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UKRAINIAN MANIFESTO INDUSTRY 5.0

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Regarding transition of Ukrainian industries to a new industrial paradigm

UKRAINIAN MANIFESTO INDUSTRY 5.0

The context

Today’s challenges force governments to constantly adjust strategic plans and policies. The countries of the European Union and other advanced countries of the world have developed and are currently implementing the strategies of the twin transition – the simultaneous green and digital transformation of society. These strategies are designed to ensure the introduction of new business models and the realization of new opportunities for a resource-limited world and the achievement of the Sustainable Development Goals. The European Union is currently reviewing and changing policies and programs in response to the tectonic geopolitical shifts caused by Russian military aggression against Ukraine. At the same time, the challenges are assessed not as an obstacle, but rather as a catalyst to accelerate the achievement of long-term goals regarding the twin transition and new economy.

Ukraine, as a country with EU candidate status, but suffering from Russia’s military aggression, not only can, but must use the current situation as an impetus to accelerate the transformation of the economy towards a stable, industrial development, and towards the principles of sustainable development. The massive and deep de-industrialization of Ukraine in the last decades, the destruction of the economic assets of the eastern and the southern parts of the country, caused by military actions, has led Ukraine to the status of the poorest country in Europe. Significant investments are needed to restore the economy and overcome the crisis. A number of funds can be made available for reconstruction and recovery, but only if Ukraine is able to offer projects that are interesting and impactful to private investors and donor structures.

Why Industry 5.0

Industry 5.0 is the new industrial concept that focuses not only on the growth of the competitiveness of individual enterprises, but also the resilience of value chains and entire economies, the implementation of the green transition and human-centered attitude. Industry 5.0 changes the approaches of enterprises’ policies including not only the growth of their own profits, but toward a much better balance of their response to the challenges of social, environmental and economic development. Industry 5.0 has appeared on the agenda of policy makers in developed countries for several reasons. Industrial transformation in the context of the transition to Industry 4.0 turned out to be a purely technological paradigm that does not meet societal needs, such as the climate crisis, deep social tension, or and other emergency situations on the planet. Moreover, it even intensified it. Therefore, it was natural to evolve into such a model, which takes into account not only the growth of the competitiveness of individual enterprises, but also the resilience of value chains and entire economies, the implementation of the green course and human-centered attitude.
Regarding Ukraine’s situation, Industry 5.0 can be a holistic foundation for the whole Recovery projects and program in Manufacturing, Energy, Infrastructure and Building sectors. A new, modern industry is needed, since the currently deindustrialized, weak economy is unable to ensure resilience in times of upheaval. This is critical for multiple parties, Ukraine itself, the European continent and integration of Ukraine’s value chains into the European and global value chains – addressing multiple challenges.

Developers of the Ukrainian Manifesto Industry 5.0

– participants of the Ukrainian Industry 4.0 movement (its development is reflected in the following documents: Charter 4.0 (2016), Strategy of Industry 4.0 (2018) and Manifesto of Industry4Ukraine (2019) –

this document declares the need to transform Ukraine’s industrial sectors in the direction of Industry 5.0. It further supports the positions that are already developed by the European Commission regarding the new industrial paradigm 5.0. And it also confirms the EC readiness to comply with its principles in the formation of their own strategies, plans, and projects of reconstruction, restoration, and production.

Priorities for Industry 5.0 in Ukraine

With this document, we declare the importance and priority of developing strategic and programmatic documents at the state, regional, and individual organization levels, and effective implementation mechanisms to ensure the transition to Industry 5.0 in the following directions:

