Megatrends that will reshape the world of manufacturing by 2020

1. Forces of Change
Mega Trends That Will Reshape the World of
Manufacturing by 2020
David Frigstad: Chairman
Richard Sear: Global VP – Visionary Innovation
Frost & Sullivan
May 2013

2. "When it comes to the future, there are
three kinds of people: those who let it
happen, those who make it happen, an
those who wonder what happened."
- John M. Richardson
2

3. Our Definition of Mega Trends
“Mega Trends are global, sustained forces
of development that are transformational
to business, economy, society, cultures and
personal lives”
3

4. 4

5. The Indicator
3
2
1
4
5
0
High Immaturity
High Maturity
The top right corner on each page will show the following indicator
The RED arrow shows the Maturity of the OVERALL area being discussed
The GREEN arrow shows the degree of impact to manufacturing as it relates to
addressing the area being discussed
GAP between Green and Red = Relative complexity to overcome the challenge
5

6. URBANIZATION
“CITY AS A CUSTOMER”
“CITY AS A CUSTOMER”
6
6

7. Four Main Trends in Urbanization: Development of Mega Cities,
Mega Regions, Mega Corridors, and Mega Slums
MEGA CITY
City with a minimum
population of 8 million and
a GDP of $250 billion in
2025 (13 Mega Cities in
2011 and 34 Mega Cities in
2025)
EXAMPLE: Greater Tokyo
MEGA
CORRIDORS
MEGA REGIONS
Cities combining with
suburbs to form regions
(Population over 15
million)
MEGA SLUMS
837Mn in Slums in 2012
The corridors connecting
two major cities or Mega
Regions (60 km or more
apart, and with a
combined population of 25
million or more)
EXAMPLE: National capital
region of Delhi (includes
New Delhi, Noida, Greater
Noida, Ghaziabad,
Gurgaon, Faridabad)
EXAMPLE: Hong KongShenzhen Western
Corridor
Photo Credits: Dreamstime
Source: Frost & Sullivan Analysis.
7

8. There Will be 34 Mega Cities Globally By 2025 - 76% of Mega
Cities to be From Developing World
Moscow
Chicago
London
Paris
New York City Madrid
Nanjing
Harbin
Shanghai
Beijing
Hangzhou
Tianjin Seoul
Tehran
Wuhan
Tokyo
Chengdu
Delhi
Osaka-Kobe
Chongqing
Cairo
Guangzhou
Mumbai
Kolkata
Foshan Shenzhen
Istanbul
Los Angeles
Mexico City
Hong Kong
Jakarta
Population in 2025
> 27 Million
18-27 Million
Rio de Janeiro
São Paulo
Buenos Aires
8-18 Million
Source: : United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011
Revision , Frost & Sullivan, 2012
8

9. 2
The Future of Urban Logistics– The Hub and Spoke
Logistics Model In Urban Environments
3
1
4
5
0
High Immaturity
High Maturity
The Spokes:
Macro to Micro Implications
Drop of delivery points for
double trailer trucks
•
•
New Technologies in tracking
deliveries such as Track and
Trace, RFID in warehouses to
evolve
•
New Business Models like innight services, special delivery,
self-collection points to grow in
popularity
•
~50% reduction in trucks going
in and out of cities
•
The Hub:
All trucks to operate at 80-100%
capacity (load factor)
Ensures ‘On-time delivery’ for
retailers
Central Distribution Centres
Medium and
Light CVs will
deliver goods to
warehouses within
city
Heavy Commercial
Vehicles (double
trailer trucks) will carry
goods to big warehouses
at outskirts
Outer Ring Road
25 miles from City
Centre
Source: Frost & Sullivan Analysis.
9

