"Industria 4.0" national plan

Investments, productivity and innovation

September 2016

2

Industry 4.0 in the world

The Italian way

"Industria 4.0" national plan

Agenda

3

Industry 4.0: The 4th industrial revolution

Late 18th century Early 20th century Early 1970s Today and near future

Through introduction of

mechanical production plants

using water and steam power

Through introduction of work-

division mass production

using electrical energy

Through use of electronics

and IT to further automate

production

Through use of smart

machines, inter-connected

and connected to internet

Industrial

revolution1st

Historical loom

Mass production and

assembly line

Industrial

revolution2nd

Industrial

revolution3rd

Industrial

revolution4th

Automated industrial robot in

manufacturing

Connection between

physical and digital systems,

complex analyses of big data

and real-time settings

4

Industry 4.0: Nine technology drivers

12

3

4

5

98

7

6

• Autonomous, cooperating industrial robots

• Numerous integrated sensors and standardized interfaces

• Simulation of value networks

• Optimization based on real-time data from intelligent systems

• Cross-company data integration based on data transfer standards

• Precondition for a fully automated value chain (from supplier to

customer, from management to shop floor)

• Augmented reality for maintenance, logistics, and all kinds of SOP

• Display of supporting information, e.g., through glasses

• 3D printing, particularly for spare parts and prototypes

• Decentralized 3D facilities to reduce transport distances and inventory

Advanced

Manufacturing Solutions

Simulation

Horizontal/

Vertical

Integration

Augmented

Reality

Additive

Manufacturing

• Network of machines and products

• Multidirectional communication between networked objects

• Full evaluation of available data (e.g., from ERP, SCM, MES, CRM, and machine data)

• Real-time decision-making support and optimization

• Management of huge data volumes in open systems

• Real-time communication for production systems

• Operation in networks and open systems

• High level of networking between intelligent machines, products, and systems

Industrial Internet

Big Data and Analytics

Cloud

Cyber-security

5

Industry 4.0: Expected benefits

Productivity

Flexibility

Quality

Speed

Higher flexibility given by small batches production

with the economies of scale of mass production

Higher speed from prototyping to mass production

using innovative technologies

Increased productivity thanks to lower set-up time and

reduced downtimes

Improved quality and scrap reduction thanks to real

time production monitoring through advanced sensors

Product

Competitiveness

Higher competitiveness of products thanks to

additional functionalities enabled by Internet Of Things

6

Main Industry 4.0 initiatives in the world

United States

Manufacturing USA

Network of institutes and leading

laboratories established by large

ICT private players, encouraged

by the Government and financed

by public-private partnerships to

foster technological innovation and

competences

Key measures:

• Public support to research

projects

France

Industrie du Futur

Re-industrialization plan including

investments in I4.0 technologies

centrally driven by the

Government

Key measures:

• Tax incentives for private

investments

• Preferential financing for SMEs

and mid-tiers

• Tax credit for research

• "Industrie du Futur" and

"Invest for the future" project

financing

Germany

Industrie 4.0

Action plan sponsored at federal

level with the involvement of large

technological and industrial

players

Key measures:

• Financing of company projects

and applied research centers

• Tax incentives for investments

in technological start-ups1

Other initiatives

Initiatives in scope

1. Pending Governmental approvalSource: Public data

7

Steering committee of "Industria 4.0"

National Steering Committee

Presidency of the Council of Ministers

Ministry of Economic Development

Ministry of Education, University and

Research

Ministry of Economy and FinanceLeading Italian universities and CRUI1

Research centers

Association of

manufacturing and

service companies Unions

CDP

Ministry of Labor and Social Policy

Ministry of Agriculture

Ministry of the Environment and Protection

of Land and Sea

1. Conference of Italian University Rectors

8

"Industria 4.0": The Italian way

Italian industrial sector peculiarities

• Few large industrial and ICT private players able to lead Italian manufacturing transformation

• Limited number of industry champions able to coordinate the evolution process of value chains

