The National Plan «Industria 4.0»
and key policy issues to govern
the Next Production Revolution
Bruxelles, 6th September2017
Stefano Firpo
Italian Ministry of Economic Development
Director General for Industrial Policy, Competitiveness and SMEs
Relaunching investments
and productivity
2
Next Production Revolution
FORNITORI
CLUSTER DEI FORNITORI
CLUSTER DEGLI IMPIANTI PRODUTTIVI
IMPIANTO PRODUTTIVO DEL FUTURO B
IMPIANTO PRODUTTIVO DEL FUTURO A
3D PRINTING /ADDITIVE MANUFACTURING
SENSORI
NANOTECNOLOGIE /MATERIALI AVANZATI
> Zero errori / dev iazioni> Reattiv ità> Tracciabilità> Prev edibilità
> Eliminazione degli scarti> Mass customization> Rapid prototy ping
> Prodotti a v alore aggiunto intelligenti> Differenziazione tecnica> Connettiv ità
ROBOT
CLOUD COMPUTING
> Sicurezza per l' "internet basedmanufacturing"
> Allungamento del ciclo vita dei prodotti tecnologici
CYBERSECURITY> Gestione della complessità> Creativ ità> Manufacturing collaborativo
> Cy ber Physical Systems (CPS)> Controllo numerico> Full automation> Sistemi totalmente interconnessi> Comunicazione "Machine to machine"
LOGISTICA 4.0
> Catena di fornitura pienamente integrata
> Sistemi interconnessi> Perfetta coordinazione
BIG DATA
SISTEMI DI MANUFACTURING
EVOLUTI
CLIENTI
VEICOLI AUTONOMI
> Vicinanza Cliente - Marketing> Flessibilità> Perfetto incontro tra bisogni del
cliente e efficienza della produzione di massa
> On demand manufacturing
MASSCUSTOMIZATION
INTERNET OF THINGS
> Controllo elettronicodell'oggetto
> Comunicazione internet-oggetto
> Dati in real time> Magazzino ottimizzato> Minori scarti e sprechi
> Real time – Autonomia –Produttiv ità
> Completa trasparenza (contestua-lizzazione, robot collaborativi) sulla reportistica dei dati
> Ottimizzazione dei flussi
> Sicurezza aumentata> Riduzione dei costi
RISORSE DEL FUTURO
EOLICO ALTERNATIVE / NON CONVENZIONALI SOLARE GEOTERMICO
> Energie pulite e rinnov abili ovunque> Stoccaggio di energia> Materiali alternativ i
IMPIANTOPRODUTTIVO 4.0
3
Key enabling technologies for industry 4.0
BIG DATA &
DATA
ANALYTICS
CLOUD COMPUTING
& CYBER SECURITY
SENSOR
SYSTEMS
AND IOT
HUMAN MACHINE
INTERFACE
ARTIFICIAL
INTELLIGENCE
COLLABORATIVE
AUTOMATION
& ROBOTICS
ADDITIVE
MANUFACTURING
NEW MATERIALS
4
Expected benefits within and outside the factory:
smart factory and supply chain integration
Efficiency
Flexibility
Quality and
sustainability
Speed
Higher flexibility: enabling small batches production,
strong variety and customisation, all with the
economies of scale of mass production
Faster time-to-market: product and process “digital
twins” allow faster prototyping and factory layout
design, saving time and costs
Higher productivity: thanks to lower set-up time and
continuous monitoring, errors and downtimes are cut
down
Improved quality and sustainability: scrap reduction
thanks to sensors that allow real-time production
monitoring, smarter resource management, a more
circular and ecological production
New business
models
Higher competitiveness of products thanks to
additional functionalities enabled by Internet of
Things, which open the way for new business models
5
Policy challenges to govern the Next Production
Revolution
Data control,
security, privacy
and interoperability
Including SMEs
for higher
competitiveness
Jobs, skills
empowerment and
training
Intangible assets
and Data
We may see more and more robots but no productivity gains:
diffusion and adoption of new technologies among SMEs is the
big conundrum. How to digitally transform firms which were not
born digital? Tech-transfer issues and infrastructures
Data-driven innovation and know-how are the real drivers: while
production factors dematerialise, it is necessary to codify
know-how to manage the generational transition. Challenge:
taxation and regulation remain pre-digital
A certain regulatory framework on data ownership and
standards, to ensure a seamless integration and secure
interoperability: new barriers to trade/entry and data related
competition issues when data control rather than size matters
Will automation and labour-saving innovations destroy jobs?
