 Ladies and gentlemen, welcome to our session on reimagining manufacturing industries for growth. I'm Vijay Vaidhiswaran. I'm the U.S. business editor of The Economist and I'm delighted to share today's session. We have what has been called something of an aha moment in manufacturing with dramatic advances in a range of technologies ranging from 5G, the Internet of Things, 3D printing to advanced forms of materials, advanced forms of business processes, to connectivity, remote monitoring. The list goes on, really, the vanguard of the fourth industrial revolution and it raises the question, could we be at the light bulb moment for manufacturing when we have a transformative move towards the factory of the future? I would say take a look at history and be careful what you wish for. Thomas Edison and Joseph Swan independently invented light bulbs in the late 1870s. In the 1880s, Edison built electricity generating stations near Wall Street and near Holborn in London and electric motors were already driving manufacturing machinery in the 1880s and yet by 1900 less than 5% of mechanical drive power at American factories came from motors. It was still the age of steam power some decades after the light bulb had been invented and commercialized. So the big question then is not what technological wizardry is available to manufacturing managers to company senior leaders around the world, but what is the combination of technological innovations combined with business models that are emerging that will ensure that these inventions turn into value creating innovations for companies and industries. To dig into that, I'm delighted to say that we have a distinguished and accomplished panel of experts to help us. Enrique Lores, president and CEO of HP Inc. Joe Kaiser, president and CEO of Siemens AG and Martin Lundstedt, president and CEO of Volvo Group. Welcome everyone to our session today. Let me turn first perhaps to Enrique. Enrique, the pandemic has clearly accelerated awareness of the benefits of the various technologies in the Fourth Industrial Revolution. In the case of your company, certainly you've put your accelerator pedal to the max on 3D printing and some of the related technologies. Can you tell me going forward, coming out of this current mode of crisis into perhaps a mindset of opportunity, what are your lessons and how are you transforming your own operations in light of this? Yes. First of all, thank you, Vijay, for having me here. Really happy to participate in this event. I think as you are saying that we all have learned a lot about what our businesses are going to require in the future and what opportunities we are going to have. And I would like to highlight three key major trends that I think are going to be very important for many, many companies. First of all, we all have seen how the adoption of digital technologies has really accelerated through the pandemic and this has had an impact in manufacturing but really has had an impact in many, many other aspects of our lives. How we manage our companies, how we learn, how our kids learn, how we communicate. Second, we have also learned how important it is to have more reliable and resilient manufacturing systems. We need to remember the situation we were facing a few months ago when many countries were in total lockdown mode, where hospitals couldn't get parts that they needed for respirators, where doctors didn't have access to masks. And this was a good opportunity to show how new technologies can really help and transform and have an impact in the world and a positive impact. And third, we have also seen new business models growing, as you are saying. We have seen subscription models really accelerating during the last months. We have seen what we call industries of one, the need and the opportunity of producing products, designing products for an individual, really raising and creating new opportunities. So when we think about the future, we think about these things. First, we think about how do we need to change our internal operations to be more resilient, to build factories closer to our customers, to redesign our manufacturing systems. And clearly technologies, 3D printing, robotics, data management are going to be fundamental to make that happen. But we are also looking at how do we redesign our systems based on the new models we will be creating and what do we need to change to be able to build and design products for individuals. So we're hearing several meaty themes ranging from the reminder of the need for resilience and reliability and supply chains of course to the need for internal dynamism at your own company to be fit for purpose for a rapidly evolving business environment. And so those are things we're going to pick up on for sure. I want to take the moment to welcome our final speaker, Nadia Swarovski, who is the chairperson of the Swarovski Foundation and member of the Executive Board at Swarovski. Welcome Nadia. We're just getting going. I'm glad the technical issues have been overcome. We're delighted to have you with us. Let me turn to Joe. Joe, you're at the forefront of a number of industrial technologies that you're pioneering at your firm, but you also have an inside look through your client base of leading multinationals around the world of what customers are doing. Can you give us a sense of where you see the dynamism? There has historically been no shortage of enthusiasm of some of the technologies that might revolutionize manufacturing. I've been an economist more than 25 years. I can remember writing stories many times about the factory of the future over the many numbers of years. It always seems just around the corner, right? It never quite arrives. What's different this time that will help us overcome the death by pilot, as it's sometimes called, or the obsessive focus with a single point operational efficiency that somehow doesn't get the resources, doesn't scale, doesn't get the full C-suite support to transform the way a company does business and instead keeps