10. 2
Gujarat International Finance Tec –City (GIFT ) $15.6 Billion 1
PPP Project to be India‟s Zero Discharge City and Zero
0
Fatal Accidental City by 2017-2018
High Immaturity
TRANSIT ORIENTED
DEVELOPMENT
ZERO DISCHARGE
CITY BY 2017
ZERO FATAL ACCIDENTAL
CITY BY 2017
•
No release of any
harmful or toxic
material to the
environment
No fatal accident
due to use of intelligent
transport system
•
•
•
•
10:90 modal split Private :
Public Transport
2 Multimodal Transit Nodes
4 External Parking Hubs
and Logistics Centers
PRT Systems – no journey
to extend 10 mins
Well connected to 6
external gateways from NH8
•
•
•
•
•
•
IT Services
ITeS/BPO
services
10
•
•
•
5
High Maturity
NEXT VERTICAL CITY – 61
buildings to be High Rise
60% of Built up Area for
Commercial Purposes and 23%
of Residential Purposes
60% of Land to be green
99.9% Uninterrupted Power
Supply
WiFi/WiMAX Services For High
Speed And All-pervasive Network
8000 Km of High Speed Fibre
Cables
GIFT Project in 2020
Capital Markets
and Trading
4
PROJECT FEATURES
BUSINESS SEGMENTS
Core Financial
Services
3
No. of Jobs 10,000-11,000 (Thousands)
Value add to GDP: $375-425 Billion
Market Capitalisation-$1,600-$1,800 Billion

11. 1
Route 128
Woonsocket
Hartford
Waterbury
Danbury
5
New Rochelle
Baltimore
New York City
Gross Metropolitan
Product (2025)
400
Philadelphia
Airport
BWI Airport
Other City Station
Washington, D.C
$2.6 Trillion
Five Year Plan To
Upgrade Transport,
Energy, Water, Telecom
Infrastructure Announced
(Feb 2011)
Philadelphia
Wilmington
High Maturity
$300 Billion
White Plains Airport
Newark
Newark Airport
Trenton
4
0
High Immaturity
Boston
3
2
Case Study: The BOS-WASH Corridor to have
58.2 Million population and to account for 20% of
United States GDP in 2025
Major City Station
Hub City Station
11
Million
Total volume on the
corridor, including
commuter service
18
Million
new inhabitants in the
next decade

12. SSOCIAL TRENDS
OCIAL TRENDS
12

13. Surge in
Asian Work
Pool
Geo
Gen Y
Socialization
Middle
Bulge
“Sheconomy”
Ageing
Population
Reverse
Brain Drain
13
Generational
Political Shift

14. 2
Global Population in 2025
3
1
4
Of 2.4 Billion Gen Y Population, about 60% will be from Asia
2.50
Population Forecast by Region and Age, Global, 2011 and 2025
Note: Gen Y = Population between 15 and 34 years
2011
6.97 Billion
0.18
Population (Billion)
0.06
0.84
0.11
0.70
0.20
0.34
2.85
0.50
1.00
0.62
0.49
0.60
0.15
0.07
0.50
0.24
0.53
0.45
0.07
0.14
0.10
0.07
0.21
0.15
0.00
Africa
Global
Population
8.00 Billion
1.50
2.29
1.85
High Maturity
2025
Approximately 35 percent of
Gen Y Population will live in
India and China.
2.00
0.54
2.29
5
0
High Immaturity
Rest ofAmerica, Caribbean and Oceania
Latin Asia
North America
0.48
2.40
0.31
0.16
0.36
0.37
0.22
0.12
Europe
1.91
India
China
Region
65 Years and Above
Personalization
and
Individualization
35-64
15-34
Techno Savvy
and Connected
24 X 7
0-14
Civic and
Environmentally
Friendly
Global
Population
Demanding and
Impatient – “Fast
and the Furious”
Source: U.S. Census Bureau 2010 and Department of Economic and Social Affairs of the United Nations 2011; Frost & Sullivan analysis.
14

15. 3
2
Rise of Young Dragons
1
China to Have 354.4 Million Gen Y (15–34 years) Population and 966
Million Working Age Population by 2025
4
5
0
High Immaturity
Gen Y Population by Province, (China), 2025
2011
Total Population: 1,355.2 million
131.6
Top 4 Provinces
Account for 29% of Gen
Y population
254.8
555.6
High Maturity
413.2
Sichuan
22 million
2025
Shandong
25 million
Total Population: 1,404.1 million
223.3
245.0
Henan
28 million
Gen Y
20-30 million
354.4
10-20 million
611.5
Less than 10 million
0–14
15–34
35–64
Guangdong
28 million
65 above
Note: All values in the charts are in millions. Some numbers do not add up because of rounding
Source: Population Division, United Nations, National Bureau of Statistics of China; Frost & Sullivan, 2012
15

