Rethinking the Factory

Arup Foresight + Research + Innovation

Foresight + Research + Innovation is Arups internal think-tank and consultancy which
focuses on the future of the built environment and society at large. We help organisations
understand trends, explore new ideas, and radically rethink the future of their businesses.
We developed the concept of foresight by design, which uses innovative design tools and
techniques in order to bring new ideas to life, and to engage all stakeholders in meaningful
conversations about change.

Contacts
Duncan White
Director, Science & Industry
[email protected]
Stephen Pollard
Director, Operations Consulting
[email protected]
Chris Luebkeman
Arup Fellow and Director
Global Foresight, Research + Innovation
[email protected]
Josef Hargrave
Associate, Foresight + Research + Innovation
[email protected]

13 Fitzroy Street
London W1T 4BQ
arup.com
driversofchange.com
Arup 2015

Cover Image: Jaguar Land Rover

Released June 2015

Contents
Key Opportunities

Introduction 9
The Human Factor(y)

13

Seamless Design and Production

27

Resilient and Adaptive Spaces

39

Delivering Change

51

References 54
About Arup

Click on section title to navigate

57

 Daniel Hopkinson

Key Opportunities
The emerging trends, processes and technologies described in this report will transform the
manufacturing landscape. The inevitable shift to leaner, smarter and more flexible forms
of production will have a range of impacts on how the factory is designed, how supply chains
operate, how people experience changing operational environments and how the future
spaces of production will be organised.

The Human
Factor(y)

Integrated
Design and
Production

Robotics and automation along with the application of

cyber-physical assistance systems1 will lead to safer and
more productive working environments. This integration of
technology will also increase the demand for highly skilled
workers to operate and maintain machinery and control smart
production processes.
The lines between blue- and white-collar workers will continue
to blur, with a growing focus on factory environments that
facilitate collaboration and innovation along the supply chain
and across production lines. As workers roles continue
to adapt and merge, the configuration of factories will have to
change to reflect these new working patterns.

Smart processes, products and machines will enable the

optimisation of production and will require a fine-tuned
integration of building and machinery. Sensor-driven production
lines and product components will enable factories to react in
real-time to changes in the market and supply chain.
The increased use of insights arising from data collection and
analytics will allow more rapid and responsive manufacturing,
where products and production processes can adapt,
perhaps even autonomously, to changing customer demands
or market trends.

Left: The atrium at the SEW Eurodrive facility in Wakefield, England, links the factory
to the headquarter offices.

Manufacturing contributes 6.7tr to the global economy2

Value added from manufacturing accounts for 16% of global GDP3
High technology exports account for 18% of global manufactured exports4
Chinas manufacturing workforce numbers 104 million5
China makes 50% of the worlds computers6
In 2013, industrial robot sales increased by 12% to 178,132 units,
the highest level ever recorded7

Daniel Hopkinson

China is the biggest robot market with a share of 20% of the total8

 AMCR / Bond Bryan Architects

The University of Sheffield Advanced Manufacturing Research Centre with Boeing.

Resilient
and Adaptive
Spaces

Climate change and resource constraints will require that the

construction and operation of factories be both sustainable
and resilient. This includes reduced energy, water and material
consumption, a shift towards the circular economy, and design
and location choices that limit climate related weather risks and
reduce transportation needs.
Faster innovation cycles, together with constantly changing
market conditions and demand patterns will require flexible and
adaptable spaces. Modular and adaptable factory buildings
allow companies to quickly set up or expand production
capacity, or shift production from one type of product or
location to another.

Left: Behind its slick architectural lines, the SEW Eurodrive building incorporates low energy
technnologies, including photovoltaic and solar thermal arrays on the roof.

cZen wave

Introduction
Its the dawn of the second machine age. To understand why its
unfolding now, we need to understand the nature of technological
progress in the era of digital hardware, software, and networks.
In particular we need to understand its three key characteristics:
that it is exponential, digital and combinatorial.
Erik Brynjolfsson and Andrew McAfee, The Second Machine Age (2014)

Manufacturing has entered a new age of production. This

shift in the design and manufacture of goods is not the result
of a single trend, but is driven by a broad range of complex
and interconnected factors. These influences range from
advances in digital technologies and automation to climate
change and market demands. The collective consequence
is a shift towards design and innovation processes that are
increasingly fast, open, collaborative and responsive.
The economic picture is also changing. Over the past
two decades, driven by cheap and plentiful labour, Asia
has dominated the global supply of manufactured goods.
However, since the onset of the global financial crisis in
2008, demand from advanced economies has slowed, while
wages and other costs have risen. This means that in order
to continue its manufacturing dominance, Asia will need
to expand its own domestic and regional markets while
upgrading the competitiveness of its manufacturing sector.9
Robotics, 3D printing, mass customisation and other trends
could also put pressure on Asias factory model.10
As the world of manufacturing changes, the way factories
are planned, constructed and operated will also change. They
will need to become more flexible and adaptable, achieve
better integration between buildings and processes, and be
more resilient to economic and environmental shifts.
Left: Changan-Fords assembly line is equipped with robotic technologies that allow for rapid
switching between car models.

cChrysler Group

First

Second

Third

Fourth

Industrial
Revolution

Industrial
Revolution

Industrial
Revolution

Industrial
Revolution

through the introduction

of mechanical
production facilities
with the help of water
and steam power

through the introduction

of a division of labour
and mass production
with the help of
electrical energy

through the use of

electronic and IT
systems that further
automate production

through the use of

cyber-physical systems

First mechanical
loom, 1784

First assembly line

slaughterhouses, 1870

Degree of
complexity

First programmable
logic controller, 1969

Time

1800

1900

2000 Today

Cyber-physical assistance systems are driving the fourth industrial revolution

Source: Siemens, Pictures of the Future, Spring 2013

These future factories will have to operate at higher material

and energy efficiencies, while providing safe and healthy
working conditions for an increasingly skilled and diverse
workforce.
This report explores the future of the factory from three
different angles: people, production and space. The Human
Factor(y) looks at the growing impact of technology on
the workforce, including automation and the diffusion of
cyber-physical assistance systems. Seamless Design and
Production focuses on the growing use of big data, insights
and smart machines to optimise production processes and
enable greater customisation of complex products. Resilient
and Adaptive Spaces focuses on the physical factory,
looking at designs that are resilient to environmental risks as
well as sustainable in their construction, operation and end
of life disassembly.
We intend the research and insights in this report to act as
a catalyst for conversation, helping stakeholders rethink the
design and operation of factories. Ultimately, we hope to help
facilitate the shift towards a fourth industrial revolution.

