“Industry 4.0”: A key for surviving the COVID-19 Pandemic

Just when the Industry 4.0 was creating a buzz in the aluminium industry, inspiring smelters and plants to integrate digitalization in their operations management, the COVID-19, also known as the novel coronavirus, made its emergence on the earth causing a pandemic and slowing down lives and livelihoods. The virus has caused radical shifts in workflows all across the globe as millions are practising social distancing and/or complying with self-quarantine recommendations.  But while downsizing many industries, the pandemic’s dramatic appearance is believed to have accelerated numerous trends on the other hand, such as “Industry 4.0”.

The term Industry 4.0 is used to describe the extensive use of digitalisation in an industrial environment. It covers the current systems and technologies for automation, artificial-intelligence and data exchange used in the manufacturing and industrial sector. It promotes a concept of factories in which machines are augmented with wireless connectivity, sensors, and artificial intelligence and connected to a system that is able to make decision on its own.

In other words, Industry 4.0 is the current transformation of traditional manufacturing and industrial practices to the latest smart technology, focusing on the use of a large-scale machine to machine communication (M2M) to enable data transfer and management more efficiently and effectively. It increases automation and improves communication and self-monitoring, which are believed to help businesses achieve higher productivity at a lesser time.

How can Industry 4.0 help businesses mitigate the COVID-19 impacts?

The COVID-19 pandemic has forced companies around the world to adjust their strategies to survive in the so-called “new normal.” While many businesses have experienced plunges in demand and growth, some are even struggling for survival. At this juncture, companies are taking in-depth looks at how Industry 4.0 tech could help them return to productive operations.

Accelerate the virtual workplace: By adopting the virtual workplace faster and using an integration platform to meld data from these systems, manufacturers can create granular, real-time views of their business and operations from anywhere. So, data flowing from supply chains will enable partners to identify trends as they emerge. This, in turn, will lead to quicker, better decisions about where to redeploy raw materials, shipments and personnel — such as scaling back plant operations in a virus hot zone while ramping them up in a recovering area.

Deploy more IoT-enabled sensors and devices: Internet of Things (IoT) adoption has been turning every device, and even components within a device, into a data creator over the past few years. Thorough application of sensor technology on the factory floor can eliminate blind spots, giving management or visualization systems a holistic view of operations that can be operated and monitored remotely. When the data from these sensors is integrated with business and engineering systems, then analyzed, these management systems can also predict an assembly line failure before it happens.

Use VR/AR tools: In order to operate at full production capacity while adhering to new social-distancing norms (which will likely drive a reduction in shop-floor headcount), manufacturers will have to speed their adoption of virtual reality and augmented reality (VR/AR). For example, consider a scenario in which only a third of the workforce is managing the factory floor, with the remaining two-thirds working remotely. In such a scenario, if drilling or milling equipment requires servicing or maintenance in the factory, the specialist on duty that day may use an AR headset or hologram to perform the work with virtual support from remote specialists.

Remote video monitoring: Specialists at home can be alerted via video analytics and predictive IoT to review a process station and help diagnose issues or guide on-site repairs. The technology also could be used for remote visual inspections. The high capacity, speed and low latency of new 5G wireless networks will make it possible to stream video data to a local cloud endpoint for quick analysis.

Effect of COVID-19 on the Global Aluminium Industry

With the COVID-19 outbreak having swept across the world, the aluminium industry has been witnessing some of the adverse effects. When not even a month or two went by this year, the aluminium industry started facing a brand new challenge in the form of COVID19. The London Metal Exchange spot price for aluminium, which was already stressed during the pre-covid time, fell further low below $1440 per tonne in early May 2020.

The global aluminium demand in the end-user sector, especially in automotive and aerospace, started declining significantly, indicating a possible glut in inventory in the near-term. Hydro, in its Q2 results of 2020, noted that the global primary aluminium consumption dwindled by 9% over the year due to the coronavirus pandemic. The world consumption stood at 15.482 million tonnes in Q2 as compared to 17.01 million tonnes in Q2 2019. Hydro also warned a bleak demand in the rest of 2020, leading to a significant primary aluminium surplus. External sources are estimating a surplus of between 3 million tonnes and 4.7 million tonnes, with both China and the rest of the world in surplus.

For the entire year of 2020-21, the aluminium production is estimated to hover between 65 million tonnes (approx.) and 67 million tonnes (approx.), in contrast to the consumption ranging between 60 million tonnes and 62 million tonnes (approx.).

Owing to this downtrend demand for the metal, Japanese aluminium buyers agreed to pay $79 per tonne of premium to a global producer for July to September shipments, the lowest since the December quarter in 2016. Japan is Asia’s largest aluminium importer. The premium it agrees to pay each quarter for primary aluminium shipments over the London Metal Exchange (LME) benchmark cash price sets the pricing tone for the region.

A source at an aluminium producer said the coronavirus pandemic took a toll on Japan’s aluminium industry, especially for use in automobiles. This, as a result, prompted buyers to seek lower premiums.

Chalco’s aluminium sales in the first quarter of 2020 stood down by 9.5% from 950,000 tonnes in a year earlier to 860,000 tonnes, due to lower demand for the coronavirus outbreak, according to a datasheet for analysts reviewed by Reuters. The output of aluminium stood at 950,000 tonnes, unchanged from last year as smelters kept rates high during the epidemic, lifting inventories. 

Hindalco, as a measure to minimise its inventory build-up, is exporting more than 80% of the total output, mainly to countries like Korea, the USA, Malaysia, Brazil, and Japan. The demand from the Indian domestic market was down by 6% YoY to 3.72 million tonnes in FY20 and 11% in Q4.

Why Industry 4.0 in Aluminium Industry?

As global aluminium producers are currently facing numerous challenges due to volatile economy caused by the COVID-19 outbreak, environmental concerns, and stricter safety and carbon emission regulations, the key for improving efficiency and productivity of a smelter lies in the intelligent use of data and information available within the smelter. This will improve cost, quality and customer satisfaction while offering better protection against the external factors.  So, introducing digital technologies and other Industry 4.0 elements in a plant can be considered a need of an hour now to enhance productivity with better control over production process and customer reach out. This, at the same time, will provide better safety and environmental sustainability.