• Industrial sector deeply based on Small and Medium enterprises

• Key role of illustrious universities and research centers in development and innovation

• Strong cultural traits of finished products

Government guidelines

• Operate in a technological neutrality

logic

• Implement horizontal actions avoiding

vertical or sector-based ones

• Operate on enabling factors

• Steer existing instruments to promote

technological leap and productivity

• Coordinate key stakeholders without

acting as a controller or decision

maker

9

"Industria 4.0" national plan2017-2020 Measures

• Generate interest on I4.0 opportunities and create the public-private governance

Governance and awareness

1. Digital classes at primary and secondary schools ; 2. Work-related learning; 3. Italian professional institutesSource: Steering Committee "Industria 4.0"

Strategic measures

• Stimulate private investments in I4.0

• Increase private expenditure in research & development & innovation

• Bolster the finance in support of I4.0, Venture Capital and Start-ups

• Spread the I4.0 culture through "Scuola Digitale"1 and "Alternanza Scuola Lavoro"2 programs

• Develop I4.0 skills through dedicated academic paths and "Istituti Tecnici Superiori"3

• Finance the I4.0 research bolstering Clusters and PhDs

• Create Competence Centers and Digital Innovation Hubs

• Ensure adequate network infrastructure – Ultra Broadband Plan

• Cooperate in the definition of IoT open standards and interoperability criteria

• Guarantee private investments

• Support large innovative investments

• Reinforce and support internationalization of Italian companies

• Strengthen the productivity – salary taxation exchange through decentralized negotiation

SkillsEnabling

Infrastructures

Innovative

investments

Public instruments

at support

Complementary measures

10

"Industria 4.0" national plan2017-2020 Targets

+10 €Bprivate investments

increase from 80 to 90 €B

in 2017

+11,3 €BR&D&I private expenditure

increase with a special

focus on I4.0 technologies

over the '17-'20 period

+2,6 €Bvolume of early stage

investments mobilized

over the '17-'20 period

100%of Italian companies with

access to 30 Mbps

connectivity within 2020

50%of Italian companies with

access to 100 Mbps

connectivity within 2020

6 consortiaregarding IoT standards ,

monitored by Italian

representatives

200.000 academic students and

3.000 managers

qualified on I4.0 topics

+100% students attending "Istituti

Tecnici Superiori" on I4.0

topics

~1.400 PhDs focused on I4.0 (out

of ~5.000 included in

NRP1 )

National

Competence

Center

+0,9 €BReform and refinancing of

Guarantee Fund for 2017

+1 €BDevelopment Contracts

focused on I4.0 large

investments

+0,1 €BStrong investment on

digital sales chains

(Made in Italy plan)

Strengthening of

productivity – salary

taxation exchange

SkillsEnabling

Infrastructures

Innovative

investments

Strategic measures

Public instruments

at support

Complementary measures

1. National Research PlanSource: Steering Committee "Industria 4.0"

11

Hyper-Depreciation and Super-Depreciation schemes

Innovative investments Advantages in plan

Hyper-Depreciation

• Increase of rate for I4.0 investmentsAs is

140%

Source: Confindustria; MATTM; MEF; MIPAAF; MISE; R.E TE. Imprese Italia;

for all investments,

Super-Depreciation

• 1 year extension of the Super-Depreciation

with a stable rate (140%) for all investments,

except for vehicles and other means of

transport that show a reduced rate (120%)