Left: More than 1,100 robots have been installed at Chryslers new body shop in
Sterling Heights, Michigan to build the 2015 Chrysler 200.

11

c Province of British Columbia

The Human Factor(y)

The full potential of the industrial Internet will be felt when the
three primary digital elements intelligent devices, intelligent
systems and intelligent automation fully merge with the physical
machines, facilities, fleets and networks. When this occurs,
the benefits of enhanced productivity, lower costs and reduced
waste will propagate through the entire industrial economy.
Peter Evans and Macro Annunziata, GE, Industrial Internet: Pushing the Boundaries

of Minds and Machines (2012)

A new relationship between people and machines

Since the 1970s the proportion of German workers employed
in the manufacturing sector has dropped by more than half,
to about 20%.11 At the same time, exports of manufactured
goods have increased and Germany continues to rank fourth
by global manufacturing output.12 This trend is a reflection
of a continued increase in automation within Germanys
production lines, allowing the nation to remain competitive
despite relatively high labour costs.
Given a steady rate of production, continued advancesin
both factory automation and robotics reduce the number of
people needed to produce goods. While some argue thatthis
trend could make certain workers positions redundant,
proponents assert that it will make workers more productive
and relieve them of unpleasant or unsafe jobs. Automation
increases reliability and product quality, and often makes it
easier to adapt production lines and create flexible production
processes. For many organisations in the manufacturing
sector, automation is also part of a strategy to deal with
the emerging risk of a shrinking and aging labour force, or
the ongoing risk of cheaper labour costs in other countries.

Left: The Husteel Dangjin Steel Plant in South Korea.

The steel industry is a key component of South Koreas economy.

Automation increases
reliability and product
quality, and makes it
easier to create flexible
production processes

13

 BMW

In BMWs Leipzig factory the production and office spaces are combined, transcending
traditional blue-collar/white-collar spatial divisions.

In Asia, labour costs are continuing to rise, cutting into

the regions competitive advantage. Nevertheless, Chinas
factories are still much cheaper than those in wealthier nations
- employees minimum wages are less than a quarter of their
counterparts in the United States.13
As the global manufacturing hub, rising prices in Asia
are reflected in an upwards adjustment of prices worldwide.
Average pay in Asia almost doubled between 2000 and 2011,
compared to an increase of about 23% worldwide (and a 5%
increase in developed countries). The biggest increase was
in China, which saw average salaries triple.14 Lower wage
countries like Cambodia and Vietnam are beginning to attract
manufacturers, meaning that China - which accounts for half
of Asias output - is embracing greater automation to ensure
that local factories remain competitive.
An example of the automation trend, Flextronics, a
Singapore-based company with factories in China, initially
made small, simple-to-assemble consumer electronics. But
as wages, land costs and competition in China began to rise,
shrinking margins prompted a focus on more complex, higher
priced products. This required investments in automation,
more precise manufacturing and increased staff training.

14

Automation increases
reliability and product
quality, and makes it
easier to create flexible
production processes

Rethinking the Factory

The Robot Armies

Number of robots per 10,000 workers in the manufacturing sector
Global Average
58

Equals 10 robots

South Korea
396
Japan
332
Germany
273
United States
141
China
23

China is the largest industrial-robot market in the world, but its level of factory-automation
lags behind other countries on a per capita basis.
Source: International Federation of Robotics, World Robotics report (2013)

Higher-priced machines for the aerospace, robotics, automotive,

and medical industries now make up 72% of the companys
Suzhou output. Flextronics has implemented automated
processes wherever it has the potential to reduce labour costs
and errors. Automated data about the assembly line is now
collected in real-time and there is far more transparency of the
supply chain.15
Asia has become the largest market for industrial robotics,
with China showing the fastest growth over the past five years.16
Global demand for industrial robots also continues to grow. The
International Federation of Robotics (IFR) expects that between
2014 and 2016 the worldwide sale of robots will increase by an
average of 6% per year. By 2016, the annual supply of industrial
robots will reach more than 190,000 units.17 MGI research
suggests that 15 to 25% of the tasks of industrial workers in
developed countries, and 5 to 15% of those in developing
countries, could be automated by 2025.18
One significant development in workplace automation
is that the factory robot of the future will be able to safely
interact and cooperate with its human co-workers. The aim of
industrial designers is to combine the ingenuity and versatility
of people with the precision and repeatability of robots, enabling

Average pay in Asia

almost doubled
between 2000 and
2011, compared to an
increase of about 5%
in developed countries

15

BMW South
Carolina Plant

Robots in BMWs Spartanburg, South Carolina

plant are challenging the notion that its too
dangerous for robots and humans to work
alongside each other. Made by Danish company
Universal Robots, the robots help workers
with the final door assembly by applying a
door sealant to keep sound and water out of
the car, a usually arduous task for workers.
BMW is also testing more sophisticated final
assembly robots that are mobile and capable
of collaborating directly with humans. These
robots, which should be introduced in the
next few years, would be able to hand their
human colleague a wrench when needed, and
manoeuvre safely around human workers.26

BMW

Case Study:

 Baxter

A Baxter robot retails for around US$25,000 roughly equivalent to the annual salary of an
unskilled worker in the US.

human-machine collaboration in dynamic and reconfigurable

manufacturing environments.19 A world optimised for both
humans and robots.
For example, Baxter, a robot manufactured by Rethink
Robotics, can safely share a workspace with workers due to its
variety of smart sensors and cameras. Interacting with Baxter
is more like working with a person than operating a traditional
industrial robot. Baxters sensors, including depth sensors as
well as cameras in its wrists (allowing it to see with its hands),
means it constantly builds and adjusts a mathematical model
of the world, allowing it to recognise different objects.
The robot is also intuitive to use, allowing regular factory
workers to function as programmers. A factory worker can
show the robot a fragment of the task she is asking the robot
to perform, and the robot infers the rest of the task. Workers
are therefore not in competition with these machines, because
they can serve as supervisors.20 A Baxter retails for around
US$25,000 roughly equivalent to the annual salary of an
unskilled worker in the US.
By 2050, 21% of the global population will be 60 years
old or older, up from 11% in 2013.21 This trend is even more
notable in developed countries where 32% of people will be

