"Industria 4.0" national plan Investments, productivity and innovation September 2016
Agenda Industry 4.0 in the world The Italian way "Industria 4.0" national plan 2
Industry 4.0: The 4th industrial revolution 4 th Industrial revolution 3 rd Industrial revolution 1 st Industrial revolution Historical loom Through introduction of mechanical production plants using water and steam power 2 nd Industrial revolution Mass production and assembly line Through introduction of workdivision mass production using electrical energy Automated industrial robot in manufacturing Through use of electronics and IT to further automate production Connection between physical and digital systems, complex analyses of big data and real-time settings Through use of smart machines, inter-connected and connected to internet Late 18th century Early 20th century Early 1970s Today and near future 3
Industry 4.0: Nine technology drivers Advanced Manufacturing Solutions 1 2 9 8 Additive Manufacturing 3 7 4 5 6 Augmented Reality Simulation Horizontal/ Vertical Integration Industrial Internet Cloud Cyber-security Big Data and Analytics Autonomous, cooperating industrial robots Numerous integrated sensors and standardized interfaces 3D printing, particularly for spare parts and prototypes Decentralized 3D facilities to reduce transport distances and inventory Augmented reality for maintenance, logistics, and all kinds of SOP Display of supporting information, e.g., through glasses Simulation of value networks Optimization based on real-time data from intelligent systems Cross-company data integration based on data transfer standards Precondition for a fully automated value chain (from supplier to customer, from management to shop floor) Network of machines and products Multidirectional communication between networked objects Management of huge data volumes in open systems Real-time communication for production systems Operation in networks and open systems High level of networking between intelligent machines, products, and systems Full evaluation of available data (e.g., from ERP, SCM, MES, CRM, and machine data) Real-time decision-making support and optimization 4
Industry 4.0: Expected benefits Flexibility Higher flexibility given by small batches production with the economies of scale of mass production Speed Higher speed from prototyping to mass production using innovative technologies Productivity Increased productivity thanks to lower set-up time and reduced downtimes Quality Improved quality and scrap reduction thanks to real time production monitoring through advanced sensors Product Competitiveness Higher competitiveness of products thanks to additional functionalities enabled by Internet Of Things 5
Main Industry 4.0 initiatives in the world Initiatives in scope Other initiatives United States Manufacturing USA Network of institutes and leading laboratories established by large ICT private players, encouraged by the Government and financed by public-private partnerships to foster technological innovation and competences Key measures: Public support to research projects France Industrie du Futur Re-industrialization plan including in I4.0 technologies centrally driven by the Government Key measures: Tax incentives for private Preferential financing for SMEs and mid-tiers Tax credit for research "Industrie du Futur" and "Invest for the future" project financing Germany Industrie 4.0 Action plan sponsored at federal level with the involvement of large technological and industrial players Key measures: Financing of company projects and applied research centers Tax incentives for in technological start-ups 1 1. Pending Governmental approval Source: Public data 6
Steering committee of "Industria 4.0" National Steering Committee Presidency of the Council of Ministers Ministry of Economy and Finance Ministry of Economic Development Leading Italian universities and CRUI 1 Ministry of Education, University and Research Ministry of Labor and Social Policy Ministry of Agriculture Ministry of the Environment and Protection of Land and Sea Research centers Association of manufacturing and service companies CDP Unions 1. Conference of Italian University Rectors 7
"Industria 4.0": The Italian way Italian industrial sector peculiarities Few large industrial and ICT private players able to lead Italian manufacturing transformation Limited number of industry champions able to coordinate the evolution process of value chains Industrial sector deeply based on Small and Medium enterprises Key role of illustrious universities and research centers in development and innovation Strong cultural traits of finished products Government guidelines Operate in a technological neutrality logic Implement horizontal actions avoiding vertical or sector-based ones Operate on enabling factors Steer existing instruments to promote technological leap and productivity Coordinate key stakeholders without acting as a controller or decision maker 8
