Abigail Klein Leichman, Israel21c, February 23, 2020
With permission, read full article at Israel21c.
Close to 1,000 people are converging on Tel Aviv for Israel Industry 4.0 Week starting February 24. And exactly why should you care?
Because even if you never set foot in a factory or power plant, what happens there affects you.
Call it the Fourth Industrial Revolution or simply I4, Industry 4.0 is greasing the wheels of a shift from “far and cheap” to “local and smart” manufacturing anywhere.
While the Third Industrial Revolution introduced technologies such as robotics, 4.0 innovations digitize, simplify, connect, safeguard and generally improve every step of production.
The benefits of I4 technology are many: more jobs, higher productivity, better oversight and quality, less pollution and faster delivery — without costing you more.
Incredibly, Israel earns a big piece of the $90 billion I4 market pie. This tiny country in the Middle East ranks third in I4 venture investments (after the US and China) and second in early-stage investments.
“Israel, as an innovative ecosystem well connected to global tech challenges and needs, has become a strong player in Industry 4.0, with increased attention from global players,” according to a report from Start-Up Nation Central, which is sponsoring Industry 4.0 Week with Grove Ventures and Deloitte.
Israeli I4-related startups number about 260. That’s nearly 70% more than in 2014, report author Yuval Engelstein tells ISRAEL21c. And the number of investors in this sector has more than doubled to 104 in five years.
“We’ve hosted dozens of multinationals from diverse industries including chemicals, materials science, fashion, food and beverages, retail, and energy that expressed interest in Israeli Industry 4.0 solutions,” said Engelstein, Start-Up Nation Central’s Industry 4.0 and smart mobility lead analyst.
People, machines, logistics
I4 is not about replacing people with machines. It’s about enhancing how both do their jobs.
“Manufacturing is physical — a combination of people and machines and logistics,” says Natan Linder, the Israeli CEO of Boston-based Tulip.
“Until now, new technology has been focused on automation. But it was not taking humans along for the ride.”
Employees in sectors such as sales and finance have many apps and software tools to assist them (think Monday or SalesForce). Tulip brings that ability to factory managers with a no-coding system they can use on the spot to build apps for improving production-line workflow.
“You have to get to the point where software is driving manufacturing,” says Linder. “In an age of customization and immediacy, it’s a complex problem to build things on time and well.”
The World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR) recently welcomed Israel as a partner in shaping the trajectory of the Fourth Industrial Revolution.
“As the ‘Start-Up Nation,’ Israel has already proven itself as a global leader in technology innovation. Now, as part of the C4IR network, it will extend this leadership to the global governance of key emerging technologies such as artificial intelligence, autonomous vehicles and precision medicine,” said Murat Sönmez, head of C4IR.
9 Industry 4.0 subsectors
The Start-Up Nation Central report divides the Israeli I4 landscape into nine categories: operations optimization, cybersecurity, sensing and imaging, inspection and testing, IoT platforms and connectivity, additive (3D printing) manufacturing, supply chain, robotics and maintenance.
Operations optimization is the largest I4 subsector in Israel. About 60 companies are innovating technologies to increase yield, decrease the consumption of raw materials or energy, and enable a faster time to market.
One example is Grid4C, whose plug-and-play AI software analyzes billions of meter readings at the grid edge to deliver millions of daily predictions for energy providers, their customers and the utility grid.
Seebo created an AI software solution to analyze production-line sensor data and offer suggestions for process optimization.
It originally developed advanced sensors for video-game controllers. Pivoting to I4 was a wise move: Among Seebo’s clients are P&G, ChemChina and Nestlé.
Preventing cyberattacks and machinery malfunctions
The second largest subsector is industrial cybersecurity.
Some 34 startups in this area “frequently serve as an entry point into Industry 4.0 for manufacturers as they try to protect their data and connected systems from hackers,” according to the report.
Tel Aviv-based Radiflow and the Fraunhofer Institute of Optronics, System Technologies and Image Exploitation in Germany are developing machine-learning and artificial-intelligence techniques to determine whether abnormal behavior on industrial automation networks indicates a cyberattack.
Start-Up Nation Central counts 16 Israeli companies that forecast or find machinery glitches that could damage the machines, the products — and ultimately, sales.
Examples include: 3DSignals, which monitors industrial machines using acoustics; Augury, which uses the Internet of Things and artificial intelligence to predict machinery faults for clients including Hershey and Heineken; and Iguazio, which uses sensors, data analysis and AI to detect signals of impending equipment malfunctions in real time.
VocalZoom recently launched groundbreaking “Autonomous Sensors” that use contactless, vibration-based sensor technology with built-in data processing to monitor the health of any industrial equipment — whether hot, wet, small, moving or rotating.
VocalZoom’s Autonomous Sensors use vibration sensing and data processing to monitor the health of industrial equipment. Photo: courtesy
Rising investment in Israeli I4 R&D
Because I4 doesn’t lend itself to one-size-fit-all solutions, Engelstein doesn’t predict lucrative exits in the I4 sector like we’ve seen in auto-tech — such as Intel’s $15.3 billion buyout of Jerusalem-based Mobileye.