To be

250%

In order to guarantee a high appeal of Hyper

however the order and a >20% deposit have

Deadline

• In order to guarantee a high appeal of Hyper

and Super-Depreciation schemes, item

delivery date is prolonged to 30/06/18

however the order and a >20% deposit have

to be placed within 31/12/17

Investments in Agrifood

technologies, Bio-based economy

and in optimization of energetic

consumption

12

Tax credit for research and development and

innovation expenditure

Research and development and

innovation expenditure – '17 example

Average

expenditure

Expenditure

R&S

2017

Expenditure

R&S

2014

Expenditure

R&S

2013

Expenditure

R&S

2012

Source: MEF; MISE

25% 50%

50% 50%

As is To be

5 €M 20 €M

Tax Credit

calculation

Credit for

intramural

expenditure

Credit for

extramural

expenditure

Maximum credit

per taxpayer

Incremental

expenditure

13

Finance in support of I4.0, VC and Start-ups

1. Open funds, Pension plans and Insurance plans; 2013 value equal to 1.069 €B Source: CDP; Invitalia; MEF; MISE

6%

10%

6%10%

100

90

80

0

Saving

distribution %

Other investments

Inv. in bonds of

Italian companies

Inv. in equity of

Italian companies

Asset Under

Mgmt 2020

80%

Asset Under

Mgmt 2013

88%

Initiatives

130

534

7801,000

500

0

€M

Italy

2020

~1000

Italy

2015

Spain

2015

Germany

2015

• 30% tax deduction for investments

up to 1 €M in start-ups and

innovative SMEs

• Enablement of "sponsor" companies

to embed losses of participated

innovative start-up

• "PIR" – Reduction of capital gains

taxes in case of medium/long term

investments

• "Acceleratori di impresa" program,

financing the establishment and the

growth of new companies focused

on I4.0 technologies ("CDP")

• Establishment of dedicated

investment funds for the turning high

tech ideas and patents into business

("CDP")

• Dedicated matching VC funds for

I4.0 start-ups ("CDP" / "Invitalia")

National

saving

invest-

ments1

Early

stage

invest-

ments

14

As Is

Amortizable value : 140% of

the purchase value

� 5 years tax reduction equal

to 96.000€

Innovative investments:

Tangible benefits for enterprises

To Be

Amortizable value : 250% of the

purchase value

� 5 years tax reduction equal

to 360.000€

As Is

Tax deduction: 19%

Maximum investment per

taxpayer:0,5 €M

� Tax deduction equal to

95.000 € / year

To Be

Tax deduction: 30%

Maximum investment per

taxpayer:1,0 €M

� Tax deduction equal to

300.000 € / year

Hyper-Depreciation

Tax credit for research

Finance in support of I4.0, VC and Start-ups

Example:

1.000.000 €

investment in

innovative start-up

Example:

1.000.000 €

incremental

expenditure • 800.000 € intramural

• 200.000 € extramural

Example:

1.000.000 €

investment in

Advanced

Manufacturing

Solutions

Source: MISE

As Is

Tax credit 300.000 €(In case of higher expenditure,

credit limit = 5.000.000 €)

To Be

Tax credit 500.000 €(In case of higher expenditure,

credit limit = 20.000.000 €)

+275%

Up to

+300%

+215%

15

Skills:

Digital Innovation Hub and I4.0 Competence Center

Digital Innovation Hub

Features:

• Selected DIH located at

Confindustria's and R.E.

TE. Imprese Italia's

branches

• Point of contact between

companies, research

centers and public – private

investors

Mission:

• Awareness creation on I4.0

opportunities

• Support in developing

innovative investment plans

• Orientation to I4.0

Competence Centers

• Support in accessing to

public and private financing

solutions / investors

• Interactions with European

DIHs

Gov. and

Public

Institutions

Start-ups

Universities

Clusters Associations

Industrial

Players

SMEs

Incubators

Investors

I4.0 Competence Center

Features:

• Few and selected national

Competence Center

• Strong involvement of leading

Italian universities and large private

players

• Support of key stakeholders (e.g.

research centers, start-ups,...)

