Industrialisation, digitisation, the Internet of Things, Industry 4.0 and the Fourth Industrial Revolution – these buzzwords are now common parlance in industrial, manufacturing and even economics and government circles. Technology is reinventing the way we work, how we manufacture goods and how we deliver services.
Yet data show that despite proclamations of increased efficiencies and cost savings, most economies today are less productive than they were five or even 10 years ago.
This notion of productiveness – or unproductiveness – is important. Productivity shows us how much we gain in GDP for every investment that we make in capital and labour, which is why the Organisation for Economic Co-operation and Development (OECD) calls it the main driver of economic output and material living standards. Despite continued investment and rollout of new technologies designed to drive efficiency and productivity, all 35 member states of the OECD, including the UAE, are experiencing a productivity slump. There is a mismatch between the potential of technologies and the impact of technologies, and there has never been a more urgent need to close this gap.
While all companies, particularly those in manufacturing, should embrace digitisation and the promise of the Fourth Industrial Revolution, new technology cannot simply be shoehorned into the business. To be effective, technological innovation must be integrated into the business model.
As the MIT economist David Autor says: “You can have all the computing power you want in your Tesla. It doesn’t solve the problem that the batteries are expensive, heavy and have low energy density.” In the same vein, our automated processes could have all the computing power in the world, but that wouldn’t have made our business any less energy-intensive or the energy any less costly. For that we had to undertake research projects in our smelters to increase the productivity of our own operations.
By closing these bottlenecks ourselves, we have converted the gains of digital technologies into meaningful changes in manufacturing.
EGA has been preparing for this next phase of industry for 25 years. Since 1990, we have invested in research and development to continually improve our core aluminium smelting process. We are focused on maximising efficiencies in this energy-intensive process, which in turn cuts costs and reduces the environmental impact of smelting.
Energy consumed during our smelting process is now among the lowest in the industry, but it has taken several iterations and many decades to arrive where we are today. We recently completed the 10th generation of our smelting technology, the result of more than 16 months of work by our 40-strong team of researchers. Continuous improvements to our technologies have been fundamental to our commercial success and our environmental performance. The previous generation, DX+ Ultra, more than doubled the productivity of our original D18 technology from 1992, and made significant contributions to profits last year.
From our experience, we believe that if more companies look at digitisation as part of the business model rather than a technology bolt-on, more bottlenecks will close and productivity will increase. The range of possibilities is wide, from developing inexpensive energy storage for electric vehicles to nanotechnology for solar energy applications. Although the initial investments of money and time may seem significant, business will expand and advance if we impart innovative thinking to these underlying technologies.
Physical industries such as manufacturing constitute 11 per cent of the UAE’s national economy, but home-grown investments in technology would allow us to expand non-oil growth and surpass our expectations of productivity. Last year, EGA became the first UAE industrial company to licence its own large-scale industrial technology internationally, and that is an achievement that not only generates revenue for the company but also for the country.
Naturally, no one company can ready an entire industry for industrial revolution or drive the national economy forward, but if we invest in technologies together, I have no doubt that we will make unprecedented gains in productivity and build a legacy that will last for generations.
Abdulla Kalban is the managing director and chief executive of Emirates Global Aluminium.
business@thenational.ae
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