How AI will reshape the manufacturing industry in emerging markets

Artificial Intelligence (AI) is leading the manufacturing industry to a transformation point. What first seemed like an opportunity to be an early adopter is now reshaping the status quo across industry, research, academia and policy.

To look at the effect of AI adoption in the manufacturing industry from the perspective of the regions under the Regional Innovation Scheme (RIS), EIT Manufacturing hosted the RIS Hubs Conference 2024 in Budapest.

RIS is a unique programme initiated by the European Institute of Innovation and Technology (EIT). It aims to reduce regional innovation disparities within the European Union (EU) and build innovation capacity by connecting innovators and local actors, such as businesses, startups, incubators, research institutions and academia. EIT Manufacturing set up 12 RIS HUBs to reach this goal. They tailor initiatives to the specific needs of each region under the RIS programme.

The future of manufacturing will reach new horizons

The manufacturing industry can reach new levels of technological advancements, as unanimously agreed by the speakers in Budapest. AI is driving these advancements, particularly in predictive maintenance, quality control, process automation, data analysis and supply chain optimisation. AI along with Industry 4.0 are reshaping lean manufacturing into the Factories of the Future by boosting performance and accelerating sustainability. By adopting these new approaches companies see at least a 6% annual boost in productivity, as analysed by the Bain & Company. As big corporations have access to finance, the path to digitalisation remains a challenging and costly process, especially for small businesses.

SMEs will find it expensive to adopt new technologies and train their teams. Europe’s dependency on global markets for energy resources and technology, an aging population and changing demographics could lead to a shortage of skilled workforce. However, digitalisation will make work safer and more engaging, drive innovation and make Europe a global leader in sustainable manufacturing.

Andrej Guštin, CEO of Ljubljana-based startup Process Space that offers ready-to-use Digital Process Models, explores the prospect of big changes in the next 5 to 10 years. Digitalisation is not only a tool but rather a strong transformative force that will redefine manufacturing from the ground up. This is Andrej Guštin’s vision. In the Factories of the Future, a concept of enhanced manufacturing production, machines will think, processes will adapt autonomously and every decision will be data-driven, unlocking unprecedented efficiency and sustainability. But on the other side, the human element — such as creativity, adaptability and leadership — remains even more critical. On the global scale, economies navigate uncertainties and face demographic challenges. This is especially pressing in EU countries, such as Slovenia.

RIS regions to lead the way in adopting and scaling innovation in green manufacturing

Looking at the sustainability aspect, the adoption of AI has the potential to reduce global greenhouse gas (GHG) emissions by 5-10%, according to the report by Google and BCG. Emerging economies can position themselves as leaders in green technology by modernising their manufacturing industry with AI, bypassing outdated infrastructure and minimising environmental impact.

The ArcLub ONE project showcases how AI-driven innovation and sustainability can lead to tangible results in RIS areas, where enhancing competitiveness and promoting technology adoption is crucial. This initiative, a spinout from the University of Ljubljana and funded by EIT Manufacturing, has made significant progress in Czechia and Slovenia, as noted by Franci Pušavec, Researcher at the University of Ljubljana.

In the Czech Republic, ArcLub ONE addresses critical industry needs by partnering with TAJMAC to develop an AI-powered machine system. This system is currently undergoing testing at the Technical University of Prague. In Slovenia, collaboration with UNIOR is aimed at reducing environmental impacts by improving machining processes for materials like aluminum and composites. This will enable the country to position itself as a leader in green industrial innovation.

ArcLub ONE also holds strong potential in the medical sector for sterile implants and precision components. It can also bring benefits in aerospace and automotive industries, where it can enhance machining of composites and lightweight alloys while reducing waste.

Franci Pušavec, Researcher at the University of Ljubljana and the EIT Manufacturing RIS HUB Slovenia lead, uncovers the main strength of Slovenia’s RIS HUB. It lies in its ability to support the partner ecosystem by translating innovation into real-world applications. The RIS HUB is integrating education and skills, research excellence and industry collaboration, which in turn is coupled with favourable legislation for innovation and targeted funding. These actions are solidifying Slovenia’s position as a leader in sustainable and advanced manufacturing.

The future of the RIS regions will require a tailored approach

Dr Verónica Rodriguez Garcia, RIS Strategy and Impact Manager at EIT Manufacturing, envisions AI as a tool for RIS countries to enhance their regional competitiveness in the manufacturing sector with improved productivity, quality, innovation and sustainability. The manufacturing sector can navigate uncertainties and become more resilient by using localised innovation ecosystems like EIT Manufacturing RIS HUBs.

The expert’s conclusion: As AI continues to reshape manufacturing, the next decade will see a fundamental shift toward smarter, greener and more resilient industries, with emerging markets playing a key role in driving this transformation.

The outlook on AI shaping emerging markets will be followed by a short news series. It will explore the need to revamp education to meet the demand for skills for the rapidly evolving technologies and initiatives to drive inclusivity in the manufacturing industry. This short news series is based on the discussions during the EIT Manufacturing RIS Hubs Conference 2024.