Adjustment process is critical: job demand and supply may
mismatch. Skills empowerment and retraining are key: STEM
competencies, vocational education, on-the-job training and
LLL: workplaces as evolving learning places
6
Industry 4.0: growth issues at stake in Italy
Stronger skills
Investments
Connectivity
Capital
allocation and
productivity
Decreasing quantity of fixed industrial investments in the last
15 years: increasing obsolescence in installed equipment
Low quality of investment allocation: resources going to low-
performing firms, misallocation within firms rather than
sectors, rent seeking, and poor bank creditors’ discipline
Poor skills in STEM subjects: only 14 out 1,000 graduated in
STEM and low appeal of vocational education: >200,000
students do not go to university nor to tertiary professional
education, poor re-placement services
70% of companies do not have adequate connectivity (>30
Mbps) and are located in grey/white areas (where providers
experience some degree of market failure)
Digital
Competitiveness
Italy ranks 25th out of 28 EU member States in the Digital
Economy and Society Scoreboard: only 6.5% of SMEs are
selling online. Well positioned in cloud computing, but…
7
Key policy objective: productivity
Source: OECD
80
85
90
95
100
105
110
115
120
(1998=100)
Total factor productivity performance
8
Trends in investments
Source: Eurostat
0
100
200
300
400
500
600
700
Italy Germany Spain UK France
2005-08 2009-11 2012-14 2015-16
Gross fixed capital formation (€ Bn)
9
Capital misallocation in Italy
Evolution of capital misallocation
vs labor misallocation
TFP can increase
by 20% with
better capital
allocation
10
Bank Loans and productivity: a comparison
Elasticity of bank loans* issued at time t with
respect to various measures of productivity at t+1
Italy France Germany
t + 1 t + 1 t + 1
MRPK 0.1%*** 7.6%*** 5.1%***
TFPR 2.4%*** 14.4%*** 6.1%***
Labor
productivity 3.4%*** 10.3%*** 5.7%***
Real value added 1.2% 22.5%*** 8.8%***
* This measure gives an idea of how credit allocated at time t by banks correlates
with various measures of firms’ activities after one year.
The period of reference is 2000-2013.
11
Stylised facts on skills in Italy
Vocational training
NEET
Core competencies
Early school leaving
Over 2.5 M NEETs, amounting to 27% of all people
between 15 and 29 y.o. (OECD average: 14%)
Among the worst rates in Europe. 15% of youths
between 18 and 24 y.o. drop out education and
training without a degree
Just 7,000 students in ITS (Germany: over 150,000)
Only 3.4% of youths between 16 and 29 y.o are
employed as apprentices (Germany: over 15%)
Language and maths skills among the lowest in OECD
(PIAAC survey 2013)
Low level of STEM and digital skills
Skill use
Unlike any other OECD country, in Italy there is no
evidence of a positive relationship between skill use
and firm size
12
«Industria 4.0»: policy approach
Italian industrial sector peculiarities
• Few large industrial and ICT private players able to lead the Italian manufacturing transformation
• Limited number of industry champions able to coordinate the evolution/integration of value chains
• Industrial sector largely based on SMEs where productivity gains are more needed
• High quality of research but fragmented network of research/tech-transfer centers
• Strong manufacturing know-how and Made in Italy quality
Government guidelines
• Operate in a technological and
sectoral neutrality logic
• Avoid “call for tender” logic;
implement fiscal measures and
horizontal actions
• Operate on enabling factors:
investments, skills, infrastructires
• Steer existing instruments to promote
technological leap and productivity
• Coordinate key stakeholders without
acting as a controller or decision-
maker
13
"Industria 4.0" national plan 2017-2020 Strategic guidelines
Skills Enabling
Infrastructures
• Generate interest on I4.0 opportunities and create a public-private governance
Governance and awareness
Innovative
investments
Key guidelines
Public instruments
at support
Complementary guidelines
• Stimulate private investments in new equipment and I4.0 transformation
• Increase private expenditure in R&D&I
• Patent Box to spur investment in intangible assets
• Open alternative forms of finance (non-bank lending, VC and PE) for better allocation of capital to innovative firms
• Spread the I4.0 culture
through "Scuola
Digitale"1 and
"Alternanza Scuola
Lavoro”1 programmes
• Develop I4.0 skills in
academic paths and
vocational education:
"Istituti Tecnici Superiori”2
• Financing research,
upscaling Clusters and
doctoral studies
• Create Competence
Centers and a network of
Digital Innovation Hubs
• National Skill Strategy
with OECD
• Ensure adequate network infrastructure – Ultra Broadband Plan with a “Fiber to the factory” approach that prioritises industrial areas
• Cooperate in the definition of IoT open standards and interoperability criteria
• Attract FDI and support large I4.0 investments
• Reinforce corporate finance, improve savings allocation towards productive investments
• Strengthen the productivity-salary taxation exchange through lower taxation on “productivity benefits”, negotiated in decentralised bargaining
1. Work-related learning; 2. Italian professional institutes
14
"Industria 4.0" national plan: 18 €B to support
industrial transformation 2017-2020 targets
+10 €B private investments
increase from 80 to 90 €B
in ‘17-’18
+11.3 €B
R&D private expenditure
increase over the '17-'20
period
+2.6 €B
volume of early stage
