Production of the Future: Advanced Manufacturing in Austria

Bridges vol. 42, December 2014 / Feature

By Kerstin Zimmerman

The manufacturing industry is a key sector in the Austrian economy: It employs around 640,000 people in some 29,000 companies, generating an annual gross value added of €50 billion per year. Approximately every fifth Euro, and over two thirds of all employees in Austria, are either directly or indirectly dependent on the domestic manufacturing industry. The capability to produce products that are internationally competitive is central to the economic growth of an industrialized and knowledge- driven country like Austria. Industry 4.0, or Advanced Manufacturing, is therefore of critical importance. This article will present the latest developments in this field in Austria – in the private sector as well as in (publicly funded) R&D.

Issues in the Industry

In Austria, the production of internationally competitive goods is a key factor in national prosperity. Manufacturing generates about 19 percent of the added value. Yet there is huge international competition. The goal is therefore to retain the manufacturing industry and make it fit for the future. Austria has excellent manufacturing companies, including several world market and global technology leaders. Its industry can remain competitive only by increased productivity provided through the use of cutting-edge innovative technologies.

The major challenges ahead require innovative solutions – novel materials with special properties, reductions in manufacturing costs, shorter development cycles and greater product diversity, environmentally- and resource-friendly manufacturing processes and, finally, issues related to logistics and recycling.

Industrial production is undergoing changes. Due to the close interdependence of the worldwide flow of goods, information, and capital, manufacturing can also be organized in a worldwide-distributed manner. New competitors – namely from the BRIC states, with China on the first rank – offer production conditions at much lower costs than in Austria. Manufacturing is under enormous pressure to cut costs in order to be efficient.

Surrounding conditions for the manufacture of real assets are also changing rapidly. More and more products are being produced in response to customers’ preferences. Manufacturing facilities need to produce small numbers of pieces in an economical and efficient way in order to respond to the requirements of the market. Research and industry are now asked to position themselves in the global networks of knowledge and to undertake research, development, and innovation (RDI) together to optimize the value chain.

Competitive manufacturing in Austria is also based on a high level of technology. Smart production – the blend of information and communication technologies (ICT) with industry – is the new premise for manufacturing. Innovative, cost saving, eco-friendly, and qualitative products and services can only be produced with innovative manufacturing.

AMS,[1] a sensor solution company in Austria, recently opened a new 3D wafer production line for combined chips and sensors. Research and development focused on improved production are therefore essential to the goods-producing sector. The project 3D-MEOD[2] investigates new materials and innovative processes for their ductile and malleable electronic, optical, and sensory functions on inexpensive films. This lays the groundwork for future production in Austria and the technological lead for more individual customers, efficient usage of resources, and better reliability for new products.

The Austrian government’s R&D&I Initiatives:

  • “Production of the Future[3]

Innovative technologies, processes, and new materials are key issues for the industry of the future. To retain manufacturing in Austria and to secure a high level of competence and competitiveness in the long term, an excellent research environment is a necessity. Knowledge of current industry trends at universities will be advantageous for tomorrow’s production. Therefore, the Austrian government started a new research, development, and innovation (R&D&I) initiative.

In an iterative process involving all the relevant Austrian private and public stakeholders, the following industrial challenges were identified:

  • Use of different technologies
  • Versatile and flexible production
  • Vertical integration of various network techniques and processes
  • Interdisciplinary approach
  • Internationalization and globalization.

Starting in 2011 with the first call for R&D&I project proposals, funding of €20 million has been invested annually to achieve the following strategic and operational goals:

Strategic Goals:

  • Increasing the innovation capacity in the national production of real assets
  • Setting up expertise in research
  • Strengthening European networks and international cooperation.

Operational Goals:

  • Using resources and raw materials efficiently
  • Having a flexible line of production
  • Manufacturing high quality products.

Within the past three years, more than 600 projects related to manufacturing were funded with €375 by BMVIT and managed by the Austrian Research Promotion Agency (FFG).

  • Endowed Professorships

In 2014, BMVIT established a new funding instrument to promote endowed professorships at universities. It was designed to strengthen important areas of knowledge for Austria’s innovation system and to promote cooperation between science and industry.

Endowed professors build bridges between industry and academia. They give universities room to make their mark, to venture into new research areas, and to respond to current trends. They meet industries’ demand by training the next generation of experts, while enhancing the overall attractiveness of Austria as a research location. Companies in turn benefit from knowledge in areas strategically relevant to them. In addition, an endowed professorship has a positive impact on a company’s image. Manufacturing companies co-fund these professorships and the professors are reviewed and selected by both funding parties.

The endowed professorships respond to pressing industry needs and therefore have the following goals:

1. To develop research expertise and capacity in a certain field

  • Setting up research groups with an international presence
  • Improving the research infrastructure in that research field.

