Manufacturing in the GCC can power economic growth

Sector is now Dubai’s third largest, and the emirate’s Department of Economic Development expects around US$19 million to be spent on R&D

Strata facilities in Al Ain. Pawan Singh / The National

As Arabian Gulf nations march inexorably forward towards economic diversification, one sector is receiving particular attention.

Manufacturing is a growth-focus for several GCC governments because of its potential to grow non-oil GDP and steer countries toward a future free of petrochemical dependence.

The region has a strong tradition in heavy, light and high-tech industry. Steel, chemicals, engineering, ship building, aerospace, plastics, electrical goods, clothing, food-processing, furniture, microprocessors, semiconductors and fibre optics all make an appearance on the GCC’s national resumés.

And as oil prices remain below fiscal break-even levels, governments are nurturing these abilities through long-term growth commitments. The manufacturing sector is now Dubai’s third largest, and the emirate’s Department of Economic Development (DED) expects around US$19 million to be spent on R&D by manufacturing companies, as the sector expands from a current value of $11.2 billion to $16.1bn by 2030.

Of course, the region’s Economic Visions predate the current oil-price dilemma. What we have seen in the Gulf, over the past decade, is humanity’s Fourth Industrial Revolution in full swing. Technologies such as artificial intelligence, advanced analytics, robotics and the Internet of Things (IoT) are blurring the lines between machinery and software. Manufacturing solutions that empower employees, transform business models and optimise operations are delivered by the deft merger of the intelligent cloud and the intelligent edge. Among the region’s manufacturing players, everything from production lines to service delivery is being dialled up by digital transformation.

Every previous industrial revolution has had its winners and losers, and I believe our current epoch shift will prove to be no different. But let me make one thing absolutely clear – success or failure will not be determined by some arbitrary natural selection but by our decisions – principally concerning our technology mix.

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Winners will find ways to maintain quality, increase efficiency, lower costs and optimise operations. Losers will not. Commerce-platform vendors – including Microsoft, with Dynamics 365 – have taken great care in integrating IoT into their products, because they know sensor-based analytics is the key to delivering on all such goals. Actionable insights emerge from a marriage of the physical and the digital. Sensors feed the intelligent cloud through the commerce platform and the cloud responds with recommendations for inexpensive, low-risk changes to processes and business models. Weekly, or even daily, optimisation is possible where, before the revolution, months of expensive research and bench-testing may have been necessary.

This is not merely an acceleration of innovation; digital transformation makes innovation commonplace – a daily occurrence.

In addition, IoT can collaborate with the intelligent cloud to streamline asset management, transform products and change the way customers are served. Imagine on-site sensors installed at a customer’s place of business. Minor support can be remotely administered. And through cloud-based communications tools, senior technicians can monitor and guide junior staff on multiple site visits when they become necessary. All of this cuts down dramatically on support costs, travel and effort, and frees up resources for other, potentially more productive, uses.

In yet another indication of how seriously regional governments regard manufacturing, Dubai Exports will host the Future Manufacturing & Trade Summit, in November. The event has a heavy focus on the latest technologies that impact the sector, including the IoT. The summit, and others like it, often showcase the manufacturing companies across the Gulf region that are making shrewd use of IoT solutions to gain competitive advantage. Firms are using technology for tracking land, sea and air fleets, and shipments; for analysing customer behaviour to optimise service; and for monitoring products, premises and supply chains, to reduce wasteful practices. Addressing inefficiencies will be a significant part of coming out on top in the Fourth Industrial Revolution.

PwC’s Manufacturing Barometer report of 2015 succinctly identified the concerns of manufacturing firms worldwide, in the digital era. Perceived barriers to growth included regulatory pressures, skills gaps, decreasing profitability, oil prices and capital constraints. These global worries are strikingly similar to those of the GCC. But for the manufacturing company pursuing the right digital transformation programme, these pain points are effectively addressed.

Digital transformation engages customers and transforms products, leading to boosted profitability; it empowers employees, which means attracting and keeping the right talent; and it optimises operations, taking the sting out of rising costs and regulatory obligations.

For regional manufacturers, the path is clear. Prohibitively pricey information and communications technology experiments are a thing of the past. Astute technology investment can be the difference between being a leader or a follower; a winner or a loser; a survivor or a victim.

Karim Talhouk is the Dynamics 365 Lead for Microsoft Gulf