The Netherlands Needs to Catch Up in the Fields of Digitalisation and AI

The Netherlands must get moving in terms of innovation, believes Micky Adriaansens, Minister of Economic Affairs and Climate. Other leading countries are not only ramping up their investments; they are also doing relatively more in terms of innovation. Digitalisation is the key word here. In this regard, collaboration within the ecosystem of large OEMs and smaller suppliers is essential. The Netherlands, and politics too, is not sufficiently aware of the impact of a healthy and stable business climate, thinks Minister Adriaansens. "Digitalisation requires that we recognise ASML as one of the Netherlands' prime examples of supply chain collaboration," adds Sjors Hooijen, CEO of Tech2B. "It's not about increasing production, but about making our value chain faster, more flexible, and more innovative. ASML demonstrates what is possible through collaboration. This is the way forward for the Dutch industry."

The Ministry of Economic Affairs and Climate Policy agrees in the Digital Economy Strategy that digitalisation is crucial for the Netherlands. Why? What does this mean for the Netherlands' international competitive position?

Minister Micky Adriaansens (Economic Affairs and Climate Policy): "This development is very crucial for our society and economy. At the moment, there is a large-scale technology battle going on worldwide. Therefore, we cannot wait a second longer to implement strategic technology policy. Our leading position is under pressure, despite the fact that we still score well on various international competitiveness and innovation strength rankings. More than three-quarters of our entrepreneurs give the Dutch business climate a passing grade. The challenge is to maintain this. Other economically leading countries have not only increased their pace to innovate, sustain, and digitalise with billions in public and private investments. But they also invest more in innovation. Therefore, we too must join this movement."

The New Arithmetic

"Digitalisation is the new arithmetic; without digital knowledge and infrastructure, we will fall behind. Fortunately, we have a good starting position and can use this advantage to expand and build upon. This also creates the jobs of the future. Thus, I would like to see both the traditional SMEs and innovative start-ups and scale-ups fully participating in these developments."

6G Technology for the Manufacturing Industry

"And when it specifically comes to investing in digitalisation, I mean both infrastructure and technology. In terms of infrastructure, we are on the eve of, for example, 6G technology, which will be important for further digitalisation of the manufacturing industry. But also for the task of building an innovative and sustainable cloud and data infrastructure that is based on European values. For example, with the Important Projects of Common European Interest (IPCEI), I am proposing tens of millions in public financing from the government for cooperating Dutch companies. And the technology investments we need for AI, Quantum, etc., are evident. Also because the starting positions vary. With things like photonics, semiconductor machines, and Quantum, our scientists and entrepreneurs are among the global top, but regarding the development and application of AI, we have a significant catch-up to do compared to countries outside the EU."

The Major Influence of AI and Big Data

What impact will AI and big data have on how SMEs operate? And what contribution should the companies themselves make?

Micky Adriaansens: "I don't think we will become entirely paperless everywhere. But, certainly also within the traditional SMEs, things like big data and AI can have a good influence on both production processes and sales. With this, you can reach existing or new customers faster, simplify online ordering and payment, shorten the time needed to gain insights or do administration, have analyses done, and learn from mistakes more easily."

Collaboration

"We still have a significant step to make. And you cannot just put this on the plate of individual (SME) entrepreneurs. We see that collaboration between entrepreneurs themselves, but also between companies and educational institutions, and even partnerships with governments (municipalities, regions, and the state) is one of the right paths here. Also, when it comes to personnel. Because we have a mismatch between the supply and demand in the job market for people with knowledge of digitalisation and sustainability: at all levels. Therefore, as the Ministry of Economic Affairs and Climate Policy, we are investing in a National AI Education Lab (NOLAI) to raise the level of AI applications and learning methods, encourage retraining within technical professions as the market demands for professionals with different skills, and ensure that employers also take their responsibility. We even have a special Action Plan for Green and Digital Jobs where we, from the state, specifically stimulate this."

"It's all very necessary, for business does not arise by itself. Yet, we do not need to be too negative now. Many countries around us still look at how we have set up public-private cooperation in the Netherlands, for example, on this subject, with a bit of envy."

European Digital Innovation Hubs

The Netherlands has significantly invested in Smart Industry Fieldlabs. Have these initiatives been successful in reaching smaller companies? And might the European Digital Innovation Hubs (EDIHs) be more effective in approaching the SME manufacturing industry?

