The next industrial revolution: do more with less

By Catherine
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Written by Catherine Bolgar*

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Since the Industrial Revolution in the 18th and 19th centuries, we keep producing more, while working less. The digital age speeded up productivity even more. The next industrial revolution is likely to focus not just on doing more faster but also with fewer resources.

We have the same potential for a 10- to 15-fold increase in productivity that we saw in the Industrial Revolution,” says Stefan Heck, consulting professor at Stanford University and co-author of the book, “Resource Revolution: How to Capture the Biggest Business Opportunity in a Century.” In the Industrial Revolution, “it was labor productivity that improved. Now we can do that with resources. We have been improving in the past, but modestly—less than 1% for water to 1.5% for gas.”

Global population grew fourfold during the 20th century, while the volume of material extracted or harvested rose eightfold, according to “Sustainable Materials Management: Making Better Use of Resources,” a book by the Organization for Economic Cooperation and Development.

The approximately 2.5 billion people in emerging markets poised to join the middle class by 2030 are likely to increase consumption of everything from food to water to energy.

Doomsday predictions that we’ll run out of oil or other resources aren’t likely because technology keeps presenting new ways to access what we need. However, “we’ve already recovered the best resources,” Dr. Heck says. Those we haven’t yet tapped are “more expensive to recover—they’re deeper, farther offshore and lower quality.”

To meet global demand forecasts for 2030, we would need to boost gross domestic product per metric ton of materials by 1.3% a year, food yields per hectare by 1.5%, GDP per British thermal unit of energy 3.2% and GDP per cubic meter of water by 3.7%, he says.

Sir John Beddington, chief scientific adviser to the British government, made a similar forecast, saying that by 2030, the world will need 50% more food and energy and 30% more water to supply a population that’s growing by six million people per month.

Such substantial productivity increases can be achieved by “combining information technology, nanoscale materials science and biology with industrial technology,” Dr. Heck says. “The benefit is, if you have that level of productivity shift, there’s billions of wealth to be created.”

Dr. Heck lists five levers to produce the resource revolution:

  1. Reduce waste.
  2. Substitute with something more efficient. For example, auto makers are increasingly using lightweight composite materials or aluminum rather than steel to reduce fuel consumption. A switch from a gasoline-powered vehicle—only 30% efficient—to an electric vehicle—96% to 98% efficient—requires less energy. Plant-derived proteins can substitute for resource-intensive animal proteins, at least some of the time. “There are multiple wins—environmental benefits, cost benefits, consumer benefits, health benefits,” Dr. Heck says.
  3. Optimize, using sensors or controls to improve efficiency. Dr. Heck describes a steel plant that upgraded with sensors and robots. Workers who previously had to wear protective gear now manipulate the steel remotely from the safety of a control room. The plant cut energy use 20%-25% and increased output. Another example is using GPS and software to optimize delivery routes, saving time and fuel.
  4. Virtualize, turning physical goods into services or moving online. The number of miles driven, driver’s licenses issued and fuel used in the U.S. peaked in 2006, before the recession. That’s in part because people have shifted to online shopping and banking—“when you multiply fewer trips by the total population, you get significant savings,” Dr. Heck says. At the same time, banks, for example, save by not having to operate as many branches.
  5. Recycle, reuse and refurbish. A number of companies are taking old products, removing the parts that are still good to reprocess them and put into new products. “That changes the equation dramatically,” Dr. Heck says. “We had an economy where most products were used once and ended in a landfill.”

Mobile phones used to be used once and thrown away, but a number of services have sprung up to take back your old phone when you buy a new one, and to sell still-working phones in developing countries or to disassemble broken phones to recuperate materials. “There’s 100 times more gold per weight in phones than in a gold mine in Africa,” Dr. Heck says.

Lead-acid batteries are collected for reprocessing the lead, which constitutes the lion’s share of the cost of a new battery. By creating a closed loop for the lead, “there’s both an economic and a huge environmental benefit. If you look at what they’re doing, it’s a lead rental business,” he says.

Companies that profit from product sales need new business models to give them incentives to make their products more durable. “If cars are shared, then you’re making money on the use of the cars, not on the sales,” he says.

As waste is wrung from the industrial system, “things become cheaper, and we can have the same level of service or quality of life with fewer resources,” Dr. Heck says. “We would spend less, and from an environmental point of view have an economy that’s still delivering growing GDP but with far less energy.”

*For more from Catherine, contributors from the Economist Intelligence Unit along with industry experts, join The Future Realities discussion.

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3 responses to “The next industrial revolution: do more with less”

  1. Roger king says:

    Great article and share. The industrial revolution has taken new ways for improvements in society and has already implemented things for refining the system.

  2. Paul Reeves says:

    I have several points on this post and will try to keep them short (and have failed)- essentially it concerns the Jevons paradox

    i) A general point that everyone seems to have to talk about the ‘next Industrial revolution’; a few years back it was Additive Manufacturing, this year the Internet of things. A more interesting discussion may be ‘Why do we keep looking for the Next Big Thing? [NBT]’. A starting point may be that in the ‘Developed world‘ productivity overall and growth especially is extremely low compared to the historical average. Related to the productivity discussion of this post – it is relatively easy to be more labour productive in manufacturing than services. It seems to me that looking for The NBT lies out of desperation of governments and existing big business. Maybe they should work out how to make Services more productive efficient. I have no answers on that.

    ii) On the core point of the post –I’ve not read Dr Heck’s book yet – but it does appear to be a more US, business friendly take on the Circular Economy – going back to the Reekman EU report of 1976 – , “The Potential for Substituting Manpower for Energy” – which started the trend for waste reduction ‘ doing more with less’, systems thinking biomimicry, Cradle to Cradle. Starting in Germany this has more recently become fashionable in the UK and is fully supported by the EC. Is he merely rebranding this for the US? Heck is hardly new then on his points 1 and 5 (Reduce Waste, Recycle, reuse and refurbish). He will have more of a problem with this in the states where the mantra of Landfill (at least siting it is less of an issue) will take less hold. [ I would also argue that Industrial sized level of landfill processing (or what goes into land fill is probably both labour productive and resource productive – without the moralizing gloss – in the UK we having saying ‘where there’s muck there’s Brass (Cash)’

    iii) His other three points, Substitution, Optimise and Virtualize – are largely happening to a degree anyway– and I have nothing against efficiency and removal of waste (labour and mataerial) from industrial processes but the Market whilst not perfect if it is in a dynamic growth form (which it isn’t at the moment – which is the Fundamental issue) is pretty good at driving that – but there are also several issues.

    a. First it looks as if he is just adding a ‘New future’ technology oriented gloss on old ideas of predictions of resources running out together with out of control populations using up all of the resources (which we’ve had since the 60s and before that Thomas Malthus)- all of those old predictions being incorrect.

    b. Secondly – if his ultimate aim it to use less energy – then that will fail – just in reference to the Jevons’s paradox (See wikipedia) – ‘In economics, the Jevons paradox is the proposition that as technology progresses, the increase in efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource’ – so if heck manages to save all that energy through Technology (or recycling) – then people will just find other ways to use it and use MORE of it in other ways. People will want to Travel more – which I think is a good thing.

    iv) Concluding – All the examples Heck gives are undoubtable goof for an individual entrepreneur and the real examples show how gaps in the market get filled – but there is a big debate to whether it scales to delivery growing GDP – especially as Jevons shows us the end result even if it did work would be that more ‘stuff’ would be made, get done (eg travel) and environmental benefits would be minimal.

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