"Industria 4.0" national plan 2017-2020 Measures Strategic measures Complementary measures Innovative Skills Enabling Infrastructures Public instruments at support Stimulate private in I4.0 Increase private expenditure in research & development & innovation Bolster the finance in support of I4.0, Venture Capital and Start-ups Spread the I4.0 culture through "Scuola Digitale" 1 and "Alternanza Scuola Lavoro" 2 programs Develop I4.0 skills through dedicated academic paths and "Istituti Tecnici Superiori" 3 Finance the I4.0 research bolstering Clusters and PhDs Create Competence Centers and Digital Innovation Hubs Ensure adequate network infrastructure Ultra Broadband Plan Cooperate in the definition of IoT open standards and interoperability criteria Guarantee private Support large innovative Reinforce and support internationalization of Italian companies Strengthen the productivity salary taxation exchange through decentralized negotiation Governance and awareness Generate interest on I4.0 opportunities and create the public-private governance 1. Digital classes at primary and secondary schools ; 2. Work-related learning; 3. Italian professional institutes Source: Steering Committee "Industria 4.0" 9
"Industria 4.0" national plan 2017-2020 Targets Strategic measures Complementary measures Innovative Skills Enabling Infrastructures Public instruments at support +10 B private increase from 80 to 90 B in 2017 +11,3 B R&D&I private expenditure increase with a special focus on I4.0 technologies over the '17-'20 period +2,6 B volume of early stage mobilized over the '17-'20 period 200.000 academic students and 3.000managers qualified on I4.0 topics +100% students attending "Istituti Tecnici Superiori" on I4.0 topics ~1.400 PhDs focused on I4.0 (out of ~5.000 included in NRP 1 ) National Competence Center 100% of Italian companies with access to 30Mbps connectivity within 2020 50% of Italian companies with access to 100Mbps connectivity within 2020 6 consortia regarding IoT standards, monitored by Italian representatives +0,9 B Reform and refinancing of Guarantee Fund for 2017 +1 B Development Contracts focused on I4.0 large +0,1 B Strong investment on digital sales chains (Made in Italy plan) Strengthening of productivity salary taxation exchange 1. National Research Plan Source: Steering Committee "Industria 4.0" 10
Hyper-Depreciation and Super-Depreciation schemes Innovative Advantages in plan Hyper-Depreciation Increase of rate for I4.0 As is To be 140% 250% Super-Depreciation 1 year extension of the Super-Depreciation with a stable rate (140%) for all, except for vehicles and other means of transport that show a reduced rate (120%) Investments in Agrifood technologies, Bio-based economy and in optimization of energetic consumption Deadline In order to guarantee a high appeal of Hyper and Super-Depreciation schemes, item delivery date is prolonged to 30/06/18 however the order and a >20% deposit have to be placed within 31/12/17 Source: Confindustria; MATTM; MEF; MIPAAF; MISE; R.E TE. Imprese Italia; 11
Tax credit for research and development and innovation expenditure Research and development and innovation expenditure '17 example Tax Credit calculation As is To be Incremental expenditure Credit for intramural expenditure 25% 50% Average expenditure Credit for extramural expenditure 50% 50% Maximum credit per taxpayer 5 M 20 M Expenditure R&S 2012 Expenditure R&S 2013 Expenditure R&S 2014 Expenditure R&S 2017 Source: MEF; MISE 12
Finance in support of I4.0, VC and Start-ups Initiatives National saving 1 Saving distribution % 100 90 80 0 M 1,000 6% 6% 88% Asset Under Mgmt 2013 780 10% 10% 80% Asset Under Mgmt 2020 Inv. in equity of Italian companies Inv. in bonds of Italian companies Other ~1000 30% tax deduction for up to 1 M in start-ups and innovative SMEs Enablement of "sponsor" companies to embed losses of participated innovative start-up "PIR" Reduction of capital gains taxes in case of medium/long term "Acceleratori di impresa" program, financing the establishment and the growth of new companies focused on I4.0 technologies ("CDP") Early stage 500 0 Germany 2015 534 Spain 2015 130 Italy 2015 Italy 2020 Establishment of dedicated investment funds for the turning high tech ideas and patents into business ("CDP") Dedicated matching VC funds for I4.0 start-ups ("CDP" / "Invitalia") 1. Open funds, Pension plans and Insurance plans; 2013 value equal to 1.069 B Source: CDP; Invitalia; MEF; MISE 13
Innovative : Tangible benefits for enterprises Hyper-Depreciation Example: 1.000.000 investment in Advanced Manufacturing Solutions As Is To Be Amortizable value : 140% of the purchase value 5 years tax reduction equal to 96.000 Amortizable value : 250% of the purchase value 5 years tax reduction equal to 360.000 +275% Tax credit for research Example: 1.000.000 incremental expenditure As Is To Be Tax credit 300.000 Tax credit 500.000 (In case of higher expenditure, credit limit = 5.000.000 ) (In case of higher expenditure, credit limit = 20.000.000 ) 800.000 intramural 200.000 extramural Up to +300% Finance in support of I4.0, VC and Start-ups Example: 1.000.000 investment in innovative start-up As Is Tax deduction: 19% Maximum investment per taxpayer:0,5 M Tax deduction equal to 95.000 / year To Be Tax deduction: 30% Maximum investment per taxpayer:1,0 M Tax deduction equal to 300.000 / year +215% Source: MISE 14
