Industry 4.0 and the NDT Sea Change
A Q&A with lead Frost & Sullivan Principle Lead Nikhil Jain on how NDT training services are shifting to fit a manufacturing landscape that is being reshaped by changes in industry, economy and technology.
Despite changing market dynamics, the nondestructive testing (NDT) industry continues to grow and innovate with an influx of new technologies, and as a result, the NDT job market has cracked wide open. However, the meeting of NDT technician supply with demand, whether it is too much of a demand or not enough, has been a consistent issue.
In 2014, Frost & Sullivan issued a press release entitled “Gap between the Supply and Demand of Well-Trained Technicians Drives NDT Training Services Market” which noted that, “due to an aging infrastructure and vastly publicized industrial disasters and catastrophes,” the demand of new NDT technicians had increased exponentially. Unfortunately though, the demand was not being met because of “an evident shortage of technicians.”
In addressing the gap, Frost & Sullivan’s Principle Lead Nikhil Jain pointed to ways in which NDT training service providers could increase the remuneration of the instructors, thus creating interest for more people to choose a career to train new technicians.
“A trained, qualified and certified technician can earn considerably more money by performing inspections with third-party NDT inspection service providers than by being a trainer,” said Jain. “For most technicians, there is not enough monetary motivation to quit a lucrative career and switch to training. But, if NDT training service providers increase the salary of the instructors, experienced technicians might be motivated to change their career path.”
In December, Frost & Sullivan released another NDT-related report, entitled “Analysis of the NDT Inspection Services and NDT Equipment Market in the Transportation Industry,” which referred to a recent Frost & Sullivan-conducted study that found the total market earned revenues of $1.93 billion in 2014 and estimated revenues to reach $2.75 billion in 2019.
To check in on how NDT training services are adjusting to meet this projected market growth, and how Industry 4.0 is disrupting established NDT products, technologies and business models, Quality spoke to Jain—also the author of a Frost & Sullivan webinar on the subject, “Adapting to the Future of Nondestructive Testing”—about what’s next.
Quality: Could you explain the term Industry 4.0—which also has been called the Fourth Industrial Revolution, because of the adoption of cyber-physical production systems—and how it came to prominence?
Nikhil Jain: Over the entire history of industry for manufacturing, there have been three so-called revolutions. Industry 4.0 is a term that was coined by the German government for promoting the computerization of the manufacturing industry in Germany. It was first introduced at the now very popular Hannover Fair in 2011, and since then, the term has gained more global prominence. In North America, it’s known as “smart manufacturing.” But one of the reasons that we at Frost & Sullivan are using the term Industry 4.0 is because we feel that the term encapsulates a lot of things other than just manufacturing. For example, the Industrial Internet of Things (IIoT) is one of the concepts that would fall under Industry 4.0.
How does Industry 4.0 factor into what you refer to as NDT Services 2.0, especially when it comes to hiring more engineers for “smart factory” work?
Funnily enough, I haven’t heard much talk about this in the North American market, but I do know for a fact that in Europe and emerging markets like India, China and a few other Southeast Asian countries, there is an oversupply of engineers. There are a lot of engineers because engineering has become a go-to profession for almost everyone. Again, I’m not sure how it is in North America, but based on my analysis in Europe and other Asian countries, this is the case. So I think even with a switch to a NDT Services 2.0 business model, it will not have an impact on the workforce so much.
Is the NDT workforce equipped to supply the demand for NDT technicians in the global transportation industry that Frost & Sullivan reported in December, or has that gap already been filled?
That is a very interesting question you bring up. First, we have to be cognizant of some of the recent developments when we talk about the supply-demand gap. The oil prices have plunged tremendously; it’s now 20 percent of what it was a year ago. The slide started in June 2014, and [in January 2016] it reached the $27 mark [per barrel]. What damage that’s done to the oil and gas industry is basically that it’s shut down the majority of the regions. So when we talk about Canada, the Canadian oil plants, they’re being shut down. No one is drilling for new oil sands there because it’s just not profitable enough. In the U.S. as well, if you’ll notice the trend over the past six months or so, the production also has come down by 2,000 to 3,000 barrels a day. Over the past year and a half, there has been a global downturn in the oil and gas industry, and the NDT inspection services market is dominated by oil and gas. So in a lot of places, there is low demand for NDT services in the oil and gas industry, and in some places, no demand at all.
