Could Israel replicate its automotive tech success in smart manufacturing?

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If Israel's flirtation with automotive manufacturing, symbolized by Autocars' fiberglass-shelled Sussita, was particularly short-lived, the country's engineers have reaped significantly greater success in automotive technology. Whether it is Mobileye, Waze, Moovit or a wide range of emerging automotive cyber security start-ups, Israel has cemented its status as a leader in automotive innovation.

While not renowned for its physical manufacturing prowess either, a report by Start-Up Nation Central (SNC) has revealed that Israel's smart manufacturing sector - also known as Industrial IoT (IIoT) or the Fourth Industrial Revolution (Industry 4.0 / I4) - is also starting to enjoy significant success.Smart manufacturing refers to a leap forward from traditional production techniques, using technologies for data collection and analysis to improve production processes, and the introduction and connection of innovative production tools including advanced robotics and additive manufacturing to existing processes.Venture-backed financing into Israel's smart manufacturing industry, the report says, has soared by 223% in just four years, from $113 million in 2014 to $365m. in 2018.Financing in Israeli start-ups accounted for approximately 5% of total VC-backed investments into the industry in 2018, which saw $90 billion in revenues and is expected to grow 20% annually. Only the United States and China were destinations for higher smart manufacturing financing last year.According to SNC, there are currently 230 active smart manufacturing companies in Israel, up from 146 in 2014, operating in fields including factory operations optimization, sensing and imaging, connectivity, robotics, 3D printing, predictive maintenance, inspection and testing, and cyber-security for connected factories."Israel has done it before with auto-tech, which has become a global power despite us not having a car manufacturing legacy," said SNC general manager Guy Hilton."We’re now poised to repeat that success – if we can help I4 start-ups overcome their challenges, such as building bridges between Israeli innovation and multinationals, increasing international awareness of the Israeli ecosystem, and strengthening the Industry 4.0 community."Despite its growth in recent years, the report details significant differences and structural challenges between Israel's automotive technology and smart manufacturing sectors.The greatest challenge, according to SNC, is the niche factor in the smart manufacturing sector, where hi-tech solutions for traditional manufacturing processes need to be highly customizable. Most factories require customized implementation of digital solutions."We won’t see a Mobileye in I4. We’re more likely to see many small, niche exits," said Yuval Engelstein, SNC Industry 4.0 research analyst and author of the report. "It’s a much broader industry, with a product-market fit different for every vertical."Other challenges slowing the adoption of smart manufacturing technologies, the report said, include adapting existing human capital and machinery, the cost of customizing technological solutions and overcoming the fear of vulnerabilities caused by digitally connecting manufacturing facilities.According to Yengelstein, one way to overcome such challenges include running more proof-of-concept trials in Israeli factories. Such trials may prove problematic, however, as approximately 85% of Israels 22,000 factories are considered traditional, characterized by labor-intensive production facilities.Creating more test-beds for smart factory start-ups could significantly benefit Israeli industry and the overall economy, especially given stagnant labor productivity and Israel's small manufacturing industry."It’s a win-win situation if the government helps traditional industry in Israel adopt and implement technology from I4 startups," said Uri Gabai, SNC vice-president of strategy at Start-Up Nation Central and former senior official at the Israel Innovation Authority.Recent moves by the Innovation Authority to incentivize local proof-of-concept sites, including the launch of the Innovation Labs Program in 2017, is a positive sign for the industry.The increased presence of major industrial firms as strategic investors in the Israeli smart manufacturing sector is also welcome news, with multinational companies including Qualcomm Ventures, Siemens Dynamo, GE Ventures, Merck and Autodesk able to provide finances as well as test-bed facilities and access to global clients."This industry, I4, could be even bigger than auto-tech, as it touches manufacturing everywhere. The potential is endless," said Hilton.

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Source: The Jerusalem Post

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