The factory of the

future will be optimised
for humans and robots
working together

17

cCory M. Grenier

Boeings Everett Factory is the largest building in the world by volume, covering over 98
acres. It incorporates a store, a theatre, an aviation museum and an education centre.

aged 60 or older by 2050.22 Within these ageing societies, the

supply of working age people will decline as a proportionof
the total population, and working age people will have to
support more dependents. In less developed regions there
will be more young people, providing a larger workforce and
growing consumer markets.
In the next few decades, new forms of human
enhancement and augmented capabilities may support mental
performance and physical mobility, helping to counter the
effects of an ageing population.23 This is already evident today
in the growing application of cyber-physical systems (CPS).
CPS are physical and engineered systems whose operations
are monitored, coordinated, controlled and integrated by a
computing and communication core.24 CPS will transform
how people interact with and control the physical world
around them. These systems will enable the physical world
to merge with the virtual world, allowing factory workers to
design products, control processes and manage operations in
radically new ways, enabling greater flexibility, productivity
and quality.25

18

Rethinking the Factory

Combining all Senses:

Getting Rid of Keyboard and Mouse in Factories

...
Speech

...

...

...

...
...
...

Gesture

Graphics

Multi-sensory interaction and control

Eyetracking

Physical Action

Facial Expression + Body Language

Multi-sensory interaction: the impact of cyber-physical systems.

Source: German Research Centre for Artificial Intelligence (2013)

As production lines and machines become more advanced

and specialised, companies must also invest more in training
and specialised equipment to enable the workforce to manage
and operate complex production lines. There will be a
heightened need for skilled workers and managers who are
adept in the STEM fields (science, technology, engineering
and mathematics) as manufacturing shifts to more complex
and technological processes. Collectively, this will lead to a
shift to safer, more highly skilled jobs in manufacturing.

Integrated and collaborative value chains

Todays knowledge economies are driven by the principles
of open innovation and collaboration. Value is created by
breaking down silos within and across organisations and
enabling dialogue and interaction across different disciplines.
These changing boundaries include the increasingly blurred
line between blue and white collar workers. As manufacturing
becomes more highly skilled and the roles for these workers
begin to merge, the configuration of factories will change
to reflect this. Many factories are now designed to enable
research, development and design teams to work on the
same factory floor, enabling enhancements to products

19

 Tesla Motors

In June 2014, Tesla broke ground on its huge lithium ion battery Gigafactory in Nevada, and
expects to begin cell production in 2017.

and processes at the point of production rather than in

segregated spaces. With the integration of consumers and
external partners and more vertical collaboration within
organisations, digital and physical factory spaces must be
designed to facilitate greater openness and integration. In such
an environment, people, technology and process drive value,
while space is a key enabler.
Beyond the walls of the factory there is an increased
focus on distributed and e-manufacturing, where physical
and virtual networks of suppliers and manufacturers come
together to produce a product. These shifts in production and
development ecosystems are not new; they are, however, being
radically accelerated by a much more sophisticated exchange
of people, information and data between the different entities.
Manufacturing value chains no longer have clear boundaries
or linear pathways. According to the Fraunhofer Institute for
Industrial Engineering (IAO), many production processes will
run on a decentralised, Internet-based model, networking all
steps of the value chain. A digital factory will be used to plan,
simulate, and optimise the entire product development and
production process.

20

Digital factories will be

used to plan, simulate,
and optimise the entire
product development
and production process

Rethinking the Factory

EU labour force developments to 2060

Ireland
Luxembourg
Cyprus
United Kingdom
Belgium
Sweden
France
Denmark
Finland
Spain
Italy
Austria
Netherlands
EU27
Greece
Portugal
Czech Republic
Slovenia
Malta
Hungary
Slovakia
Estonia
Germany
Lithuania
Poland
Romania
Latvia
Bulgaria
-60

-40

-30

0%

30

40

A decade-long decrease in fertility rates is causing a shift in the availability of Europes

labour force. This shift is also influenced by patterns of migration, with high
immigration projected for the UK, Spain and Italy, while the Baltic region will experience
emigration outflows as well as very low rates of fertility. Most European
countries will experience a decrease in the working age population to 2060.
Source: Eurostat, 2015

21

BMW Plant Central Building

BMWs Central Building is the nerve centre

for the entire Leipzig complex, acting as
the administrative hub in a plant where all
production processes assembly, body
shop and paint shop converge. This
design is part of a deliberate strategy to
ensure that administrative, engineering
and production staff mix more effectively
in sharing common spaces and navigable
routes throughout a central marketplace.

The production line runs through the

Central Building, visible from a variety of
angles and levels. Everyone in the building
has their own desk, and the lockers and
social spaces of the factory workers are
also located in this administrative centre.
This brings the BMW community closer
together in order to share experience and
knowledge.30

BMW Group

Case Study:

Workers will require IT and software skills in order to

understand and manage more integrated processes and product
development pathways. This requirement for specialised
skills means that companies will no longer choose locations
based on the cheapest wages, but rather will be based in areas
where they can find highly skilled workers.27 Crucially, the
global supply of these kinds of workers is not keeping up with
demand. According to McKinsey Global Institute, there will
be a potential shortage of more than 40 million highly skilled
workers by 2020.28
Sharing knowledge across the value chain and network is
crucial for competitive advantage. Knowledge-sharing of this
sort requires strong relationships between manufacturers and
suppliers. This is an area in which the Chinese have excelled,
and accounts for much of Chinas leading manufacturing
capability, strengths that have allowed China to innovate
and develop new products more quickly than other global
competitors. In 2012, China was the worlds leading exporter
of high-tech products, with a combined value of more
than $600 billion.29 The same pattern is being replicated
in other parts of the world, where clusters of research and
manufacturing facilities enable collective innovation and
knowledge exchange

Showroom experiences
are part of the larger
trend of customers
demanding connected
product experiences,
rather than just a
product

An open and engaging customer experience

Many developed and emerging economies are witnessing a
transformation in how people consume products and services.
In addition to a shift to more service-based consumption,a
democratisation of product design and manufacturing is
occurring. The maker movement, 3D printing, open product
development platforms, crowd funding and peer-to-peer
marketplaces are empowering more people to design, produce
and share their own goods than ever before. In response,
consumer product companies are integrating these types of
experiences into their existing service offerings, enablingthe
mass customisation of products, or participation in open
innovation processes. Faster innovation cycles, coupled with
constantly changing market conditions and demand patterns,
mean that manufacturers will need a more agile and flexible
approach to production, both in terms of the machines
deployed, but also in terms of the shape and function of
buildings and the skillsets of people working within them.