  1. Course on Governance. The Government of Ukraine should be more effective in developing modern industrial strategies and policies that are relevant to external challenges and stimulating the country’s integration into European industrial ecosystems. Development of the policies and programs of Government assistance and cooperation in developing should also be the focus of the business and the expert communities. For effective interaction, appropriate mechanisms have to be developed and implemented, relevant institutions have to be established.
  2. Integration and cooperation with the defense industries to strengthen critical infrastructure and to develop dual-use technologies. A successful development of the economy of independent Ukraine is possible only under the conditions of proper territorial integrity and collective security. The Ukrainian Industry 4.0-5.0 communities should maximally promote development in the sectors of critical industries and dual-use technologies, and together strengthen the domestic defense industry.
  3. The restoration and growth of human capital is an imperative for the Ukrainian industrial community in the context of the huge losses of the last decade and of the war. The transition to Industry 5.0 should mean the development of effective, balanced strategies to restore the potential of engineering personnel, science, research and education both at the state level and at the level of communities. At the same time, the enterprises themselves should aim to implement an innovative culture and organization of production, where employees can take an active part, show their creative potential and pursue lifelong learning.
  4. Inclusiveness, anticipatory and innovative development of small and medium-sized enterprises (SMEs) in the direction of the twin digital and green transition. SMEs are the basis of the country’s economy, both in the EU and in Ukraine. Facilitating their development, integration into regional and sectoral innovative ecosystems should be a priority of public policy, and especially in the field of reskilling and upskilling of SMEs in the twin transition, where we currently record large gaps and lagging behind European policies and programs.
  5. Defining Deep Tech Innovation as a focus. Deep Tech entrepreneurship is a driver of development in the Industry 5.0 paradigm. Creation and commercialization of Deep Tech innovations are impossible without the development of innovative ecosystems and strong support for science and education. This requires a change in the mental models of managers of various levels both in state institutions and in business regarding the perception of scientific innovative systems—it should be the focus and point of reference for transformation and recovery. Development of effective strategies and programs for the development of science, innovations and education, completely different from the previous ones, should be a priority of state policies and economic development programs.
  6. Focus on strengthening the resilience of value chains and ecosystems. Sustainable Value Added Chains and innovative ecosystems are key factors in successful response to external shocks. Ukraine must accept 3 major challenges in this category – 1) building strong domestic chains, 2) ensuring their integration into European industrial ecosystems, 3) strengthening and intensive development of innovative ecosystems at the level of industries and regions.
  7. Transition to circular production and circular economy in general. This direction is key to the successful integration of digital transformation with the green transition. A regenerative circular economy should offer more distributed, diverse and inclusive models for industry based on the intensive use of renewable energy sources and circular value chains.
  8. Digitization is not only for profits, but also for people and the planet. The digital transformation of industry should lead not only to improving the competitiveness and profits of enterprises. Equally important are the indicators of sustainable development — the growth of the number of jobs, preservation of the environment, sparing use of resources and cooperation for the sake of a common future. The government and business communities must implement a comprehensive digitization program that will include real sectors of the country’s economy.
  9. Decentralization and adaptability for less vulnerability and ensuring resilience and stability. This direction is, first of all, safe and important from the point of view of optimization of resources and assets. Managed (coordinated) and secure decentralization, modularity, autonomy and network interaction of individual assets and resources are key principles for the recovery and development of critical infrastructure, critical industries and digital assets.
  10. Transition to ESG principles and standards. Transition to ESG corporate governance standards (Environmental, Social, Governance) changes the focus of enterprises from purely financial indicators to a broader set of goals and KPIs. Today compliance with ESG standards is a reality that forces Ukrainian enterprises to quickly accept new rules for their successful integration into the European value chains and to export products to the EU. War expands the spheres of application of this principle — in particular, trade or any support of aggressor countries is important.

Effective cooperation of various stakeholders in the development and implementation of national strategies and programs is the cornerstone of ensuring industrial transformation. The level of fragmentation of State administrations and interactions with other stakeholders is today irrelevant to existing challenges. The lack of appropriate policies, strategies or targeted programs, on which business, government, and other parties have reached a consensus, does not allow implementing systemic changes. Not only government structures, but also business organizations, scientific and expert communities should change approaches and apply practices that lead to much more effective cooperation of key stakeholders.

To emphasize the importance of the interaction of various stakeholders towards transformational transition to Industry 5.0, we call on the business community, government institutions, scientific and educational institutions, and civil society organizations to sign this Manifesto, declaring their agreement with what has been stated and their readiness to jointly develop and implement the necessary strategies, programs, and policies.

The signature of Ukrainian Manifesto Industry 5.0 will take place at the conference on the 14th of July in Kyiv.

P.S. Most of the statements above are correlative and based on those from the European commission policy brief ‘Industry 5.0, a transformative vision for Europe’.

The original article can be found on the UCA website.

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