, the conversations CEOs/directors need to have on these transformations and more. Below are excerpts from this conversation.

What digital transformation/Industry 4.0 transformations have you seen in your visits at auto manufacturing plants?

There’s been a trend in the last 5-10 years towards integration of more digital technology into the workplace, in every industry, but certainly the automotive industry. It’s led [the transformation] in many ways, both in the product and in the factory. It’s been interesting and I’ve been fascinated to kind of sit in the front row and watch this, because some Industry 4.0 has been thwarted on the industry by many of the companies that will benefit the most from it, which is the technology companies, the companies that build automation, particularly coming out of Germany. So it’s kind of self-serving. I’ll just say that and put that aside.

Nonetheless. I mean, there’s no doubt that every company has to understand it and use it judiciously. And like anything, it’s just human nature. What’s happened to some companies have overdone it. Others are way behind. And then you have many in between.

When I look at the performance of all the plants and the industry we’re in, the high-tech companies are not the best performers. So they’ve used the technology, but in some cases overused it or put it in thinking they were going to get a certain benefit and they didn’t. For example, there’s automated some process to take four people out in the end, ended up with six. Yes, it took out some direct labor hours, but what happens is they end up having a lot more expensive labor to maintain and debug it and keep it running. The companies that are most successful are the ones that integrate both the technology and the people, especially in our industry, which is so labor intensive.

What conversations should CEOs and directors need to have about disruptive technologies to stay relevant, but not overdo it?

In my experience, you get requests for capital when you’re on a board whether it’s for technology, machinery or something else. As a board, you’ve got to evaluate whether or not that technology is worth the investment. I think the conundrum for boards right now is that they aren’t sure how to deal with some of that. On one hand they say, well if we don’t make this decision, I’m going to be viewed as being behind or we’re roadblocks or whatever. But I don’t understand it enough to give the okay, so what do I do? And I think that’s the dilemma that many of the boards are in because boards by nature are mixed with a lot of different expertise. I know the one meeting we had yesterday on one board I’m on, I represent the manufacturing group, but we have other people that are finance people, IT people, HR people. So they don’t all have the same level of knowledge of technology and I think that’s one of the dilemmas.

Come see Ron Harbour at the Disruptive Tech Summit on June 10-11, 2019 in Cambridge, MA. Click image for details.

What are some of the topics and discussions you hope come up at the Disruptive Tech Summit?

For me, I largely work within the automotive industry. Yes, I live in Detroit and have a house there, but I am fortunate to see this industry all over the world and where it’s going. But for this event, I have to step back. I can talk a little bit about the auto industry a little bit, everybody is intrigued by cars. But I can’t go too far on that other than to use it as an example and broaden it for industry in general, in business in general. I have to discuss what are the implications for the kinds of people that are going to be in that audience?

So many of them are like me, they have board experience and are on boards now, but what does that mean? How should they analyze that as a board member differently? What’s one of the kind of questions they should ask most importantly of their management and what are the kinds of things they should look out for along the lines of the questions that you were asking? So that’s where I’m trying to give my thought process in putting this together. And yes, there’s been a foundation of what my experience has been with, with integrating technology and what they call Industry 4.0 in the workplace, but again, what’s the implications of all that for them? How does it affect their decision making?