investments mobilized
over the '17-'20 period
Patent Box to sustain investments in
intangible assets
100% of Italian companies with
access to 30 Mbps
connectivity within 2020
50% of Italian companies with
access to 100 Mbps
connectivity within 2020
6 consortia on IoT standards, with the
involvement of Italian
players
Fiber to the
factory
approach
200,000 academic students
qualified on I4.0 topics
+100% students attending "Istituti
Tecnici Superiori" on I4.0
topics
Creation of
Competence
Center and DIH focused on solution-driven
tech-transfer, training and
collaborative R&D
National Skill
Strategy
+1 €B Development Contracts
focused on large I4.0
investments
+0.1 €B Strong investment on
digital sales chains
(Made in Italy plan)
Strengthening of
productivity-salary
taxation exchange:
increments in RAL and
higher amount eligible for
incentive
Key guidelines
Skills Enabling
infrastructures
Innovative
investments
Public instruments
at support
Complementary guidelines
15
Hyper-Depreciation and
Super-Depreciation schemes
Innovative investments “Industria 4.0” advantages
Hyper-Depreciation
• Increase of rate for I4.0 investments
2016
140%
Super-Depreciation
• 1 year extension of the Super-Depreciation
with a fixed rate (140%)
• extension to immaterial assets like software,
IT systems, digital platforms
2017
250%
Deadline
• In order to guarantee a high appeal of Hyper
and Super-Depreciation schemes, item
delivery date is prolonged to 30/06/18;
however the order and a >20% deposit have
to be placed within 31/12/17
16
Tax credit for research, development
and innovation (R&D&I) expenditures
Research and development and
innovation expenditure – '17 example
Average
expenditure
Expenditure
R&D
2017
Expenditure
R&D
2014
Expenditure
R&D
2013
Expenditure
R&D
2012
25% 50%
50% 50%
2016 2017
5 €M 20 €M
Tax credit
calculation
Credit for
intramural
expenditure
Credit for
extramural
expenditure
Maximum credit
per taxpayer
Incremental R&D
based on the
2012-14 fixed
average
R&D tax credit
regime valid until
2020
R&D tax credit
contribution
17
Italy’s Patent Box
Optional tax regime: a deduction by 50% of taxable IRES
income that demonstrably derives from direct or indirect use
(as licensee) of IP, such as: industrial models, patents,
formulas, software protected by copyright, know-how.
It transposes into law OECD guidelines on harmful tax
practises, being only applicable to the production,
development and maintenance activities of IP that are based
on real research and development («nexus approach»).
It is a permanent fiscal instrument to reward firms that
base their value production on knowledge and IP.
It can be combined with the R&D Tax Credit.
In case of use of internally-developed IP, a ruling
agreement with the Italian Revenue Agency is required.
18
Capital markets to support «Industria 4.0»
Initiatives
130
534
7801,000
0
500
€M ~1000
Italy
2020
Italy
2015
Spain
2015
Germany
2015
• PIR – Elimination of capital gain
tax for medium-long term
investments in unlisted
companies
• CDP programmes:
“AccelerateIT", and ITATech
aimed at acceleration of hi-tech
ideas and patents
• New tax regulations on carried
interest to attract foreign VC and
PE funds
• Tax deductions up to 30%, for
investments up to 1 €M in
innovative startups and SMEs
• «Sponsor companies» may
now buy and deduce from
taxable income fiscal losses of
participated startups in their first
four years
Nati
on
al
savin
gs
E
arl
y s
tag
e f
ocu
s
• In the last 5 years AuM almost doubled
in Italy (now amounting to almost €2
trillion)
• No more than 2% of them are invested in
stocks representative of the Italian real
economy
• The national industry of savings
management has weakened: nowadays
Italy is a net exporter of savings
19
Digital Innovation Hubs
and I4.0 Competence Centers
Digital Innovation Hubs
Features:
• Point of contact and
information for companies
on I4.0
• Selected DIH located at
Confindustria's and
R.E.TE. Imprese Italia's
branches
Mission:
• Awareness creation on
I4.0 opportunities
• Digital maturity assesment
• Support in innovative
investment planning
• Orientation to
Competence Centers and
I4.0 network
• Support in accessing
public and private
financing
solutions/investors
• Mentoring services
Gov. and
Public
Institutions
Startups
Universities
Clusters Associations
Player
industriali
SMEs
Incubators
Investors
I4.0 Competence Center
Features:
• Few and selected national
Competence Centers, putting
together the best practices
• Strong involvement of leading
Italian universities and private
players (PPPs)
• Ad hoc governance and adequate
managerial skills
Mission:
• Live demos on new technologies
and access to I4.0 best practices
• Technical advisory on I4.0 for
SMEs
• Launch and acceleration of
technological development and
innovative projects with high TRL
• Trial support and "on-site"
development of new I4.0
technologies
• On-site I4.0 advanced training
• Coordination with European CCs
Research
Centers
CC
CC CC
20
Italy : the 2nd most attractive country
for digital investment (Digital Tax Index 2017)
Country
(Region)
Effective tax rate
2017 Ranking
Ireland -10.32% 1
Italy -8.84% 2
Hungary -6.85% 3
… … …
Switzerland (Zurich) 8.39% 11
United Kingdom 11.11% 16
France 12.39% 18
Spain 12.85% 20
Netherlands 13.61% 22
Germany 22.81% 31
USA (California) 22.82% 32
Thank you for your attention!
Bruxelles, 6th September 2017
Stefano Firpo
Italian Ministry of Economic Development
Director General for Industrial Policy, Competitiveness and SMEs