Smart Manufacturing: Industry 4.0 As A Balancing Act For Mechanical Engineering

In a survey by Hiscox, managers from plant and mechanical engineering explain that smart manufacturing creates a higher security risk. So far, only every third company in the manufacturing industry has taken out a policy to protect against digital dangers.

• According to a new survey by Hiscox, respondents see the higher risk but underestimate the individual risks in intelligent manufacturing.
• Only every third company in plant and mechanical engineering has the policy to protect against digital risks.
• A shortage of skilled workers is cited as the most significant obstacle in Industry 4.0.

Automation, Industry 4.0, cloud services, and remote maintenance. Hardly any other industry is subject to such high digitalization pressure as plant and mechanical engineering. According to a survey on intelligent manufacturing by tech consult on behalf of Hiscox, 79 percent of manufacturers also use digital features such as automation, cloud services, or remote maintenance in their products. In addition, real risks are often underestimated when implementing digital tools. Especially in the current time, with many internal and external digital threats, damage to companies can threaten their existence.

The representative survey of decision-makers from the industry shows how plant, and mechanical engineering perceive its degree of digitization and digital risks and how it protects itself. The market research institute tech consults surveyed mechanical engineers and manufacturers of electronic and optical products, metal products, data processing devices, and electrical equipment for Hiscox between the end of February and March 2022.

Smart Manufacturing: Digital Features Have Been Established For Some Time

The survey shows that hardly any machines without a digital connection are produced in this country. Four out of five respondents (79 percent) say their companies’ products rely on digital tools. These include automation, cloud services, or remote maintenance. The following applies to the more significant, the more digital. Seventy percent of the companies surveyed with 100 or more employees have been using such digital features in their products for more than two years. In the case of small companies with up to 19 employees, less than half (43.5 percent) state this.

“It is becoming increasingly clear that the exclusively analog machine builder will no longer be able to survive in the future. Industry 4.0 has long since found its way into the production facilities of small and medium-sized companies. As a result, classic analog mechanical engineering merges with IT services such as software updates via remote maintenance,”

Growing Risks, But Little Concrete Risk Awareness

Digitization and Industry 4.0 are already firmly anchored in the industry, often still perceived as dusty and conservative. Almost two-thirds of decision-makers (62 percent) believe that this will also increase digital risks. Only around a sixth (16.5 percent) state that the threat situation will ease in the future. It is striking that the perception of the risks depends on the industry: in the mechanical engineering sector, almost a quarter (25 percent) say that the risk is even lower due to digitization.

So while the industry is assuming increasing risks, there is still a lot of catching up to do when it comes to knowledge of specific digital dangers. Only one in three decision-makers assesses the digital risks surveyed as critical. Just under a third (32.5 percent) rate the current data protection and cyber risks as necessary. Here, too, machine builders assess the threats to be significantly lower than the rest of the respondents: 32.5 percent of all respondents rate damage caused by their programming errors as high or very high risk – but only 20 percent in mechanical engineering see it that way. However, the Hiscox claims figures paint a different picture: Around three-quarters of the claims reported arise from digital risks.

“Eyes shut and go for it? That’s never the right motto when securing your own company. Because it is precisely in comparison with our claims experience that it becomes clear that there is a lack of knowledge about the specific individual risks, plant and mechanical engineering must therefore first become aware of the jungle of digital risks in which they have recently been moving to walk the tightrope between digital progress and appropriate security,”.

Particular Policies For Smart Manufacturing Are Scarce

The survey shows a significant protection gap in the plant and mechanical engineering industry. Because regardless of the company’s size, less than half (45.5 percent) have public liability insurance. And only 28.5 percent have taken out professional liability insurance. Only 36.5 percent of the companies surveyed also stated that they had taken out property insurance. And 36 percent have protection against cyber and data risks. In addition, only 32 percent of respondents have taken out a policy specifically tailored to the industry to protect themselves against digital threats.

“The data show that many plant and machine builders arbitrarily protect themselves. And that such imminently important insurances as business and professional liability are not a matter of course. Because of the constantly growing digital threat situation and the complexity of claims, the industry should always have new risks on its radar and business and professional liability as a basis. With a special policy like Smart Manufacturing by HiscoxCyber ​​, data risks and D&O modules can be booked, and digital risks are explicitly included. This is the only way to rule out life-threatening damage largely. And so the industry can continue to be a driving force behind digitization,”.

A Lack Of Skilled Workers And Gaps In Knowledge Make Digitization More Difficult

The survey also clarifies that the plant and mechanical engineering industry is struggling with well-known digitalization obstacles: A lack of skilled workers and know-how (49.5 percent) is at the top of the challenges, followed by excessive bureaucratic hurdles (35.5 percent). Percent). But attempts at digitization also encounter internal obstacles – in mechanical engineering, even with over a fifth of decision-makers (21 percent).

On behalf of the specialist insurer Hiscox, the market research company tech consult of the Heise Group conducted a representative survey of decision-makers from the plant and mechanical engineering sector and several related sectors (manufacturers of metal products, data processing equipment, electronic and optical products, and electrical equipment ) from the end of February to the beginning of March 2022 ) through. They were asked about the degree of digitization of their products, their perception of digital risks, and insurance coverage.