23

Case Study:

VW Group / Lars Landmann

Volkswagen
Autostadt

At Volkswagens Autostadt people can

enjoy anything from a factory tour to
driving the latest SUV along a specially
designed off-road course. Picking up your
new car at the Autostadt instead of from
a dealer is one way of building a strong
relationship with the brand and exposing
customers to its unique history. The
factory area includes a museum, movie
theatre, bakery, restaurants, exhibitions,
guided tours and a five star hotel.

Another aspect of this transformation is a growing

opportunity to utilise the factory as a showroom. Many
companies have built sophisticated customer experiences
around their factories. These showroom experiences are
part of the larger trend of customers demanding connected
product experiences, rather than just a product.31
In Volkswagens Glass Factory, for example, customers
and potential buyers of the Phaeton luxury saloon can watch
their cars final assembly process at close hand. The concept
of the transparent factory and factory experience will gain
increased importance as more people get involved in making
things themselves or as they expect closer insight into how
products are manufactured, especially at a customised
level. The opportunity for factory owners and operators lies
in adapting their existing spaces to enable these types of
experiences to take place.
Chrysler is taking this idea one step further with a
virtual reality experience of its factory floor. Users put
on a headset to experience a four-minute, 4D immersive
experience of how the 2015 Chrysler 200 is made. Users
can interact with the car in real-time via the headset while
exploring the three aspects of the cars building process. In
the body shop, 18 state-of-the-art framing robots weld the
frame of the car together. The next stage is the paint shop,
where the car is prepped for its paint job with the help of
ostrich feathers before being given its coating. Finally, in the
metrology centre, the vehicles fit and finish is checked and
measured.
Brand experiences are not limited to fun consumer
products like cars. Saunier Duval, a manufacturer of heating,
ventilation and air-conditioning technology, has created a
factory tour at its plant in Nantes, France which takes in a
360 degree, 3D cinema show, an interactive display of the
companys products and a meal.
These sorts of consumer experiences help differentiate
a companys products. To remain competitive and adapt to
changing consumer behaviour, companies are finding new
concepts and marketing strategies to build brand loyalty.
Experience marketing of this kind can also be very useful
in creating an image and corporate identity, capitalising on
the idea that people wont remember what you said, but they
will always remember how you made them feel.

Top: Volkswagens
Transparent Factory in
Dresden, Germany.
Bottom: Chrysler 4D
virtual reality experience.

Top: Volkswagen
Bottom: Wieden+Kennedy
Portland, Stopp, and MPC Creative

25

 GDMZH Pearl Red Spirits & Wines Co., Ltd.

Seamless Design and Production

This is nothing less than a paradigm shift in industry: the real
manufacturing world is converging with the digital manufacturing world to enable organisations to digitally plan and project the
entire lifecycle of products and production facilities.
Helmuth Ludwig, CEO, Siemens Industry Sector, North America in IndustryWeek (2013)

Rapid and reactive manufacturing

At the end of 2014, the number of mobile-connected devices
in existence exceeded the number of people on earth, and
by 2018 there will be nearly 1.4 mobile devices per capita.32
The expanding Internet of Things the connection of a
huge range of devices, sensors, and machines to the Web
and the increased collection and analysis of data will
have a fundamental impact on the design and operation of
factories and manufacturing processes. Embedded sensors
and dynamic data collection can now span the entire value
chain of a product or component enabling new degrees
of transparency and flexibility on production lines.
Intelligence based on big data and advanced analytics
creates new opportunities for competitive advantage.
Analysis of selected data enables companies to reveal
customer insights in more detail, identify new product
opportunities sooner, and get new product and design
variations to market faster. Real-time information allows
greater transparency in the supply chain and, and alwayson monitoring of machinery can prevent potential outages
before they happen.33 Manufacturing and product design
can become responsive to external events or changes
happening at any point in the supply chain. This can support
compressed research, development and production timelines,

Intelligence based on
big data and advanced
analytics creates new
opportunities for
competitive advantage

Left: The Guangdong Mingzhu Zhenzhuhong Wine Factory in China will use cutting edge
automated equipment to improve the traditional wine-making process.

27

Key Elements of the Industrial Internet

Intelligent Machines

Advanced Analytics

People at Work

Connect the worlds machines,

facilities, fleets and networks
with advanced sensors, controls
and software applications

Combines the power of physicsbased analytics, predictive

alogrithms, automation and
deep domain expertise

Connecting people at work

or on the move, any time
to support more intelligent
design, operations,
maintenance and higher
service quality and safety

Source: GE, Industrial Internet: Pushing the Boundaries of Minds and Machines (2012)

as well as faster responses and adaptation to potential

disruptions or changing customer demand. It is estimated that
manufacturers can cut product development and assembly
costs by as much as 50% and save up to 7% of working
capital by integrating big data into their operations.34
One of the biggest opportunities for manufacturers
presented by big data is the ability to unearth actionable
insights from customer engagement, consumer behaviour
and feedback. By 2025, the majority of global consumption
will take place in developing countries, while customer
demand in established markets is expected to fragment as
consumers seek greater product variety. Manufacturers
will need to be able to combine data from commercial
transactions with data from various web outlets, including
social media and mobile devices, in order to better
understand, anticipate and meet customer preferences
and demands.35
Although mass customisation has been the next
big thing for decades, relevant technologies are
finally sufficiently developed and affordable enough
to make it a reality. Interest in customisable products
is growing, and according to Forrester Research, Inc.,
threetrends will allow mass customisation to flourish:

28

By 2025, the majority

of global consumption
will take place in
developing countries

Rethinking the Factory

The winners in the global manufacturing arena will be those

companies that can adeptly harness big data with manufacturing
analytics to uncover customer insight, identify new markets,
monitor sensors and collect after sales data.
TIBCO Spotfire (2013)

Supply chain technologies now enable more efficient

production, so there is a more efficient flow between
customers orders and fulfilment on the production side.
Customer-facing technologies are cheaper and easier to
deploy than ever before. The price, and time requirement,
for developing customer-facing configurators (which
intuitively guides end-users as they build customised
products) has dropped significantly in the past few years.
Technologies allowing customers to design their own
products will continue to grow and will become richer.36
Additive manufacturing will also make mass
customisation easier and more affordable, and in turn,
mass customisation will drive the growth of 3D printing.
Expenditure on 3D printing is scaling up rapidly, reaching
US$412 million in 2013 (an increase of 42% from 2012).
In 2014, this investment grew by an estimated further
62%.37 Additive manufacturing also allows for
manufacturing to take place in non-traditional spaces,
such as a small office in a city centre. This will allow
production to take place closer to the point of use, thereby
lowering transport costs and associated emissions.