16. Developing World Seeing a Thirst For Innovation
Five Key Trends for Employers of Youth in Emerging Markets (tracking similar to
developed nations)
Trend 1: School to Work Transition
Trend 2: Entrepreneurship Society / Positive
Identity
Trend 3: Thirst for Access to Technology
Trend 4: Desire for Education / Certificates
Trend 5: Longevity and Security
16

17. TECHNOLOGY
TECHNOLOGY
17

18. Connected World:
Over 80 billion devices will be Connected in Future
10 Connected Devices for
Every Household by 2020
190Mn Pay TV
In India
India = 1.5
Billion Devices
10 Connected Devices
for Every Household
by 2020
5 connected devices for
China 877Mn
every user by 2020
Internet Users
800Mn Internet
Users in Africa
China = 5.1
Billion Devices
Connected
World
5 connected devices for
every user by 2020
5 billion internet
users by 2020
5 billion internet users by
80 billion Devices
2020
by 2020
IPv6
500 devices with unique
digital IDs (Internet of things)
per square kilometre by 2020
340,282,366,920,938,463,463,374,607,431,768,211,456
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18

19. 2
Virtual World 2020: 3D Simulated Environment
for Interaction: Progress made by interesting players
3
1
4
5
0
High Immaturity
Virtual Shopping Allowing Customers to Try
Products without leaving their homes
Virtual World Used for
Product Builds
Virtual Classes and Laboratories and
Daily 3D Field Trips
to Different Countries and Planets
High Maturity
Virtual Business Conferences
Social Networking: 3D Avatars
Enabling People to Lead Multiple
Lives
19

20. Total Augmented Reality Market to Hit $75.2 Billion in
2020, with Mobile Augmented Reality Market Accounting
for The Majority 60%
2
3
1
0
4
5
High Immaturity
High Maturity
Augmented Reality (AR) is defined as a real-time augmented view of the environment through digital data through use of
text, sound, graphics, video, and navigation systems that increases user‟s interactivity with the local environment . This extends business and
mobility options, social interactions and experiences which has implications on personal lives, businesses and even day-to-day activities.
Augmented Reality, Global Revenue, 2020
Total AR Market: $75.2 Billion
Mobile AR
Augmented reality embedded
mobile apps
60%
Others
Heads Up Displays & Head
Mounted Displays
$30.2 Billion
$45 Billion
Reality
40%
Augmented Reality
Augmented Virtuality
Photocredits: : Dreamstime
20
Virtual World
Source: : Frost & Sullivan, 2012

21. 2
Future Robotics: Pervasive Robotic Technology in
2020 - 2025
3
1
4
5
0
High Immaturity
Robots as Pets
High Maturity
Robots for
Household
Chores
Robots to Wait
on Hand and
Foot
Robots for
Companionship
Robots as
Waiters
Robots To Help
With Strategic
Planning and
Business
Robots as
Nannies
21

22. 2
1
“Smart” as the New Green
0
High Immaturity
22
3
4
5
High Maturity

23. MOBILITY
MOBILITY
23

24. Top 20 Megacities – Regional Transportation Policies
Congestion , low emission zones and road user charging initiatives in the emerging
economies will have a major impact on car mobility
Delhi
Mumbai
Beijing
Bus Rapid
Transit Lanes
Moscow
2011
Metro/Subway
Congestion
Charging
Shanghai
Seoul
New York
London
Tokyo
2011
2011
Planned
Planned
2012
2012
Future
Yes
1 Week
Day Ban
1 week
Day Ban
Planned
Future
Parking Cuts
Road use
Charging/Ban
1 Week
Day Ban*
Future
EV/Hybrid
Incentives
Bicycle Lanes
Emission
Standard
Euro 4
Euro 4
Euro 4
Euro 3
Euro 4 by
2012
Euro 4
Not planned
24
Euro 4
CAFÉ
27.5mpg.
34.1 mpg
by 2016
Existing currently
Euro 4
Euro 5 by
2011
25%
reduction
by 2015
* Voluntary noSource: Frost & Sullivan
road usage incentive

