Headline November 17, 2016/ ''' *INDUSTRIE 4.0* : GERMANY '''

''' *INDUSTRIE 4.0* : GERMANY '''

APPLE AND GOOGLE ARE pressing carmakers to install the operating system they have designed for cars' entertainment systems, which-

In practice will suck up all sorts of other data about  the car and   its occupants. Carmakers, are realising that to give up the territory would risk their   ''sovereignty over the data''  generated by their vehicles- In the words of  Wilko Stark, Daimler's strategy chief.

They could end up like Samsung, whose profits from smartphones are limited by the fact that it depends on Android,  Google's mobile operating system.

It is not just German carmakers, which worry about this sort of future, however. The American tech giants also trying to establish platforms for the  ''smart home'' , which collect data from appliances, heating systems and the like.

''Whoever controls the platform will rule the future,'' declares  Henning Kagermann, the head of  Acatech, who coined the term  ''Industrie 4.0''  for GermanIndustry's collective efforts to make the transition to a digital, internet-connected future.

Despite such concerns, in some ways Germany's industry seems, well prepared  for the rise of services and platforms. Its bosses are alive to the threat.

Axel Springer, a publishing giant, started a trend among German firms by having some of its top people live in  Silicon Valley for several months. 

The experience led the firm to invest in a consulting firm, gratingly called Hy!, which introduces old-economy executives to startups and helps them plan their digital transformation.

Some firms have already acted on the insight that digital platforms are crucial for their futures. One is Trumpf. Another is Klockner, a metals trader, which has created a platform to connect steelmakers with construction firms and other customers.

Germany's manufacturing and engineering giants, too, have started to take platforms seriously; Bosch now offers an ''IOT Suite''   to help other companies create new services around connected devices. 

Deutsche Telekom has teamed up with other firms to establish Qivicon, a smart-home platform to rival Apple's and Google's.

The government is trying to help. It has taken the lead in Industrie 4.0, creating around it an unwieldy structure that ropes in everyone from the trade associations and ministries to unions and academics.

Only in a country with Germany's corporatist tradition would  an effort to make businesses more agile and responsive to change be so stuffed with steering committees, working groups and advisory boards.

The first aim of this bureaucracy is to produce templates and test beds for trying out innovative digital services, and to publicise interesting examples. Its second aim is to convince two groups of the need for change: the smaller among Germany's Mittlestand firms and the-

Industrial trade unions, which, under the country's  ''co-determination'' model of labour relations, have a say in many management decisions.

''Creating acceptance is key,'' says Mathias Machnig, a senior official who leads the industrie 4.0 effort at the ministry of economic affairs.

Fortunately for many Germany industrial firms  -and, for that matter, their counterparts in the other countries, they have more time to adapt than consumer firms.

In consumer markets, digital newcomers can quickly become dominant by exploiting the  ''network effect''  in some technology platforms: the more people use them, the more apps and other offerings they generate, and the stronger they get versus any rivals.

This is why German makers of cars and heating equipment look with trepidation at Google's work on self-driving cars and intelligent thermostats.

Yet the economics of the markets for industrial equipment, and the other business-to-business products many German firms make are different, explains a recent report from by  Stiftung Neue Verantwortung, a think tank and other organisations.

These markets move slowly and are more complex. The expertise of incumbents is hard to replicate and more important, and in many cases they control access to the data their products generate. 

As a result the network effects are not as strong in these sorts of business.

If that offers some comfort to German manufacturers, it only goes so far. First, platforms thrive when other firms, developers and customers make use of them.

Most big  IT  companies have grown up managing such  ''ecosystems'' , but this will not come easy to manufacturers. As Sangeet Paul Chaudhry, a technology analyst  puts it, they are steeped in  ''pipe thinking'', firms order supplies- Fashion them into products and-

Then send them towards customers. Now they must think more like a gardener, and maintain a park which attracts and retains other firms and customers, in order to flourish.

So, in Manufacturing as % of GDP, here is the score card for 2014:

.- CHINA 40%.

.- GERMANY 24%

.- JAPAN 19%

.- EUROPEAN UNION 15%

.- UNITED STATES 12%

.- BRITAIN 9%.

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