29

 Local Motors Inc.

Case Study: Local Motors 3D Printed Car

The vision behind Local Motors driveable
3D printed car is that consumers will one day
be able to design their own cars online, then
have the vehicle printed and delivered to their
door. The company plans to set up two new
micro-factories and to start selling its cars
within 12 to 18 months. The long-term goal is
that micro-factories will be located within 100
miles of major urban centres. This will help
create local jobs, and will also reduce auto
freight and distribution costs by an estimated
97% compared to typical automakers.

Smart and connected machines and products

According to the German Research Centre for Artificial
Intelligence, 80% of the innovations seen in the
manufacturing sector are ICT-based.38 Terms like Industry
4.0 or the Industrial Internet refer to the convergence
of machines and intelligent data. These new ecosystems
of connected machines have the potential to increase
efficiency, minimise waste, and help the employees
operating them make better decisions. GE estimates
that the Industrial Internet could eliminate $150 billion
of waste and inefficiency across major industries.39
Along with smart machines and the augmented operator
(operators that use virtual tools to control production
processes), smart products are one of the central aspects
of the fourth industrial revolution.40 Smart products are
grounded in the idea that machines can communicate,
learn from one another, and even organise their workflow
and throughput without human intervention. These fully
integrated systems of hardware and software, enabled by
embedded sensors, are reshaping how machines interact
with humans, other machines, and manufacturers.41

30

Smart products
incorporate memory
and embedded
intelligence, and will be
able to coordinate and
control manufacturing
processes

Rethinking the Factory

Future production facilities will be much smarter than todays factories.

This intelligence will be made possible by the use of miniaturised processors,
storage units, sensors, and transmitters that will be embedded in nearly
all conceivable types of machines, unfinished products, and materials, as
well as smart tools and new software for structuring data flows. All of these
innovations will enable products and machines to communicate with one
another and exchange commands. In other words, the factories of the future
will optimise and control their manufacturing processes largely
by themselves.
Siemens, Pictures of the Future (2013)

Smart products incorporate memory and embedded

intelligence, and will themselves be able to coordinate
and control manufacturing processes. The advantages
of this approach include completing processing
operations on schedule, making optimal use of
resources, and reducing warehouse holding stock.

Sustainable resource streams

According to the International Energy Agency, global
energy demand is expected to increase 37% by 2040. By
this point, the worlds energy supply mix is likely to have
divided into four nearly equal parts: oil, gas, coal and
low-carbon sources.44 (The current mix is: gas 24%,
coal 30%, oil 33%).45 The availability of alternative
fuels, as well as volatile oil prices, could change the
way factories operate and could lower costs associated
with the transportation of manufactured products.
A focal point of continued factory innovation
is reduced energy and material consumption within
the manufacturing process. Advances in technology
continue to enable lower energy consumption. Recent

These fully integrated

systems of hardware
and software, enabled
by embedded sensors,
are reshaping how
machines interact
with humans, other
machines, and
manufacturers

31

Siemens Electronic
Works

The Siemens Electronic Works facility in

Amberg, Germany, is a 108,000-square-foot
high-tech facility where smart machines
coordinate the production and global
distribution of the companys Simatic control
devices. This is a custom, built-to-order
process involving more than 1.6 billion
components for over 50,000 annual product
variations, for which Siemens sources about
10,000 materials from 250 suppliers to make
the plants 950 different products The
Amberg factory only records about 15 defects
per million and enjoys a 99% reliability rate
and 100% traceability on its expansive lines.
Managing these levels of complexity requires
a sophisticated network of technologies that
are all integrated into a smarter, more efficient
industrial value chain.43

Siemens AG

Case Study:

 Rolls-Royce

Case Study: Rolls-Royce, Prince George County

The Rolls-Royce advanced manufacturing
and research facility in Prince George County
USA is an example of a highly automated
modern factory, characterised by a minimum of
human interference in the production process.
Machines do the initial milling of disks, which
later become parts of an aircraft engine, as
well as the inspection of the parts dimensions.
Sensors embedded in Rolls Royce engines
will track how the engine and its parts are
performing, and data is kept on each part for
25 years. While the factory is part of a complex
global supply chain, it operates within a local
ecosystem of organisational expertise; the
facilitys proximity to the Commonwealth
Centre for Advanced Manufacturing facilitates
continuous dialogue with experts and the
efficient transfer of innovative ideas.

examples include regenerative braking in conveyor

belts, algorithms for improved robot movement and
operation, and the use of advanced low-power lasers.
The utilisation of 3D-printing in manufacturingcan
reduce the amount of waste produced as well as the
amount of energy used. Metals manufacturer, Metalysis,
in collaboration with engineers from Sheffield University,
is using 3D printing to produce titanium car parts. The
process uses electrolysis for extracting titanium powder
from rutile sand, making it much more affordableand
energy-efficient than alternative processes.
Auto manufacturer Tesla is building a Gigafactory in
Reno, Nevada, which the company claims will generate more
power than it consumes. The facility will be the worlds
largest lithium-ion battery factory, and will use three sources
of renewable energy: geothermal, wind and solar. Together
these energy sources will produce 20% more energy than the
factory will need in order to operate. Through economiesof
scale, the Gigafactory is expected to drive down the perkilowatt cost of the companys own lithium-ion car batteries
by more than 30% in its first year of production in 2017.46

A focal point of
continued factory
innovation is reduced
energy and material
consumption within the
manufacturing process

33

Nestl Zero-Water
Factory

Nestls dairy factory in the water stressed

state of Jalisco, Mexico, was recently
transformed into the companys first
zero water manufacturing site. The Cero
Agua factory uses fresh cows milk, which
naturally consists of around 88% water,
and heats it at low pressure to remove
some of its water content. The resulting
steam is then condensed, treated and used
to clean the evaporating machines. Once
the machines have been flushed out, the
water is collected, purified and recycled a
second time. The water can then be reused
for watering gardens or cleaning, thereby
eliminating the need to extract groundwater
for operational use. The water savings are
enough to meet the average daily water
consumption of 6,400 people in Mexico.