As Tulip’s Linder puts it, “There is no Microsoft or Google in this space, and I don’t think there ever will be because manufacturing is so big and varied.”
Nevertheless, investment in Israeli I4 startups jumped from $413 million in 2018 to $650 million in 2019.
Fabric (formerly CommonSense Robotics) tailors technologies that allow automated micro-fulfillment centers to be embedded in cities, closer to customers.
Vayyar’s 4D radar imaging sensors see through walls and objects to track and map everything happening in an environment in real time, without cameras or privacy concerns.
One of many Vayyar use cases is helping robots detect where people are in the factory, to avoid safety incidents and reduce machine down-time.
Industry 4.0 incubators opening across Israel
Announcement for the opening of Let-Lab.
Israel’s first Industry 4.0 incubator, Let-Lab, opened in 2018 in Nazareth Illit under license of the Israel Innovation Authority (IIA). It’s run by the Ham-Let Group, a Tel Aviv-based global manufacturer of valves, fittings and hoses.
Less than two years later, Israel now has eight Industry 4.0 accelerators and incubators, plus three I4 entrepreneurship programs.
Some are run in cooperation with foreign companies. InfraLab in Haifa is operated by Italian energy company Enel and Israeli infrastructure giant Shikun & Binui. PMatX in Yavneh is a collaboration between Germany-based Merck pharmaceutical company and US-based semiconductor maker Flex.
The IIA is soon opening the I4 Valley incubator in Carmiel with local corporate partners Wipro Givon, Kusto (Tambour), Keter Plastic, Trellidoor, Flying Cargo and Klil.
The IIA’s parent body, the Ministry of Economy, is setting up an Institute for Advanced Manufacturing to focus on robotics, digitization and IoT; and a Center for Resource Efficiency focused on optimizing production of energy, raw materials and water.
Israeli startups also benefit from the R&D centers, corporate venture arms and open innovation platforms established in Israel by about 50 global companies in the Industry 4.0 sector.
Updating kibbutz industries
Israeli I4 technologies are meant primarily for foreign businesses because Israel has only 22,000 registered factories.
However, Engelstein says local I4 startups and factories really need each other.
“Israeli manufacturers can benefit from the most advanced Industry 4.0 technologies, tailor-made to their specific needs, cost-effective, faster and more agile. On the other hand, Israeli Industry 4.0 startups can benefit from simpler testing for their products, the experience of working in a real factory, easier access to external funding at an early stage and the chance to start earning.”
A case in point is a collaboration announced earlier this month between Seebo (see above) and the dairy division of Israeli food group Tnuva.
Another place this is happening is on the kibbutz.
In the old days, kibbutzim were agricultural communes. Today, 250 of Israel’s 270 kibbutzim earn income from manufacturing.
“These are mostly traditional industries producing plastic, rubber, metal, fertilizer or food,” says Rafi Nevo, head of innovation and entrepreneurship for the Kibbutz Industries Association.
Sales from kibbutz factories in the past year reached a record high of $13.6 billion. To continue that growth, they need smart technologies to keep production onshore, modernize processes and increase output.
“We are helping them get to know and implement Industry 4.0 advancements,” Nevo tells ISRAEL21c.
Sensors, artificial intelligence, augmented reality, business intelligence, computer vision, data collection and analysis, and even collaborative robots (“cobots”) are starting to help kibbutz industries reach greater overall productivity.
Israeli additive manufacturing company XJet created a new ceramic material, Alumina, which offers electrical insulation, exceptional strength and durability. Photo: courtesy
A countrywide phenomenon
Engelstein says Start-Up Nation Central will soon host a roundtable event in Jerusalem for Israeli manufacturers and representatives from the Ministry of Economy and IIA. “We’ll try to learn how to connect better between Israeli industry and startups.”
Start-Up Nation Central established an Israel Industry 4.0 Community in 2018. II4 facilitates online and offline business opportunities and strategic alliances among local innovators and global financers and industry leaders.
Unlike some high-tech ecosystems clustered in the Tel Aviv area, I4 startups are spread across Israel. It’s therefore a sector that drives employment for diverse populations.
In the southern city of Beersheva, Siraj Technologies specializes in Industrial Internet of Things connectivity solutions and is headed by Arab co-CEOs.
Other examples are Hoopo on Kibbutz Glil Yam near Herzliya (supply chain); Cybord on the religious moshav Bnei Re’em in south-central Israel (inspection and testing); Ayyeka in Jerusalem (operation optimization); EZMems in Netanya (sensing and imaging); and XJet in Rehovot (additive manufacturing).
The Start-Up Nation Central report points out that many of the entrepreneurs starting these companies gained experience in sensors, image and video processing, big data, algorithms and real-time analytics technologies during their military service.
“This knowledge is utilized later to either start or seek employment in companies which utilize non-military applications of the technologies. Industry 4.0 is one of the more attractive sectors to exploit this experience,” says Engelstein.
Israel Industry 4.0 Week will give them a platform to create greater awareness among Israeli and overseas investors and multinationals “that Israel is a powerhouse in 4.0 and if they’re searching for technology to improve manufacturing they need to come to Israel,” he concludes.