Skills: Digital Innovation Hub and I4.0 Competence Center Digital Innovation Hub I4.0 Competence Center Features: Selected DIH located at Confindustria's and R.E. TE. Imprese Italia's branches Point of contact between companies, research centers and public private investors Mission: Awareness creation on I4.0 opportunities Support in developing innovative investment plans Orientation to I4.0 Competence Centers Support in accessing to public and private financing solutions / investors Interactions with European DIHs Incubators Gov. and Public Institutions Start-ups CC Associations Research Centers CC CC Investors Industrial Players Universities Clusters SMEs Features: Few and selected national Competence Center Strong involvement of leading Italian universities and large private players Support of key stakeholders (e.g. research centers, start-ups,...) Competence Center focused on specific and complementary technology drivers Appropriate legal framework and managerial skills Mission: I4.0 training and awareness Live demos on new technologies and access to I4.0 best practices Technical advisory on I4.0 for SMEs Launch and acceleration of technological development and innovative projects Trial support and "on-site" development of new I4.0 technologies Source: MIUR Coordination with European CC 15
Strategic measures: Innovative 2017-2020 cumulated effort Initiatives Stimulate private in I4.0 technologies Hyper-Depreciation: Rate increase to 250% for I4.0 Super-Depreciation:Refinishing and one year extension "Beni Strumentali Nuova Sabatini": One year extension "Fondo Rotativo Imprese" 3 : Section of "FRI" dedicated to I4.0 Increase private expenditure in research & development Tax credit for research expenditures:fiscal deduction rate increased to 50% of incremental expenditures and credit limit to 20 M Bolster the finance in support of I4.0, VC and Start-ups 30% tax deduction for up to 1 M in start-ups and innovative SMEs Enablement of "sponsor" companies to embed losses of participated innovative start-up "PIR" Detaxation on capital gains from medium/long term "Acceleratori di impresa" program Dedicated investment funds for the industrialization of innovative ideas Dedicated matching VC funds to invest in I4.0 start-ups Private effort 1 10,0 B 11,3 B 2,6 B Public effort ~13 B 2 Total ~24 B ~ 13 B 1. Includes 0,5 B of CDP ; 2. Public effort includes 2018-2024 effort for financial coverage of private performed in 2017 eligible for Hyper-Depreciation, Super- Depreciation and Beni Strumentali; 3. Revolving fund Source: CDP; Invitalia; MEF; MISE 16
Strategic measures: Skills 2017-2020 cumulated effort Initiatives National Plan "Scuola Digitale" implementation I4.0 skills: Creative ateliers, technology classes and I4.0 laboratories Territorial laboratories: School-enterprise meeting, digital skills development Digital curricula: Development of 25 curricula focused on digital and I4.0 technologies Computational thinking: Education in computational thinking starting from primary schools Focus of selected work-related learning initiatives on "Industria 4.0" Private effort 0 M Public effort 355 M 2 Specialization of academic courses, masters and executive masters on "Industria 4.0" topics in partnership with industrial and technological players Increase of the number of students attending professional institutes focused on "Industria 4.0" topics Strengthening of technological clusters "Fabbrica Intelligente" and "Agrifood 1 " Coordination with other technological clusters and industrial stakeholders 1.400 new PhDs on "Industria 4.0" technologies 30 M ~ 70 M 70 M 170 M 3 Establishment of selected national I4.0 Competence Center 100 M 100 M Development of working class skills through dedicated funds and programs Total Budget waiting for approval ~200 M ~ 700 M 1. Development and diffusion of precision agriculture technologies and food production innovation; 2. Already assigned; 3. Of which 150 M already assigned Source: LPS; MIPAAF; MIUR 17
Complementary measures: Main initiatives 2017-2020 cumulated effort Initiatives Ultra Broadband Plan 100% of Italian companies with access to 30 Mbps connectivity and 50% with access to 100 Mbps connectivity within 2020 Guarantee Fund 1 Reform and refinancing of Guarantee Fund for year 2017 with focus on I4.0 Made in Italy Strong investment on digital sale chains and increase of support to SMEs (technological centers, workshops, trainings) Development Contracts Negotiation and supply of tailored loans to finance execution of large programs, with priority on I4.0 programs Productivity salary taxation exchange Strengthen the productivity- salary taxation exchange through annual gross salary and maximum eligible limit increase Private effort 6 B 22 B 1 B 2 2,8 B N/A Public effort 6,7 B 0,9 B 0,1 B 1,0 B 1,3 B '17-'20 '17 '17 '17 '17-'20 Total 1. Includes the extension of primary warranty coverage for agricultural enterprises through ISMEA; 2. Estimate of additional revenues Source: PCM; MIPAAF; MISE ~32 B ~10 B xx Year(s) of impact 18