If you look at it, it’s sort of a cycle. We saw the same thing happen from the beginning of 2008 to 2010, when the world was going through a global recession. The oil prices plunged then as well, the industry downturned, we had a blunt in demand and suddenly we had an oversupply of technicians, which caused a lot of people to leave nondestructive testing as a profession because they couldn’t find a job, and had to find a job somewhere else. So when the oversupply happened, a lot of people left the NDT world; and when the demand picked up, there was an undersupply, because the technicians who had left for different industries probably did not want to come back to NDT, because the NDT industry is that volatile.
Currently, the demand-supply gap [for NDT technicians to service the global transportation industry] has more or less evened out. Because the price of oil has gone down so much, the existing supply can more or less meet the demand; in fact, some of the big NDT services companies, especially those that service the oil and gas market, are cutting workforce. Small to medium-sized companies are cutting 10 to 15 percent of their workforce.
Clearly there are many benefits to permanent, sensor-based monitoring to replace periodic inspections, but will NDT inspection jobs be cut as a result?
No, I don’t think so. One of the reasons why I think [smart inspection] is going to be important is because if you look at the job that an NDT technician does, it’s quite basic. Not a lot of people, younger people, wanting to get into the industrial space want to do the job than an NDT technician does. They don’t want to travel to a desolate place, or be outside for 10 months in the heat or the cold winds, depending on where you are. Increasingly, a lot of the younger generation wants to be in the office. They want to sit in front of a laptop, doing whatever work it is that they have to do, in an air-conditioned office.
With NDT Services 2.0, the point is that that you have operators. You don’t have technicians, but you have operators who are operating the NDT equipment out there in the field. And in field time, the measurement—or whatever they are testing, the test data—is being transferred from the field to the laptop or the computer of an engineer. The data is front of the engineer in the office, so instead of using regular, run-of-the-mill inspection services, you move to using engineering services and making engineering decisions.
One question I got [while explaining the concept to a company] is, “You know, Nikhil, that sounds good; but why would someone want to do the job of an operator when he will be making half of what I would have paid an NDT technician?” So technically the next step of this would be to replace the operators with either automated testing machines or robots. You might want to have someone to supervise the robots, because right now, and maybe even in five years, they might not be able to operate autonomously. But the point is that if you replace operators with supervised robots or with automated testing machines, it will further increase accuracy of measurements and decrease human error, as well as make smaller businesses [more competitive].
How will Industry 4.0 transform business models in the NDT space; and, just as importantly, will this transformation stimulate job growth?
Industry 4.0 will fundamentally change the business model of NDT inspection services companies, where currently they’re just contractors or sending out people into the field. They will become more sophisticated in what they do and what they can offer, because they can offer engineering services and Big Data analytics. So what Industry 4.0 is going to do as a business model is really on the NDT inspection services side, where it’s going to change from what it is now to operators and engineers or robots and engineers.
But on the other side, there are probably going to be additional companies entering the NDT field, which will increase the services angle—not from the inspection side, but from software-related services, which will increase in the NDT world. When we’re talking about automated inspection and the IIoT, that’s where NDT Services 2.0 comes into play.
For example, if you have a pipeline out in the field and you have to move data from that pipeline in real-time to an office in Houston, you will use some kind of wireless communication capability to transmit your data. That in and of itself is a new business opportunity, and more companies are starting to invest in this space. Secondly, if you’re thinking about extracting a huge amount of data, then you would want to have a space to store all of that data. Again, the Cloud becomes a very important element, and another new business opportunity for NDT inspection services emerges there.
*This interview has been edited for length and clarity.