rooted in an innovation team or a small manufacturing tiger team. Give us a sense of what's changing this time. First of all, manufacturing matters a lot. Still two-thirds of global trade is manufacturing. We talk about an industry sector which has an impact on the world and what we see is that the internet now reaches the industrial world. That basically means that we have a fundamental change in the way we manufacture, fundamental change in such that machines are talking to each other. They learn from what they do and they learn from each other. Instead of having a central governance of how to manage and steer production, we will have a decentralized manufacturing organization. That basically means that machines talk to each other and that machines are learning. That machine learning in our view will determine probably the biggest thing in manufacturing in the next five years. What you also see is that the physical world of manufacturing comes together with the virtual world of simulation. That means that we do have digital twins of everything, every process, every product, every subject. That virtual and that digital twin is basically going to be optimized. The optimization which we get from things like artificial intelligence, data analytics, that knowledge, that improvement will go straight back into the manufacturing process. What you see is product lifecycle, management, innovation, and manufacturing excellence such as productivity designed to cost and time to market come together in one. That is likely to revolutionize the PLM and supply chain managed process in a way that you could expect 40% to 50% productivity increase in manufacturing as well as the time and the effort it takes to create new products. Those are provocative words. These are bold predictions with the concrete timelines and huge efficiency gains that you're forecasting. I want to poke at that just a little bit. We're all familiar that in the supply chain arena, the traditional old-fashioned sort of planning mindset has been revolutionized in recent years with predictive algorithms, the transformation of data, shifting from a retrospective or rear-looking mindset towards really more of a predictive mindset. You're talking about the shop floor. You're talking about manufacturing within five years or so moving from what has largely been a centralized operation at least in design and conception towards one that may be data-driven, bottom-up, machine-to-machine learning, AI embedded. It goes to the edges of the value chain. When I talk to AI experts or technology consultants, they love talking like this, but you're at the business end of the business. You run a major global company and you have clients that are responsible for delivering products. Are they ready? Do they have the mindset in place? I want to move to the human dimension of technology. Do you think managers and workers are ready for a mindset shift because power, when it's decentralized, can be disconcerting, can be upsetting to company cultures, to old ways of doing things. How do you handle that or what do you advise your clients? I mean, some are more and some are less. We, as the machine learns, we also need to learn on how to do manufacturing. I mean, it depends on whether you are a disruptor like somebody who builds electric cars from the green field. For example, Martin, please jump in because you're one of the most advanced companies in understanding what that means. Really, Volvo, in many ways, have learned to come back a big time and change the process. It is a massive mindset change, especially the ones who own brownfield operations, who go from something they have to defend into something they need to let go. That's massive. Typically, the incumbents are the ones who are the least prepared for the next big thing because they've got a lot to lose. The greenfielders are easier to get convinced about new technologies applications because they've got nothing to lose. Think about the Tesla. The Tesla example versus the legacy automotive, big struggle. The churis up at Martin, why don't you jump in? You know exactly, I guess, what I mean. It's an excellent segue, Martin. Give us your perspective on this as a venerable brand known around the world. How is it you've been able to take on the challenge of legacy mindset when it comes to new manufacturing approaches? No, thank you for that, Vijay and also thank you, Joe, for that segue. To start with, I think what is important, what Joe talked about when it comes to the decentralized way of utilizing this power, is also to actually work a lot with the decentralized way in your company, that you really have the empowerment and ownership out in the different parts of the operation. So they feel that they want to embrace the change because that is the way that they will continue to develop and own the business. So I'm a big fan also from the company culture and leadership to really drive the decentralization with full, as much as possible, P&L responsibility full out. And we see that we'll also make the change happening in these type of embracing technologies. And having said that, what I think is important, I will come just in a minute to the product definition of it, because in the heavy vehicle industry that we are representing, of course, for trucks and construction machinery, etc. The good news is that we are already into mass customization. We are producing production equipment for our customers. We are a true B2B model as well, meaning that we are not today building platforms that are one-size-fits-all that the car industry is doing. And thereby we can mitigate this change now into electric mobility, utilizing the new technologies. And by the way, this will also make a redefinition of scale, because scale of economies has been one of the killers of big incumbents. They have built them into big structures. And with the new technologies, you are much more flexible of actually doing the redevelop value chains, being less vulnerable, driving the decentralization, and still