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Greig Mordue is ArcelorMittal Dofasco chair in advanced manufacturing policy at McMaster University.

Crafting a budget is delicate work, particularly when the gulf between resources and needs is wide. As we digest Ontario Finance Minister Charles Sousa's recent version, it's easy to fixate on the posturing, positioning and politicking.

But in all this action and reaction, it's possible to lose sight of the big picture. Certainly, on its most basic level, the budget explains where the money is coming from and where it will go. But the document is also a tangible expression of Ontario's government values and the direction it wants for the province's economy.

One of the best examples is in a little-noticed segment on manufacturing. Hiding in plain sight on Page 8 is funding for a new initiative. If properly played, this line item holds the potential to propel Ontario, and Canada, to the forefront of a major trend reshaping global manufacturing.

The budget supports an Advanced Manufacturing Consortium being formed between McMaster University in Hamilton, Western University in London and the University of Waterloo. It's a $35-million, five-year commitment. The cynical might assume it could mean another building, another "investment in our future," a vessel for accepting money that taxpayers will never hear about again.

But this one has the potential to be so much more.

These universities form a triangle of knowledge and geography with the power to align, assist and advance the creation of a new form of manufacturing, one that demands speed, creativity, expertise and collaboration. This funding offers the potential to pay major dividends: high-level employment, better products and materials, reduced waste, greater economic activity.

Already partners in related projects, the three universities will now be asked to harness collective strengths and resources to help their industrial partners ensure that Ontario's old industrial heartland is also its new industrial heartland.

We're not talking about tweaking old factories. We're talking about creating the factories of the future – the very near future – where technology-enabled products communicate with technology-enabled machines, where machines anticipate their own preventative maintenance, where sensors in products communicate to machines, to other products, to customers.

The McMaster Automotive Resource Centre – where a high-performance lab meets a garage – offers a preview of this future.

Many call this the fourth industrial revolution – Industry 4.0. Empowered by the "Internet of Things," it's the next phase in the evolution of manufacturing and with it, everything changes. Everything.

The first industrial revolution, beginning in the late 1700s, was driven by the introduction of mechanical production equipment, powered by water and steam.

The second, in the late 1800s, was based on mass production, achieved by division of labour and the use of electrical energy.

Industry 3.0, beginning around 1970, further automated production by electronics and information technology.

Industry 4.0 breaks down barriers. It brings together emerging technologies and trends – for example, huge increases in connectivity, data volume, data integration, computational power, predictive modelling – and gives us powerful new tools. Some are not yet ready for application at scale, but many are at a point where reliability and costs are creating industrial opportunities.

For example, the product itself will communicate with the machinery that's making it. The machinery will communicate with other machinery. The communication will continue between companies, between company and consumer, between consumer and product. Everything about the old way of making things is changing, and fast.

This takes the Internet of Things, and the cool applications we're just beginning to deploy – smart parking meters, wearable devices for health and fitness, smart home thermostats and lighting systems – then integrates them across a range of industrial applications.

The Advanced Manufacturing Consortium gives us a powerful hub to bring all of this together: the engineers, scientists and policy-makers; the trends, technologies and opportunities; the employees, employers and consumers.

Canada's manufacturing sector – set in these same university communities – is in a prime position to make this happen. Having experienced its greatest growth since the Second World War, its infrastructure is already more modern than that of many others, but we cannot afford to lose more ground. Germany, the United States, South Korea and others are aware of the transformation and making investments. With this budget, Ontario has announced its intention to engage.

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