Plastics News Europe - September 2019 - 33

DIGITALISATION

production speeds and costs. The demand for customised parts is particularly high in the European plastics
sector, which is characterised by its
high quality products.
Additionally, the plastics industry
is itself inventing smart products that
help optimise uptime across the
manufacturing industry. One such
innovation inserts sensors (RFID
chips) into plastic wiring and connection units that can then be networked
with a communications module to
provide direct integration with the
manufacturer's IT infrastructure,
making automated continuous condition monitoring and predictive
maintenance possible. This same innovation can also connect with a
data cloud, opening up the possibility
of automatic ordering of external
maintenance crew or replacement
parts - a significant step towards the
Industrial Internet of Things (IIoT).
It is now an industry-wide expectation among manufacturers that
new-generation digitalised technology will reduce costs and increase revenue as standard. Although the various dimensions of productivity differ
between industries and countries, increased manufacturing productivity
- the ability to either produce the
same number of products for less, or
more products for the same - has a
clear and calculable positive effect on
costs and margins. This effect can be
measured using the Digitalisation
Productivity Bonus (DPB), a financial
model devised by Siemens Financial
Services (SFS) which estimates the
potential gains as a result of investment in digitalised Industry 4.0 technology. In the case of the UK plastics
industry, it is estimated that conversion to digitalised technology could
deliver a DPB of between $1.5 billion
and $2.3 billion. Across Europe the
estimated DPB ranges from $1.1-1.7
billion for French manufacturers,
$2.5-3.9 billion for German manufacturers, to $0.7-1.1 billion for the
Polish, $0.7-1.0 billion for the Spanish, and $0.3-0.4 billion for the
Swedish plastics industries.
Whilst many manufacturers in the
plastics sector are aware of the benefits associated with digitalisation, financial obstacles frequently delay or
discourage investment. Access to a
range of smart and appropriate financing techniques - Finance 4.0 - is
critical to a manufacturer's ability to
sustainably invest in the new fourth
generation of digitalised technology
and automation equipment. Finance
4.0 covers a range of requirements
from the acquisition of a single digitalised piece of equipment, right through
to financing a whole new factory. Financing techniques have now been
developed to allow an end-user to in

SEPTEMBER 2019

Manufacturing
technology
upgrade and
update

Pay to access/
use equipment
and technology
finance

Pay for
manufacturing
outcomes

Working-capital
solutions for
manufacturers

Transition finance for
manufacturers

Asset-based lending
in manufacturing

Refinancing/
recapitalisation for
manufacturers

Acquisition/
growth finance
in manufacturing

Examples of Finance 4.0

effect apply some or all of the Digitalisation Productivity Bonus to fund the
digitalised technology and equipment
that makes the bonus possible in the
first place. In simple terms, these financing methods seek to align payments for the new generation technology with the rate of gain from the
Digitalisation Productivity Bonus.
Broadly speaking, this can help make
the upgrade to digitalised technology
affordable and potentially cost neutral
(or better) for the end-user.
By integrating Finance 4.0
into their overall offering and
helping their customers invest
in new technology, OEMs engaged in the manufacture of
plastics machinery can leverage
these benefits to drive sales.
Such finance arrangements tend
to be offered by specialist finance
providers that have a deep understanding of how the digitalised
technology works. These
financiers have the ability
to work with OEMs to
demonstrate how that
technology can be
practically implemented to deliver the Digitalisation Productivity Bonus as well as other benefits of digitalisation to the plastics
sector. As the financing arrangement
can be an embedded component of
the value proposition, OEMs are able
to introduce customers to the latest
equipment and technology and simultaneously present them with a financially sustainable method to invest in digitalisation. OEMs offering
an integrated financing solution to
their own customers have the potential to enhance their offering and remain competitive. In other cases, the
technology provider will refer its customer to one or more finance providers to fund a sale.

33

As well as offering their customers
leasing solutions, OEMs can also benefit from a range of invoice finance
and receivables financing from specialist finance providers to enable
them to purchase parts and equipment without disrupting cash flow.
This means that OEMs have access to
a dedicated credit facility for purchases and other borrowing facilities are
left free to be used more efficiently to
support business development.

"

Thompson: "Access to
a range of smart and
appropriate financing
techniques - Finance 4.0 - is
critical to a manufacturer's
ability to sustainably
invest in the new
fourth-generation of
digitalised technology
and automation
equipment"
Integrating finance into their sales
proposition allows OEMs to facilitate
investment in the latest equipment
and technology and help their European customers to invest sustainably
in digitalisation, creating more sustainable and green production processes. Complete solutions should be
taken into consideration in order to
identify the best finance package to
effectively digitalise a manufacturing
facility's entire operation - from
equipment to software to the production line to the whole enterprise.
Between them, this range of Finance
4.0 techniques allows plastics manufacturers to access the Digitalisation
Productivity Bonus.
Plastics News Europe - September 2019

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