Labor costs in Europe are among the highest in the world. In fact, according to Eurostat, hourly labor costs in the EU rose by 5.1 per cent in the third quarter of 2024. What’s more, this figure was slightly higher for industries compared to the service sector, which saw a growth rate of 5.3 per cent over the same quarter in the previous year.
The challenge: High costs and a shrinking workforce
At the same time, businesses face a critical shortage of skilled labor. In a recent European Commission release, nearly two thirds of small-to-medium sized businesses state that they cannot find the talent they need. This challenge here is two-fold. Changing demographics are resulting in an ageing workforce, without a pipeline of fresh talent to plug the gaps. Similarly, there’s a mismatch of demand and supply for many professional skillsets — and engineering has long been a sector grappling with this dilemma. As European businesses face rising costs and a shrinking talent pool, they must find new ways to maintain their competitive edge on the global stage.
The solution: Digitalization and AI
Digital technologies are proving to be a game-changer, bridging the labor gap by enhancing productivity and reducing dependence on manual work. Picture a production line where automated systems handle repetitive tasks like assembly operations or routine inspections, allowing employees to focus on creative and strategic initiatives. Imagine machinery that maintains itself using predictive analytics, identifying potential failures before they occur — minimizing downtime, extending equipment lifespan, and saving costs. Add to this live data dashboards that detect inefficiencies in real time, empowering managers to make swift, informed decisions and optimize operations.
Artificial intelligence (AI) takes this to the next level. AI-powered systems can analyze vast amounts of data to optimize workflows, improve quality control, and predict maintenance needs with unprecedented accuracy. Machine learning algorithms continuously refine these processes, ensuring that automation adapts dynamically to changing conditions on the factory floor. AI-driven chatbots and virtual assistants also streamline administrative tasks, reducing workload and enhancing decision-making efficiency.
While digitalization has been widely discussed, its true challenge lies not just in implementation but in scaling automation effectively. McKinsey & Company states that 31 per cent of businesses have already fully automated at least one function. The next step is leveraging automation and AI to mitigate the labor shortage. This is where standardization becomes essential, ensuring automation can be deployed at scale while allowing human workers to focus on high-value tasks.
Why standardization is key
Standardization is the backbone of modern industrial automation, yet it often goes unnoticed. At its core, it’s about creating a common language for systems, devices and processes to work together seamlessly.
In the manufacturing and process industries, where operations often rely on a mix of legacy equipment and new technology, standardization eliminates barriers to integration. It ensures that different systems, regardless of their origin or complexity, can communicate effectively. This unlocks opportunities for innovation and allows businesses to connect and integrate those currently siloed automated functions.
Digitalization and standardization also play a pivotal role in supporting the twin transition toward sustainability and digital resilience. By fostering more efficient, future-ready processes, these strategies not only reduce operational expenses but also ensure businesses remain globally competitive in an ever-changing market.
Applying digitalization and standardization
COPA-DATA’s zenon software platform has long been a firm advocate of standardization. From its inception, zenon has been built with interoperability in mind, making it possible for different devices to work together smoothly. By creating standardized data models and process interfaces, different machines and systems — regardless of their origin, age or communication protocol — can work together efficiently.
As European industries navigate the twin challenges of high labor costs and a shrinking workforce, the path forward lies in digitalization and standardization. The promise of technologies like zenon, which embodies these methodologies, is not merely to maintain competitiveness but to turn today’s pressures into tomorrow’s opportunities.