Micky Adriaansens: "Yes, actually, the concept of the European Digital Innovation Hubs is more or less based on the model of the Dutch Smart Industry program in which the initiators have set up 50 field labs since 2015. In just the first period up to 2019, the financing (by companies, the state, region, knowledge institutions, and EU) of the field labs was more than 300 million euros and supported hundreds of small and medium-sized businesses. A success that was mainly due to the local SMEs, local education, knowledge institutions, and local governments that have worked together regionally. Subsequently, five Smart Industry Hubs have emerged where regional collaboration and knowledge sharing from the field labs take place. The Hubs are now being integrated into the five Dutch European Digital Innovation Hubs (EDIH). Here they work together regionally on applying innovative technologies like artificial intelligence, robotics, 3D printing, autonomous systems, Internet-of-Things devices, and cybersecurity in processes and products."

Keeping the Manufacturing Industry Healthy

"Co Financing and EU cooperation are essential in the coming years. After all, only by having a strong and resilient internal market can we compete globally in technology and keep the manufacturing industry healthy through digitalisation and sustainability. The EU is not just a market for our entrepreneurs; it also allows us to form an economic block together and drive innovation."

Priorities in a European Context

"I am in favour of also setting priorities in a European context. For instance, I recently presented the National Technology Strategy to my European fellow ministers. Companies, knowledge institutions, social organisations, and the cabinet will prioritise ten strategic technologies. These are necessary for our future jobs and income, solving societal challenges, and our national security. Among these ten are optics and integrated photonics, Quantum, (opto)mechatronics (industrial systems/machines and devices), artificial intelligence (AI) and data, semiconductors, and cybersecurity. So, these are all priorities that contribute to the digitalisation of our manufacturing industry."

Not Replacing People with Robots

Digitalisation and automation require new skills and competencies. Is the SME manufacturing industry attractive enough for employees with these new skills? And does digitalisation help solve the labour market problem?

Micky Adriaansens: "Digitalisation and automation can certainly contribute to solving this problem. Consider applying AI for time-consuming and inefficient research or administrative work. But it's not the only solution, especially not from the wrong thought: 'just replace people with robots'. Strengthening digital knowledge starts at a young age. So, we need to ensure that more young people – including girls – opt for technology. Therefore, we need role models: entrepreneurs who show how important and distinctive this work is and more appreciation, also financially, for these professions. But also, a good educational structure that is much more focused on such education in areas like energy, technology, and ICT. Various manufacturing companies, large and small, indicate that there are too few Dutch students, from vocational to university level, to fill all the vacancies. We must take this signal more seriously and improve the connection between education and the labour market."

The Netherlands as an Attractive Business Location

Theo Henrar, chairman of FME, emphasised in an interview with Elsevier at the end of last year the importance of small suppliers for the survival of large corporations. He states that if large companies leave, the smaller suppliers will also disappear. How essential is the digitalisation of the entire production chain to keep the Netherlands attractive as a business location for large companies?

Micky Adriaansens: "Indeed, that is essential. The interaction between large companies and smaller ones - known in professional terms as the ecosystem - is precisely what has made the Netherlands economically great. If that starts to crumble, then that's something I'm worried about. That a company like ASML has recently sought publicity with this issue, unfortunately, comes as a surprise to too many people. While it has around it hundreds of SMEs in the Brainport Region Eindhoven as suppliers. In the Netherlands – including politics – we talk too easily about this: we are not aware enough of the impact of a healthy and stable business climate. So, it must be much duller and more predictable. And that goes beyond just paying attention to not too many fluctuations in fiscal arrangements. That means also putting our money where our mouth is when it comes to sufficient private and public investments in innovation and education, improving financing policy, and ensuring that we keep regulatory pressure manageable."

A Memorandum of Understanding was recently signed with South Korea to intensify cooperation, especially in the field of smart industry. What specific activities are planned under this agreement? What could this cooperation mean for SME companies in the manufacturing industry?

Micky Adriaansens: "We see that like-minded countries such as South Korea, EU member states, but also the USA are very keen to make strides in digitalising their manufacturing industry. Cooperation with these countries offers many opportunities. Dutch knowledge is still held in very high esteem, but it's valorisation: turning this knowledge into products or services on the market could be improved. As such, the ministries of Foreign Affairs and Economic Affairs and Climate Policy facilitate these kinds of international cooperations, and the Ministry of Economic Affairs and Climate Policy has local innovation attachés at embassies, consulates, etc., worldwide to promote this. An example is that chip production is one of the most important economic activities for the South Korean industry, while the Netherlands is leading in technology for semiconductor production machines. Another example is that the Netherlands already has significant knowledge in technologies like Quantum and photonics: this is with our knowledge institutions but also in SMEs. In South Korea, there are industrial companies that are very eager to apply this and take it further, which are commercially interesting corporations. For me, it is indeed a point of attention that this does not limit itself to a vanguard group of Dutch companies that have put themselves forward for this. We must broaden the group of innovative companies from small to large. This is where the new ASMLs will emerge, with an ecosystem that the entire high-tech industry but also the baker as a supplier benefits from."