have, to use point also with the digital twins, very good opportunities, both for the manufacturing footprint and environment to learn from each other around the globe, but also when it comes to the whole product development process. And just one example of that is, of course, that we have today in our customer base, more than one point, I think it's 1.2 million machines and trucks and buses connected to us today that are constantly feeding us with data. And we are utilizing that, of course, to improve our algorithm for the coming product development, but also to feed back through remote downloading, optimizing, because a lot of optimization for our products today is done through software. So it's coming not only for our own manufacturing system, but also for the production system of our customers, that is really the logistic systems for the future. So we see how that is applied in a good way. I think one very important lesson that we have done is that people love to collect data, but you need to have a plan how to organize, how to make available, how to analyze, and how to make action out of it. And on the four last steps, I think people are spending too little time to really understand why should you have all this data if you're not having a good idea of actually doing it actionable for value creation for the customers or for your own operation. Martin, let me put your feet to the fire on that. With this massive data deluge that you're now getting and you make the wise point that you need to understand and make sense of that data, give us one insight that your own company has gleaned over the last few years by adopting this smarter approach. What's something you learned or are doing now that before you entered this age of sensors and everything, data collection, smart analytics, that you might not have figured out? What's a surprise or something new you're doing or something you couldn't do before? I think we have always argued about, of course, our ability to customize different products and what that will mean for wear and tear solutions for our customers, predictive maintenance, short period service intervals, etc. The good news now with all the data, if we are really pinpointing a specific subject that we really would like to improve like the maintenance schedules, for example, for trucks. That is a pretty big thing for our customers. We are actually much better now by both pinpointing specific applications in regions, but also utilizing the global data to really through machine learning, artificial intelligence, to see what are the underlying patterns of improving these service intervals. They have been improved with 25%, 30%, 50% depending on the region and application. It's a huge value for the customers. The same goes for energy efficiency. The other part is the whole root planning now when a battery range applications would be a big issue. So you have a number of very concrete things that you need to start with. What do you want to achieve? Then you can dig upstream with your data streams and really organize it in a good way and also apply the intelligence that you were into. Right. The old adage, garbage in, garbage out still works. Let me go to... Only faster. Exactly. We have a higher efficiency processing of the garbage now. You've seen that digitization has been a theme that everyone has touched on thus far, but the industry that you're in, luxury goods, is a high touch. It's almost the opposite of some of the traditional commoditized industries. And yet it seems that some of the same techniques that digitization can bring and knowledge of the consumer, BTC engagement, follow on sales, trust, authenticity might affect your industry as well. Can you give us a perspective on how that's advancing and how the challenges are different in your business? Absolutely. And I think you're so right. It is really high touch. We call it low tech. And despite this advancement in innovation and technology and manufacturing, what we also feel is really incredibly important within the fashion jewelry, home decor industry, luxury goods industry is certainly also the human touch, the human involvement. At the end of the day, we're talking about a designer's vision, which he or she is creating for the end consumer. So I think that human element is absolutely important. The tactile element is important. In this crisis of last year, statistically, it's been fascinating to see how the fashion industry's sales have declined by 30%, yet overall within that decline, we've seen that an increase of online sales has occurred with 29%. So the entire industry really had to embrace the digitization, not just to reach out to the consumer in a more proactive way, but also as an industry amongst itself. And that's another thing that I think this modern day and age has really enabled is still that human connectivity while we're all locked away at home. The teams are communicating with each other. They are really also keeping each other inspired, keeping the connection to the customer in order to enable the continuation of product design, product manufacturing. Within the fashion industry, what's also been so fascinating to see is this 360 degree digitalization. So usually we have two fashion seasons. Now we're talking about no more fashion seasons, but just really being open, not just to the trade, but also to the end consumer, 365 days a year. We have seen virtual fashion shows, we've seen virtual showrooms, we have seen virtual try on sessions. So the connection certainly is there. And it really has also sparked a slightly different artistic approach in terms of how the designers are presenting their collections. And nonetheless, with the digital approach, there's still that integration of the zeitgeist of what's happening. And once again, we see fashion and design in general as a very strong reflection of what's happening. Tell us a little bit more. You mentioned right at the end that you were even seeing a different kind of design in those. That gets to a little bit of the