Business Korea met with Lee Gyu-bong, the Secretary of the Smart Factory Division at the Ministry of Trade, Industry & Energy. In charge of designing policies relating to smart factories, he is a leading figure in Korean government policy on smart factories. During the interview, we discussed Innovation in Manufacturing 3.0, the Korean version of Industry 4.0, and the challenges surrounding creating a new paradigm of manufacturing.
Although Korea is recognized as a manufacturing powerhouse, recently the country ranked 17th out of 24 OECD countries, and its export industries have suffered a drastic decline in productivity and efficiency. Lately, how do you view the international competitiveness of the Korean manufacturing industry?
There is a sense of crisis regarding the future of Korean manufacturing in the policymaking community these days. Export market conditions have been exacerbated due to the weakening of the yen, aging labor market, and structural weakness of the Korean corporations. In seeking to secure sustainable growth in manufacturing, the government decided that addressing fundamentals and structural weaknesses in Korean manufacturing is most critical.
The current government introduced the Innovation in Manufacturing 3.0 initiative in June 2015, intended to disseminate smart factories. How does the Innovation in Manufacturing 3.0 differ from foreign equivalents in Germany, the U.S., and China?
The Innovation in Manufacturing 3.0 envisions fusing ICT into the entire manufacturing process, which the government expects to enable customization and optimization of smart factories and enhance manufacturing industry’s competitiveness. To this end, the government plans to invest 200 billion won [US$172 million] annually, and build 1,500 smart factories by 2020, which amounts to 1 trillion won [US$861 million] in investment and the building of 10,000 smart factories by 2020.
The main difference between the Innovation in Manufacturing 3.0 and foreign equivalents developed in Germany and the U.S. is that the former prioritizes the technological development and standardization of indigenous technologies, whereas the Korean government’s Innovation in Manufacturing 3.0 stresses government provision of support for local small and medium enterprises (SMEs) with a view to disseminating smart factory technologies among local SMEs.
Moreover, already in possession of highly advanced manufacturing technologies, the U.S. and German governments’ strategies prioritize building the technologically most sophisticated smart factories, whereas Korea’s Innovation in Manufacturing 3.0 follows an incremental or phase-by-phase approach.
Under the Innovation in Manufacturing 3.0 imitative, the government identified four areas for special attention: platforms, applications, devices and networks, and interoperability and security. Please tell us about the progress of each sector that has been made so far and future road maps.
Under Innovation in Manufacturing 3.0, the government has identified two broad goals to achieve: one is technological advancement and the other is the dissemination of smart factory technologies. It also has both long-term and short-term plans. For a short term plan, the government looks for the immediate application of software and hardware. For a long-term plan, the government pursues technological sophistication. Laying out road maps falls to the latter. In fact, in September 2015, the government launched road maps for 6 areas for R&D projects. These include flexible design technology; technology to sort out defective products; software-integrated operating techniques; an open IoT platform; smart sensor, data collecting and data processing technologies; and industrial standards. Starting in 2016, newly developed technologies will be applied in the field. For a long-term technological plan, the government will take a phase-by-phase approach, in accordance with the roadmap set out in September this year.
Speaking of progress made in the four target areas, it is noteworthy that the government joins hands with Fraunhofer Institute and Siemens in Germany and the CWC institute in the U.S. to work towards the standardization of IoT platforms. As for the application area, the government is engaged in developing customized manufacturing and quality control technologies. After on-site applications, companies will be able to disseminate new technologies.
In Networks and device and interoperability and security, the government is currently working on the synchronization of the operation of equipment powered by various standards.
In addition, the government promotes flexible production and a variety both in equipment and applications. For R&D projects, the government also identifies 8 target areas including IoT, the cloud, big data, 3D printing, smart sensors, energy-saving technologies, CPS, and holograms.
In order to promote the export of indigenous smart factory technologies, I believe that Korean smart factories will need standardized platforms. Are there any local collaboration projects at the B2B level or international projects at the government level that are currently underway to this end? Or, does the current government have any future plans in relation to standardization efforts?
Government officials are actively participating in international standardization efforts at IEC and ISO. In addition, given that countries like the U.S., Germany, and Japan dominate international standardization processes, at the government level officials seek to secure international opportunities via diplomatic events or economic cooperation with governments in these countries.
At the non-governmental level, experts from the domestic private sector formed an organization named the Smart Factory Standard Research Council to effectively respond to international activities and push to standardize locally developed standards.
The government plans to run a Smart Factory Standardization Forum to respond more systematically to international standardization activities and ensure compatibility with established standards. It is assumed that the forum will also help the government to make a more informed decision when planning future road maps.
In order to facilitate exporting and disseminating indigenous smart factory technologies, I believe that studying successful cases both from home and abroad is critical. Also, identifying a testbed suite for particular conditions in Korea is equally critical. Tell us about the government’s plans in this regard.
The government plans to set up an open-platform-based test bed that complies with international standards. By setting up a so-called “mother factory,” the government plans to ensure interoperability between locally developed solutions and equipment. A mother factory refers to a test bed where one can verify interoperability and test product performances that are difficult to achieve in real-life situations.
At the mother factory, the entire production process is powered by IoT and Cyber-Physical Systems (CPS). Moreover, at the mother factory, one can test production processes, the performance of newly developed software and hardware, and their interoperability sector by sector. By closely working with the German and U.S. equivalents of mother factories, the presence of the mother factory will help local manufacturers to comply with international standards and catch up with smart factories in advanced economies.
The discrepancy in wealth and technological development between large companies and their secondary and tertiary subcontractors is large in Korea. Please tell us about government strategy to bring innovation to SMEs.
Generally speaking, while a majority of large corporations have achieved the “intermediate” level of technological sophistication, most SMEs, and especially large corporations’ secondary and tertiary sub-contractors in Korea are in their infancy. In particular, a majority of SMEs that engage in casting, tooling, welding, plastic working, heat treatment, and surface treatment are viewed as even below the basic level.
Given the much-needed initial investment for SMEs with low technological competencies and low budgets, the current government policy put special emphasis on the growth of the latter and dissemination of wealth, going beyond a mere focus on the enhanced automization of manufacturing.
A special smart factory task force is being organized under the Ministry of Commerce, Industry and Energy to handle investments both from the public and private sector. The center for creative innovation, on the other hand, assesses the qualifications of SMEs and elects potential candidates who will receive government funds. While the government works towards widespread adoption of newly developed smart factory technologies, especially by providing funds, it doesn’t just give them away.
For instance, the smart factory special task force and the center for creative innovation assess the qualifications of the likely SME beneficiaries of the public and private funds collected for the government smart factory project. Dubbed the “Voluntary Participation Principle,” Innovation in Manufacturing 3.0 looks for genuine desires from the potential SME beneficiaries to upgrade their factories and thus demand 50 percent of the investment. Generally, the government provides 50 million won [US$43,115] for each elected SME and expects another 50 million won from the respective SME to contribute. Those who provide extra credentials, including certificates for specialized companies, can receive extra funds from the government. For instance, SaeHan Heat Treatment Company received 100 million won [US$86,230] for its exceptional credentials, and the company contributed 45 million won [US$38,780] for its part.