25. 3
2
1
Impact of Urbanization on Vehicle Technology Planning
4
Opportunity for OEMs to Develop Technologies for Customers’ Unmet Needs
5
0
High Immaturity
High Maturity
Evolution of Megacities: Impact on Vehicle Technology Planning (Global), 1950 - 2025
Vehicle length of
less than 3500mm
CO2 less than 80
gm/km vehicles
Limited boot space
and more head and
leg room
Voice recognition
technology
Start Stop System for
frequent stop in traffic
Panoramic roofs
Customised and
personalised comfort
functions
Lightweight
construction
Low speed collision
avoidance for enhanced
safety and pedestrian
protection
Autonomous parking
assist
Simple and easy to use
HMI
3G/Wi-Fi Connectivity - V2V
and V2X communication
Ergonomically designed
comfortable seats for
long commuting hours
Turning radius <4.3m to
drive in congested streets
Facebook on wheels,
Internet in cars
Smart vehicle
access
Navigation systems with
route guidance and traffic
information
Source: Frost & Sullivan
25

26. The Future of Mobility will Rely on „Intelligent‟, „Integrated‟ and
„Interoperable‟ Transport Infrastructure
Example of Implication of Augmented Reality and Location Based Services
SATELLITE
COMMUNICATION
REAL TIME
INFORMATION
AIRPORT
DISTANCE: 10 KM
TIME: 40 MINS
TOLL COLLECTION
POINT
DISTANCE: 4 KM
TIME: 20 MINS
CAR SHARING
DISTANCE: 3.5 KM
TIME: 15 MINS
VEHICLE TO VEHICLE
COMMUNICATION
RETAIL
DISTANCE: 5 KM
TIME: 25 MINS
SERVICE STATION
DISTANCE: 3.5 KM
TIME: 17 MINS
YOUR
FRIENDS
INTERMODAL
COMMUNICATION
DISTANCE: 1.5 KM
TIME: 3.5 MINS
PARKING SERVICE
DISTANCE: 3 KM
TIME: 10 MINS
DISTANCE: 1.7 KM
TIME: 4 MINS
CONGESTION
CHARGING
ZONE
DISTANCE: 1.5 KM
TIME; 53.5MINS
26
CHARGING
STATION
DISTANCE: 1 KM
TIME: 3 MINS

27. NEW BUSINESS MODELS
NEW BUSINESS MODELS
27

28. Business Model Focus Creates Higher Rate of Return
Strategy
Business
model
Partnering
Process
Enabling
process
Core
process
Product
Product
performance
Product
system
Delivery
Service
Channel
Brand
Customer
experience
Volume of Innovation Efforts
Last 10 Years
Hi
Lo
Cumulative Value Creation
Last 10 Years
Hi
Lo
Source: Doblin analysis, Doblin Inc.
28

29. N=1
N=1
Integration of Technology changes manufacturing Business Model’s
Integration of Technology changes manufacturing Business Model’s
Source: MLC, Frost & Sullivan
29

30. INFRASTRUCTURE DEVELOPMENT
INFRASTRUCTURE DEVELOPMENT
30

31. Telecom Infrastructure: Investments are expected to drive mobile penetration (M2M
included) in Latin America from 91% in 2009 to more than 200% in 2020, and fixed broadband
from 7% to 65%
2010
Europe
2020
140%
North America
200%
150%
200%
90%
90%
100%
68%
65%
Asia
56%
56%
11%
Mobile Broadband
Penetration Penetration
Mobile Broadband
Penetration Penetration
Mobile Broadband
Penetration Penetration
90%
200%
112%
Africa
82%
Latin America
Oceania
41%
91%
83%
27%
57%
65%
4%
Mobile Broadband
Penetration Penetration
Mobile Broadband
Penetration Penetration
7%
Mobile Broadband
Penetration Penetration
Source: 2009 telecommunications statistics from ITU 2020 projections from Frost & Sullivan
31

32. Infrastructure in Latin America: Latin America’s infrastructure is significantly behind
OECD countries, demanding significant investments
Latin America has a large
infrastructure deficit…
Roads, paved (% of total roads)
Latin
American
countries
33.3%
OECD
countries*
And significant amounts need
to be spent
86.5%
Rail lines (total route-km)
93,454 km
562,410 km
Air transport, registered
carrier departures (million)
1,838,212
18,639,951
Annual investment in infrastructure over 20 years to equal
the same level of South Korea (as % of GDP)
Country / Region
% of GDP
Improved water as %
urban population
97.1%
99.6%
Broadband density per 100
people
6.6
23.8
Electric power
consumption (kWh per
capita)
1907
9.0%
Costa Rica
3.0%
2.0%
Peru
11.0%
4.0%
Total LatAm
94.0%
5.0%
Venezuela
87.0%
8.0%
Mexico
Improved sanitation as %
population
All continent
Brazil
Colombia
26,500
4.0%
Chile
Oil & Gas Pipelines (length in
km)
Argentina
6.0%
8376
* Includes Chile and Mexico
Source: The Worldbank WDI database, 2010; WHO World Health Statistics 2011
32