Nestec S.A., Vevey, Switzerland

Case Study:

So often, in the first industrial revolution, factories were dirty.

We have these images of factories as gritty buildings with
smokestacks facilities that no families would want in or near
their neighbourhoods. This factory is a clean factory.
The energy will be clean. The production will be clean.
Architect and sustainability leader William McDonough on the design plans for
Methods LEED-Platinum factory in Chicago (2014)

McKinsey estimates that, in general, manufacturers

across all sub-sectors could reduce the amount of energy
they use in production by 20 to 30%. McKinseys analysis
indicates that manufacturers could also design their
products to reduce material use by as much as 30%, while
increasing inherent potential for recycling and reuse.
Some companies are also starting to explore business
models that retain ownership of the materials used in the
products they sell. This means that manufacturers could
extract additional value from a product by encouraging the
consumer to return the product at the end of its useful life.47
Historically, industry has been dominated by a oneway, linear model of production and consumption in
which goods are manufactured from raw materials, sold,
used and then discarded as waste. In a circular economy,
rather than entering the waste stream, products are reused
to extract their maximum value before being safely and
productively returned to the technosphere or biosphere
as an input. Resource scarcity and tighter environmental
standards will propel this trend forwards, as will new
technologies and new patterns of consumer behaviour.48
New asset management standards, such as ISO 55000, will
also draw more from existing assets as proactive lifecycle
asset management systems are further developed.
As a result of the volatility of both steel and fuel
prices, the Danish shipping division Maersk Line has
developed a Cradle to Cradle Passport for a fleet of
twenty new Triple-E ships. Their longer-term goal is

In a circular economy
products are reused to
extract their maximum
value before being
safely and productively
returned to the
technosphere or biosphere

35

Bio-inspired plastic, self-healing

micro metals, self-cleaning glass

Researchers at Harvard Universitys

Wyss Institute for Biologically Inspired
Engineering have developed a new material
called Shrilk to replicate the strength,
durability and versatility of a natural insect
cuticle. Insect cuticles are light enough to
permit flight, thin enough to accommodate
flexibility and strong enough to protect its
host without adding weight or bulk. Among
other uses, Shrilk could be used to make
rubbish bags, packaging and nappies that
degrade quickly.52
Researchers at the University of Illinois
have developed a self-healing system
that supports conductivity. The material
is filled with tiny microcapsules that
burst on impact, releasing the contained
liquid metal which seals any gaps in the

damaged product. This approach deals

with both structural repair and conductivity
restoration. It works on a localised level,
so only those microcapsules near the
damaged area are activated.
A team from Harvard University has
developed a transparent, biomimetic
coating that toughens ordinary glass giving
it self-cleaning properties. The coating
offers numerous applications from durable,
scratch-resistant lenses for eyeglasses,
to self-cleaning windows, improved
solar panels or new medical diagnostic
devices. The technology was inspired by
the carnivorous pitcher plant, which has
slippery leaves that trap unsuspecting
insects.

Joanna Aizenberg / James Weaver

Case Study:

to create new ships from those that reach the end of

their useful life. The Passport, a first for the shipping
industry, records a detailed inventory that can be used
to track, locate and recycle the ships component parts
to a higher degree than is currently possible. As a result,
the materials including the 60,000 tonnes of steel per
ship can be sorted and processed more effectively.49
Due to concerns about water scarcity, water
quality, climatic risks and potential damage to brand
value, water efficiency has become an increasingly
important factor for manufacturers. Major corporations
like Coca-Cola have well-developed strategies at a
global level to manage their water footprints, and to
address water concerns in the wider community.

New materials and production

Emissions reductions, resource constraints, rising prices
and environmental challenges are major drivers for material
innovation and life-cycle considerations. As new and
innovative technologies continue to be harnessed in the
effort to address these and other global challenges, focus is
shifting towards materials that are lighter, stronger, smarter
and greener. New materials have the potential to change
the future of manufacturing, by improving the production
process, increasing product performance, and differentiating
products from competitors.
Materials like graphene, which provides revolutionary
strength, flexibility and conductivity, could have numerous
applications and could support innovative structures.
Developments in material science are also dramatically
improving the performance of batteries, unlocking much
greater potential for electricity storage.51 A variety of selfhealing and self-cleaning materials are being developed,
capable of repairing damage without external human
intervention. These technologies could potentially extend the
lifetimes of manufactured goods and reduce demand for raw
materials, as well as improve the inherent safety of materials
used in construction.

Top: Additive Manufacturing

Steel Node, Arup
Bottom: The design of the
Shell Star Pavilion was
enabled by advanced digital
modelling techniques.

Top: Davidfotografie
Bottom: Shellstar Pavilion, Matsys
+ Riyad Joucka, Hong Kong, 2012,
Photo by Dennis Lo

37

 Veolia Water Leighton John Holland Joint Venture

Resilient and Adaptive Spaces

Designing the digital factory

Factories will need to be significantly more responsive
to rapidly changing market dynamics and operational
environments in the future. They will need to adapt
physically to supply chain disruptions and variations,
new product lines, machinery and equipment.
As such, the factory will need to accommodate a
range of floor layouts, production systems, equipment
configurations and extensions.53 Most automotive factories
today are typically set up to maximise economy of scale
for a limited range of vehicle models. In a smart factory,
however, the equipment is flexible and readily adapted to
manufacture multiple models within the same factory.54
In China, Changan-Ford is using robots from
automation technology company ABB on a new vehicle
line designed to provide greater flexibility. Using ABBs
FlexLean philosophy, the assembly line for the vehicle
body is equipped with a number of robotic technologies
that allow for rapid switching between car models, in
response to shifting market demands. According to ABB,
the ability to produce different car models on the same
line reduces the required capital investment of a new line
and saves floor space. This flexibility also makes it easier
to phase out old models and introduce new models over
time, improving the efficiency of the overall line.55
The shift to flexible and adaptable factory designs and
layouts is in part enabled by the increased use of building
information modelling (BIM) in factory design, planning
and management. BIM enables production plants to evolve
into intelligent digital factories. Digital models of factories
enable factory owners and operators to make changes to the
physical plants far more quickly and accurately. According to

Digital models of
factories enable factory
owners and operators
to make changes to the
physical plants more
quickly and accurately

Left: BIM model for Hong Kong Sludge Treatment Facility, the largest sludge treatment
works in the world.