2. To strengthen human capital

  • Training highly qualified young researchers in the respective research areas
  • Expanding and developing teaching in those areas.

3. To broaden and deepen cooperation between science and industry

  • Developing quantitative and qualitative aspects of the portfolio of cooperative projects
  • Increasing the attractiveness of Austrian research-based companies in the research areas
  • Setting up international networks in the research areas.

The thematic focus areas of the endowed professorships are:

a) Advanced Manufacturing

Austria has a number of outstanding qualities for industry and production. In addition to above-average productivity growth, these include the excellent growth and export performance of the manufacturing industry, the high level of research and development, and the successful niche strategies of individual companies, especially in the manufacture of high-quality products in the upper price segment.

b) Steel as a High Performance Material

High performance metals and steel are of particular significance to the Austrian economy. Steels are the most widely used metal materials. Their general strength as a high performance material in Austria is usually defined through the products manufactured and the existing process and production technologies.

c) The Austrian Marshall Plan Foundation supports an additional endowed professorship in manufacturing. The foundation is a symbol of gratitude for the great support the United States provided to Austria after World War II. The foundation was initiated with a financial allocation from the ERP Fund (European Recovery Program).

After the evaluation process in summer 2014, which included three days of the jury deliberation, the following universities and their consortia were selected[4]:

  • University of Innsbruck (Advanced Manufacturing)
  • Montan University Leoben (High-performance Material)
  • Vienna University of Vienna (Marshall Plan)

A new call for applications for new professorships is scheduled for 2015.

  • Flagship Projects

An international Advisory Board for strategic advice to these R&D&I initiatives has been established by BMVIT. Its members are experts in different fields and represent different stakeholder groups. One outcome of the work of the board has been the initiation of a call for flagship projects.

Flagship projects are strategic R&D projects with a clear thematic focus and a large budget (more than €2 million in funding) to focus on specific challenges. The aim is to realize sustainable growth solutions with a long-term perspective. In addition, research competence will be established for enhanced European and international R&D cooperation.

An interactive stakeholder dialogue process has identified suitable topics for flagship projects. Generative fabrication is a theme with high potential and operational relevance in strategy, research, and development. A leading project is also a tool to avoid over-subscription in calling for proposals. The first will be launched in 2015.

  • Pilot Fab for Industry 4.0[5]

A pilot fab is a realistic model of a factory, a lab with real machinery and new technologies where energy- and resource-saving manufacturing can be developed and tested.

The first pilot of such a fab will be set up at the Vienna University of Technology. BMVIT will fund the first three years with €2 million. The university will match this investment, with companies adding financing after the first phase.

The establishment of up to five pilot fabs is planned by 2016 to set up a common infrastructure for Industry 4.0. Interdisciplinary development and the integration of different fabrication methods are called “Advanced Manufacturing” or Industry 4.0. This includes the vertical integration of networked production systems and the establishment of horizontal added-value networks for production of the future. Technology-based cyber-physical systems and the Internet of things have to be bundled and coordinated.

BMVIT will also set up a platform for all stakeholders in realistic models of factories.

In total, BMVIT will spend over €250 million in funding for manufacturing in 2014/15 to enhance industry performance and innovation capacity in Austria in order to keep it a first-rate manufacturing hub.

The European Perspective

The Austrian research program “Production of the Future” is well integrated into the Austrian and European funding landscape.  

Within the new European framework program “Horizon2020”[6], the public-private partnership initiative “Factories of the Future” (FoF) will strengthen the technological base of Small & Medium-sized Enterprises (SMEs) through their integration. The pillar called “Industrial Leadership” aims to speed up development of the technologies and innovations that will underpin future businesses and help innovative European SMEs to grow into world-ranked companies. It will provide support for research in Key Enabling Technologies (KETs), e.g., nanotechnology, advanced materials, micro- and nano-electronics, photonics, and biotechnology.

“Access to risk finance” will aim to overcome deficits in the availability of debt and equity financing for R&D and innovation-driven companies and for projects at all stages of development. “Innovation in SMEs” will provide SME-tailored support to stimulate all forms of innovation in SMEs, targeting those with the potential to grow and internationalize across the single market and beyond.

In addition to Horizon 2020, transnational and European research funding instruments are connected to manufacturing. One example is the Joint Undertaking ECSEL[7] (Electronic Components and Systems for European Leadership) with its key application Smart Production; another is the EUREKA umbrella Pro Factory Plus[8].

Austria has a considerable interest and footprint in all of these initiatives and has shown a strong commitment to these initiatives at the European level: e.g., Austria is a founding member of ECSEL. All these initiatives and programs will further strengthen Austria and Europe’s industrial competitiveness.









Kerstin Zimmermann is a visiting expert at OSTA. She has served as a policy and program officer at the Austrian Federal Ministry for Transport, Innovation and Technology since 2005. She is responsible for research funding in Information and Communication Technology (ICT), with special focus on older persons.