33. O&G will remain the Major Source for Primary Energy for the Next
Two Decades
20000.0
Forecasted Growth of Global Primary Energy Consumption
(million tons of oil equivalent )
15000.0
10000.0
O&G will
provide for
55 percent of
energy
demand in
2030
5000.0
0.0
2010
2015
Total Liquids Consumption^
2020
2025
Total Natural Gas Consumption
2030
Others
^Liquids include Biofuel, Others include Nuclear, Coal, Renewable and Hydroelectric energy , Data Source (BP Statistical
Review, 2011)
• Global energy consumption to grow by
40 percent in the next two decades
• Non O&G energy source would see a rise
of 50 percent from 2010 levels
• Renewable energy to grow at a CAGR of
nearly 8.5 percent during this period
BUT
33
• O&G will continue to remain the major source
of energy
• O&G contribution to the global mix is expected
be 55 percent in 2030, only 2 percent lower
than 2010
• Oil consumption is expected be 18 percent
higher in 2030 and gas consumption is
expected to rise by 52 percent

34. Energy Storage
Viable Solutions for Intermittent Challenges?
 Lithium ion batteries are the energy
storage option for electric vehicles and
hybrids – as demand increases cost will
decrease with volume efficiency bringing
economies of scale.
Ambri‟s Liquid Metal Battery
Magnesium (Mg)
Antimony (Sb)
 Lithium-manganese chemistry is likely
to be the future of lithium-ion batteries for
automotive applications.
The automotive application‟s share in the
lithium-Ion battery demand is likely to near
50% of the total demand by 2016
100%
90%
1%
16%
80%
48%
70%
60%
Automotive
50%
40%
83%
12%
Industrial
Consumer
30%
20%
40%
10%
0%
2009
2016
Source: Frost & Sullivan
34

35. ECONOMY
ECONOMY
35

36. 3
2
1
Beyond BRIC: The Next Game Changers in 2025
4
5
0
High Immaturity
High Maturity
Russia
$6,189
Billion
Turkey
Poland
$1,167
Billion
$2,601
Billion
$687
Billion
$2,212
Billion
Egypt
Brazil
$38,526
Billion
$6,235
Billion
Thailand
$803
Billion
Mexico
BRIC Nations
India
$6,467
Billion
$4,816
Billion
Next Game Changers
Note : The figure denotes GDP at
market prices. Forecasts have been
made based on Real GDP growth
rates
$709
Billion
South Africa
36
China
Indonesia
$323 Vietnam
Billion
$483
Billion
Philippines

37. Trends Implications to Manufacturing
Adaptable and
flexible to
opportunities
caused by
technology is
speeding
Manufacturing to
arrive earlier in
R&D process as it
becomes a value
center to drive
differentiation
Constantly
adapting to
technology will be
crucial to stay
competitive, sustai
nable and
profitable over long
term
Companies must
drive and foster
innovation – a
source of
competitive
advantage
China is a source of
concern
37
Manufacturing
pushes closer to
end consumer in
an era of hyper
personalization
Smart products will
create complexity
to the
manufacturing
process

38. Innovating to 2025: A Few Predictions
We will be
witnessing
robots in homes
Digital assistants
will guide our
lives
Cars to have
autonomous
functions
Your health will
be driven
China will be
going through
social reform
Cities will be
Smart
USA remains the
#1 wealth
generator
Virtual world
will Disrupt
Industries
38

39. Contact Details
David Frigstad
Richard Sear
Chairman
Global Vice President – Visionary Innovation
(210) 348-1000
(210) 247-3840
df@frost.com
rsear@frost.com
@searrichard
Join Our Mega Trend Group On
Mega Trends: Strategic Planning and Innovation Based
on Frost & Sullivan Research
39