39

The Nestl Modular Factory Concept

Natural ventilation
extraction for better
energy usage

Lit by natural lighting

and solar tubes

Slanted roof to
collect rainwater

Solar panels for

heating water

Sides open to
facilitate cooling
and ventilation

Utilities unit

Diesel generator
when reliable
energy unavailable

Electrical
System

Amenities block,
including offices,
canteen and
changing room

Road for truck

access

Roof made
from insulated
metal sheet

Steel Frame

Source: Nestl in collaboration with Concept Consult Architectes, Lausanne

The Nestl modular factory will be made of a number of

easy-to assemble component parts, designed to offer a flexible,
simple and cost-effective solution for creating production sites in
the developing world. The average Nestl factory takes between
18 and 24 months to build and costs between 22m and 36m.
The new modular factory could be built and functional in less
than 12 months, at a cost of between 11m and 18m.
Nestl on its plans to adopt modular factories (2014)

Siemens, when new components are installed in the physical

plant in future, they will be able to configure themselves and
establish communication with each other, thereby eliminating
start-up time and reduce costs. Once in operation, production
processes will optimise and even heal themselves.56
Creating a digital factory model for utilisation during
both the design phase and operation of the factory is critical
in achieving an efficient manufacturing layout. An important
benefit is the ability to pre-visualize the factory design and
layout in order to fine-tune the relational integration of all
components, including the buildings structure, building
systems, machinery, logistics processes, resource flows and
energy production systems. BIM allows designers to perform
performance and process-related analysis before the factory
is constructed and any equipment installed, optimising
machine utilisation and energy consumption, maximising
footprint efficiency, and increasing production throughput.
BIM can also identify and create efficiencies in the design
of multiple factories across a portfolio of assets. A library
of digital factory content and components can be used
to quickly assemble a factory design from a toolbox of
standard components.

These digital factories

are better able to adapt
to disruptions, changes
in demand and other
influencing factors

41

Vitra Circular
Factory

In 2013, Vitra, the German furniture

manufacturer, unveiled its latest assembly and
shipping centre: a 60,000-square-foot circular
factory. This design is built for flexibility as
logistics and production methods no longer
adhere to the strict hierarchical principles of
rectangular factories. The circular footprint of
the building allows the delivery and loading of
goods in different locations, so that the traffic
flow inside the hall is reduced, optimised and
simplified. The assembly zone in the middle of
the building can also be shaped to meet new
requirements based on current orders.

SANAA, Vitra Campus, 2012

Case Study:

Principles for Design for Disassembly59

Design for disassembly incorporates a number of core principles. These include:
Careful initial selection of recycled and recyclable materials. At scale, use of
easily recycled materials in new projects can drive industry and governmental
development of new recycling technologies.
Minimise the number of material types used. Fewer material types simplifies
sorting and reduces complexity of recycling transport.
Preferentially use mechanical, rather than chemical, connections. Easy
separation and disassembly of components reduces damage to materials
and simplifies recycling.
Embrace modularity. A freely interchangeable building system enables rapid
and efficient changes to layout and function.

These digital factories are better able to adapt to

disruptions, changes in demand and other influencing factors.
The supply chain can be altered by sharing data without
interference between manufacturers, supplier and customers,
resulting in improved information mobility across the supply
chain. This minimises disruption, improving the ability for
the supply chain to adapt in sync, independent of location.

Adaptable and modular design

Improved adaptability and flexibility will also mean that
factories can be constructed from modular components that
are easily disassembled and relocated. Modular structures
can be expanded quickly and easily to meet changing spatial
requirements. Tented factories, for example, can be used for
extra capacity or as stand-alone moveable facilities.
Modularity and disassembly are alternatives to current
construction practice, which sees the assembly of buildings
as a uni-directional project to create a final structure.
However, in the future there will be more focus on design for
disassembly. This more cyclical view of the built environment
will take into consideration the deconstruction process as
well as the construction process.57

43

Case Study:
The design of this 95,000sqm factory allows
for maximum flexibility and scope for future
expansion and the on-going development
of the manufacturing process. Through a
number of sustainable features, the building
is targeting the classification of BREEAM
Excellent. These strategies include natural
ventilation, solar hot water panels and
extensive photovoltaics to partially offset
energy costs of the manufacturing process.

Jaguar Land Rover

Jaguar Land
Rover Engine
Manufacturing
Centre

 University of Sheffield AMRC

Case Study: Advanced Manufacturing Research Centre Factory 2050

The University of Sheffield Advanced

Manufacturing Research Centre with Boeing
(AMRC), has secured funding for a 43 million
state-of-the-art research factory which will
be the UKs first fully reconfigurable assembly
and component manufacturing facility.

The factory, which will be a focus for

collaborative research, will be capable
of rapidly switching production between
different high-value components and one-off
parts. The facility will constructed largely of
glass, so that the advanced manufacturing
technologies can be displayed, and cover an
area of around 4,500sqm.
The factory will combine technologies
including advanced robotics, flexible
automation, unmanned workspace, off-line
programming in virtual environments linked
to plug-and-play robotics, 3D printing from
flexible automated systems, man-machine
interfaces, and new programming and training
tools.60

Vertical space and urban possibilities

Manufacturers can now do more with less space as robots

and automation are reducing the space needed for production
lines. More vertical space is also being used. This reduction in
footprint leads to lower energy costs per square foot.