• Competence Center focused on

specific and complementary

technology drivers

• Appropriate legal framework and

managerial skills

Mission:

• I4.0 training and awareness

• Live demos on new technologies

and access to I4.0 best practices

• Technical advisory on I4.0 for SMEs

• Launch and acceleration of

technological development and

innovative projects

• Trial support and "on-site"

development of new I4.0

technologies

• Coordination with European CC

Research

Centers

CC

CC CC

Source: MIUR

16

Stimulate private investments in I4.0 technologies• Hyper-Depreciation: Rate increase to 250% for I4.0 investments

• Super-Depreciation: Refinishing and one year extension

• "Beni Strumentali – Nuova Sabatini": One year extension

• "Fondo Rotativo Imprese"3 : Section of "FRI" dedicated to I4.0 investments

~13 €B2

Public

effort

10,0 €B

Strategic measures: Innovative investments2017-2020 cumulated effort

1. Includes 0,5€B of CDP investments; 2. Public effort includes 2018-2024 effort for financial coverage of private investments performed in 2017 eligible for Hyper-Depreciation, Super-Depreciation and Beni Strumentali; 3. Revolving fundSource: CDP; Invitalia; MEF; MISE

Initiatives

11,3 €B

Increase private expenditure in research & development• Tax credit for research expenditures: Fiscal deduction rate increased to 50%

of incremental expenditures and credit limit to 20 €M

2,6 €B

Bolster the finance in support of I4.0, VC and Start-ups• 30% tax deduction for investments up to 1 €M in start-ups and innovative SMEs

• Enablement of "sponsor" companies to embed losses of participated innovative

start-up

• "PIR" – Detaxation on capital gains from medium/long term investments

• "Acceleratori di impresa" program

• Dedicated investment funds for the industrialization of innovative ideas

• Dedicated matching VC funds to invest in I4.0 start-ups

Private

effort1

~24 €B ~ 13 €BTotal

17

Strategic measures: Skills2017-2020 cumulated effort

Initiatives

1. Development and diffusion of precision agriculture technologies and food production innovation; 2. Already assigned; 3. Of which 150€M already assignedSource: LPS; MIPAAF; MIUR

Private

effort

National Plan "Scuola Digitale" implementation

• I4.0 skills: Creative ateliers, technology classes and I4.0 laboratories

• Territorial laboratories: School-enterprise meeting, digital skills development

• Digital curricula: Development of 25 curricula focused on digital and I4.0 technologies

• Computational thinking: Education in computational thinking starting from primary schools

Focus of selected work-related learning initiatives on "Industria 4.0"

Specialization of academic courses, masters and executive masters on "Industria 4.0"

topics in partnership with industrial and technological players

Increase of the number of students attending professional institutes focused on

"Industria 4.0" topics

Strengthening of technological clusters "Fabbrica Intelligente" and "Agrifood1 "

• Coordination with other technological clusters and industrial stakeholders

1.400 new PhDs on "Industria 4.0" technologies

Development of working class skills through dedicated funds and programs

0 €M

30 €M

~ 70 €M

Establishment of selected national I4.0 Competence Center 100 €M

Public

effort

355 €M2

70 €M

170 €M3

100 €M

Budget waiting for approval

~200 €M ~ 700 €MTotal

18

Ultra Broadband Plan• 100% of Italian companies with access to 30 Mbps connectivity and 50% with

access to 100 Mbps connectivity within 2020

6 €B

Private

effort

Complementary measures: Main initiatives2017-2020 cumulated effort

1. Includes the extension of primary warranty coverage for agricultural enterprises through ISMEA; 2. Estimate of additional revenuesSource: PCM; MIPAAF; MISE

Initiatives

Guarantee Fund1

• Reform and refinancing of Guarantee Fund for year 2017 with focus on I4.0

investments

Made in Italy• Strong investment on digital sale chains and increase of support to SMEs

(technological centers, workshops, trainings)

Development Contracts• Negotiation and supply of tailored loans to finance execution of large programs,

with priority on I4.0 programs

~32 €BTotal

22 €B

1 €B2

Productivity – salary taxation exchange • Strengthen the productivity- salary taxation exchange through annual gross

salary and maximum eligible limit increase

2,8 €B

N/A

xx Year(s) of impact

6,7 €B

Public

effort

~10 €B

0,9 €B

0,1 €B

1,0 €B

1,3 €B

'17-'20

'17

'17

'17

'17-'20