innovation part of the question. How is the way that we interact with luxury goods through digital platforms and in a different kind of mindset today, how is that affecting the design of them? Which of course is connected to how one might make them. So one certainly is talking about form follows function. And I think what this entire pandemic has sparked is really kind of a thought back to our roots and purpose. So I think designs are becoming more purpose driven and certainly more sustainable. I mean, we ask ourselves, why are we in this pandemic? And we've seen the climate change, we're feeling the climate change. So, you know, the fashion industry being one of the biggest contributors to the environmental negative output is realizing that actually things can be produced differently. This certainly has let the designers also look at their supply chains. A lot of designers weren't able to get their materials, either shipped or products even made. So I think a wonderful thing that has also happened in my opinion, my opinion, it's a wonderful thing is that a localization of manufacturing has happened. And just to give you one example in New York, for example, the garment district, a lot of people are unemployed. So there are a lot of efforts being made to keep people employed, whether if it's not making fashion, then it's making fabric shopping bags that people still might use. So, you know, I think there is an incredible sense of benevolence within the industry, people reaching out to each other and certainly trying to keep themselves going. But again, sustainability is a counterintuitive trend, right? Many companies are cash strapped at the moment because of the pandemic. And yet we are seeing lots of indicators that interest in and concern about climate change about and willingness to invest behind sustainability has continued and in some ways perhaps has accelerated as companies think about their next digital platform keeping in mind the carbon footprint or other aspects of sustainability, as you point out. Thank you Nadia. We have a host of questions coming up. Let me also say, I think did I see one of my panelists indicated they wanted to jump in and we get it. I see you motion. Did you want to jump in? I wanted to compliment the comment that Martin was making. I think what we have learned during the last month is that when the combination of technology can be used to create new value propositions to customers, can we really do something that we couldn't do for customers before is when magic happens. It's when really we see new business models being created, new industries being created. And I think the example Nadia was bringing is perfect to that we are seeing the need for local production. And this is really driving people to come with new ideas. And when they are reinforced by technology, really amazing things can happen. And this is part of what I think we're going to be seeing during the next months and years. Thank you. We have a question from Nitin Joglekar who's asking a lot of the innovation supply chain happen in middle tier and SMEs. How will the digitization and business model opportunities reach them? And we know of course the recession has been quite difficult for smaller companies at the same time. There's no denying that's where a lot of innovation happens. Any anyone want to jump in on that and offer a thought on what might be the effect of the new tools and technologies as it affects a little smaller companies? If I may, maybe to start there, I mean we are working of course in our supply chains, but also with our customers that are in many cases, small and medium sized enterprises. I mean the fact that we are of course with the right balance with the data protection obviously being able to share more real facts of what is happening out in our customer's operation. What do they need to think about when it comes to their input? For example, in our value chains, it's much easier to interact around facts and give the opportunity to innovate from real use cases with their expertise, etc. So I think that is one example of how it's strengthening actually the connection in the value chains. Because what we see now is, for example, moving into an eco-mobility on the heavy duty side is much about confidence, who can go together and then we can bring facts to the customers. We see together what is their route planning and you will be fine with the range, you will be fine with the grid capacity. We can build up a system solution around this, also including a lot of our partners in the ecosystem, since a lot of the utility things and also infrastructure charging is local. So yes, to bring the data that you have an elaborator, it is super important to make these new things happening around not at least the electro-mobility and the heavy duty and journey. Thank you Martin. You know, time flies when you're having fun and we've had a phenomenal overview of the future of manufacturing from our leaders here. In the one minute I have left, I'm actually going to do something risky. I'm going to give you each a chance to sum up your sentiment, your feeling about the future of manufacturing as it connects to growth in one word. I'm going to do a round, Robin, put you on the spot before we sign off from this live session. Let me start, perhaps I'll start with Enrique. One word that captures your mood at the moment. I would use optimism. I think the amount of change is opening a lot of opportunities. Optimism it is. Joe, how about you? Excited to bring more people out of poverty by using technology. Okay, so an excitement about the opportunity, Martin? I think decentralization, regional value chains, much closer and thereby serving customers in a foster way. At decentralization vision, we come back to you again. Nadia, your word. Growth ambition to be teamed up with environmental and social positive impact. Okay, well, that's more than one word, but it's a powerful statement. I will make an exception for you. Thank you. It's an inspirational note to end on as well.