Steven Hawkins, Director of Automation Services, Stellar (2012)

The enduring image of a traditional factory reaches
back to the height of the industrial revolution. These highly
polluting factories first scarred the urban centre, before
moving out to the industrial hinterland. Factories are now
beginning to return to the city in a different guise. They are
cleaner, greener, quieter and no longer demand large-scale
rectilinear spaces. Most of these modern urban factories are
assembly plants which need less room, and many are able to
occupy vertical spaces.61
Cities offer a number of interesting advantages for
greener, more sustainable manufacturing models. Urban
density allows for a symbiotic relationship where one

45

Advancements in ecologically-responsible technology mean that

clean manufacturing can exist adjacent to residential spaces,
and that work and living can be hybridized in new ways.. Vertical
urban factories could produce energy rather than just consume
it, and workers could recycle goods, rather than spew them out.
This in turn would close the loop of making, consuming and
recycling as part of a new urban spatial and economic paradigm.
Nina Rappaport, architectural historian and critic (2011)

factory can use waste outputs from another as an input,

thereby sharing resources. With cleaner, more high-tech
processes, factories can fit better into the urban environment.
For example, in the production of niche goods such as
furniture, garments or high-tech products.62 Manufacturing
also contributes to the vitality of cities, providing job
opportunities with a high multiplier effect.63
3D printing will allow manufacturing to be more mobile
and dispersed. Factory locations are therefore likely to
become both more varied and closer to the end consumer.64
This development, along with the trend of next-shoring
(developing products closer to where they will be sold) could
result in smaller, more central urban factory locations.

46

Rethinking the Factory

Sustainable energy (solar)

Data analytics

Ventilation and cooling

Flexible spaces

Natural lighting

Sustainable construction material

Remote data sharing and analytics

/ Social data streams

Data stream for assessment

Drone logistics network

Factory experience
Healthy environment
Collaborative environments

Modular adaptable spaces

Water capture and storage
Grey and black water
Factory experience
Smart Grid

47

cChrysler Group

Delivering Change
Manufacturing is entering a new era. Key to this shift is the
intersection of the virtual and physical worlds, made possible by the
integration of software, sensors and communications within cyberphysical systems. Additive manufacturing is another game-changing
trend that has the potential to reduce waste, enable mass customisation
and shift manufacturing closer to the end consumer.

These and other trends will influence the design and

operation of factories, catalysed by the ability to create
digital models of factories, making it more efficient for
operators to make changes to the actual physical plant.
Manufacturers will need to be quick to adapt and will have
to focus on more sustainable processes and products, including
the circular economy. Due to the convergence of the physical
and digital, factories of the future will also require a more
skilled workforce. Manufacturers will therefore look to locate
operations where there is access to a skilled pool of workers.
As manufacturing remains critically important to
both the developing world and the economically advanced
world, it is important for companies and policy-makers
to have a comprehensive understanding of the changing
manufacturing landscape, in order to decisively and
quickly respond to new challenges and opportunities.

Left: Workers evaluate paint quality of the 2015 Chrysler 200 at

Chrysler Groups Sterling Heights Assembly Plant.

Due to the convergence

of the physical and
digital, factories of the
future will require a
more skilled workforce

51

cBASF

Workers conduct an inspection at BASFs water treatment and paper chemicals plant
in Nanjing, China.

Here are eight suggested actions for factory

owners and operators to consider:
1. Provide new training opportunities for staff so that
they are ready to manage more complex technological
processes and utilise cyber-physical assistance systems
2. Provide healthy, comfortable workplace
conditions for an increasingly skilled and diverse
workforce, including systems and policies
to accommodate an ageing workforce
3. Design factories and production facilities that encourage
greater openness, integration and collaboration
between staff of different backgrounds and skills
4. Explore options for creating modular and adaptive
factory designs for rapid expansion or reconfiguration of
production capacity in terms of both product and location

52

Rethinking the Factory

 McDonough + Partners

Methods new factory in Chicago is designed to be one of the few LEED Platinum factories
in the U.S.

5. Harness the power of sensors, data and advanced

analytics to enable rapid and responsive
manufacturing processes that can anticipate
and respond to changing demand patterns
6. Create sustainable factories that operate at higher
material and energy efficiencies by maximising
on-site production and the re-use of energy and
materials resources. Ultimately, strategies need
to be formulated to help transition towards a
circular economy in which there is no waste
7. Utilise BIM models to shorten lead times on factory
reconfigurations and expansions, and to optimise
the relationship between building, machinery and
production processes
8. Develop the understanding and implementation of best
practice asset management and whole life-cycle costing

53

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56

Rethinking the Factory

 Hufton + Crow

Packaging facility and warehouse for Gerber Foods & Soft Drinks Ltd, Somerset, UK (Arup)

About Arup
Arup is the creative force at the heart of many of the worlds
most prominent projects in the built environment and across
industry. We offer a broad range of professional services
that combine to make a real difference to our clients and the
communities in which we work.
We are truly global. From 100 offices in 38 countries our
11,000 planners, designers, engineers and consultants deliver
innovative projects across the world with creativity and
passion.
Founded in 1946 with an enduring set of values, our
unique trust ownership fosters a distinctive culture and an
intellectual independence that encourages collaborative
working. This is reflected in everything we do, allowing us
to develop meaningful ideas, help shape agendas and deliver
results that frequently surpass the expectations of our clients.
The people at Arup are driven to find a better way and to
deliver better solutions for our clients.
We shape a better world.

57

Acknowledgements
Authors
Josef Hargrave
Lynne Goulding
Graphic Design
Mark Pearsall
Illustration
Steve Sciluna
Copy Editor
William Newton

Contributors

Duncan White
Elisa Magnini
Jeremy Chatwin
Kate Fairhall
Mark Bartlett
Matt Cooper
Helen Jackson
Melody Ablola
Stephen Pollard
Marcus Morrell
Susan Claris

Research
Lynne Goulding
Josef Hargrave
Project Management
Josef Hargrave

Image Credits
Images from Flickr
p 8 Zen Wave, CC-BY-SA
p 10 Chrysler Group, CC-BY-NC-ND
p 12 Province of British Columbia, CC-BY-NC-ND
p 18 Jetstar Airways, CC-BY-SA
p 50 Chrysler Group, CC-BY-NC-ND
p 52 BASF, CC-BY-NC-ND
Icons from flaticon.com, CC BY 3.0
p 19, 41
Gesture icon by, lukew.com/touch CC-BY-NC-SA 3.0
p 19
All copyright images used with permission

59

Manufacturing has entered a new age of production. This shift in the

design and manufacture of goods is not the result of a single trend,
but is driven by a broad range of complex and interconnected
factors. These influences range from advances in digital technologies
and automation to climate change and market demands. The
collective consequence is a shift towards design and innovation
processes that are increasingly fast, open, collaborative
and responsive.
The emerging trends, processes and technologies described in this
report will transform the manufacturing landscape. The inevitable
shift to leaner, smarter and more flexible forms of production
will have a range of impacts on how the factory is designed, how
supply chains operate, how people experience changing operational
environments and how the future spaces of production will
be organised.

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