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»Generative AI offers considerable potential for the entire craft sector. It is certainly important to cross thresholds to distinguish between what is useful and what is feasible.«

Last summer marked the start of »AI und Digital Initiative HANDwerk.NRW«, a consortium project between the Fachhochschule des Mittelstands, the Fraunhofer Institute IOSB-INA and the District Craftspeople’s Association Paderborn-Lippe. As a KI.NRW flagship project, »KIDiHA« aims to strengthen the competitiveness and innovation potential of craft businesses in North Rhine-Westphalia through the integration of AI. Prof. Dr. Klaus Schafmeister is the scientific director of this project and talked to us about it.

You have been doing SME and regional economics for years, focusing on companies in the region, especially the craft sector. How did it come about that AI has now also become an important topic in this context?
The current challenges clearly point to a multifaceted pressure to adapt. This not only applies to the solution of global economic, social and ecological crises, but also to the optimal design of business processes to meet the requirements. Keywords such as climate or energy transition, demand for skilled workers or maintaining competitiveness are just as important as equality of living and working conditions, digitalization and artificial intelligence.

A wide range of interdependencies are becoming increasingly important and need to be given much greater consideration – on the one hand, those between companies and organizations and, on the other, those between the players within the value chain and their stakeholders. Key instruments for shaping these processes in terms of future-oriented and resilient development can be found in the field of digitalization and artificial intelligence. Craft businesses play a decisive role in overcoming the challenges mentioned in the beginning. Various analyses show that there is still a considerable need for adaptation here, but this is also accompanied by new opportunities.

The skilled trades sector is of enormous economic importance. In Ostwestfalen-Lippe (OWL) alone, there are more than 22.000 businesses with a revenue volume of around 18 billion euros (as of the end of 2021). How can the craft sector benefit from digitalization and artificial intelligence?
Although the craft sector is very diverse, there are several challenges facing the entire sector. In particular, these include the need for skilled workers, solution-oriented collaboration on economic and ecological challenges and the ongoing maintenance of the quality of services provided by the craft sector. In this overall context, digitalization and artificial intelligence offer numerous opportunities that would benefit the craft sector in a tangible and sustainable way. New types of digital scanning or measuring processes, for example, can optimally fit a saddle to a horse’s back, lead to considerable raw material savings in the food sector, optimize resource flows in the context of the circular economy or enable much more efficient maintenance processes for machines or heating and water installations. In many conversations with craftspeople, it quickly and emphatically becomes clear what possibilities exist when such innovations are considered. 

Last summer, you received funding for the »KIDiHA« project, the »AI and Digital Initiative HANDwerk.NRW« What exactly are your plans here and who are your fellow campaigners?
The project consortium consists of the application-oriented Fachhochschule des Mittelstands (FHM) in Bielefeld, the Fraunhofer Institute IOSB-INA in Lemgo and the District Craftspeople’s Association Paderborn-Lippe. In particular, the project partners want to make a sustainable contribution to strengthening the competitiveness and innovation potential of craft businesses in NRW through the needs-based integration of AI and digital solutions. This primarily involves the development of practical and customized AI solutions and approaches for craft businesses of different trades and scales. In addition to digital and AI solutions that are being developed and demonstrated, corresponding (further) education programs in this area should be promoted.

What projects are planned for companies? How exactly will the craft sector benefit from the results of your project?
I think that’s very interesting, because we are involving craft businesses closely, as our aim is for digitization and/or artificial intelligence to be seen and used as a helpful, feasible, affordable and efficient tool that offers new opportunities and complements the craft sector. We therefore integrate companies at different operational levels. It is especially interesting to exemplarily accompany individual companies over the entire duration of the project, from the initial needs assessment to the solution analysis and implementation, including the evaluation. Together with the entire consortium, we are available as partners for all craft-related questions relating to the subject area. With specifically developed events, workshops, further education courses, etc., we address certain topics in the craft sector across all elements of the transfer chain to achieve sustainable implementation.

Two further interesting elements are our mobile labs in the form of showrooms, which we use directly at companies, trade fairs or in cities and further education and training organizations to encourage shared discussions about the opportunities and risks. On the other hand, we will particularly discuss the new possibilities for shaping their own future with young skilled workers from the craft businesses.  

What are the main challenges in your project?
A wide range of analyses on the status quo of digitalization in the craft sector speak for themselves. The sector is less advanced when it comes to digitalization than the industry or the service sector. As a result, there is still some catching up to do. In addition, a number of framework conditions in the craft sector speak against a fast transformation: a shortage of skilled workers, traditional behavioral patterns, a high order backlog or considerable bureaucratic obstacles are just a few examples. A look at specific needs also reveals the width and thus also the heterogeneity of the craft sector with its wide variety of trades.

Generative AI in particular offers considerable potential for the entire craft sector. There are certainly barriers to be crossed in order to distinguish between what is useful and what is feasible. A significant challenge is often faced when it comes to combining certain data, for instance to coordinate services from different trades for the manufacturing of certain products. This so-called intersection problem also arises in the required relationships with public administrations as approving authorities or planning organizations.

Is »AI and Digital Initiative HANDwerk.NRW (KIDiHA)« a strictly regional project?
The focus is on the entire state of North Rhine-Westphalia. The core of the project consortium is certainly located in Ostwestfalen-Lippe. However, the project partners are closely linked with their organizations and partner structures throughout NRW. This applies to both the craft sector family and the Fraunhofer-Gesellschaft, in addition the FHM has several locations in NRW, not only in Bielefeld but also in Cologne, Frechen or Düren. KI.NRW ensures a close connection to other organizations and initiatives in NRW.

In addition, the transfer chain developed in the project with its various formats does not have a regional focus but will refer to the engagement and needs of NRW as a whole. In this respect, the project reflects the importance of the transfer concept for the craft sector. This means that not only local skilled crafts businesses, but also stakeholders from other regions, as well as representatives from politics, business and educational institutions, will be able to use the results for their own purposes and develop them further.

Finally, taking things a little further: what do you think the skilled trades will look like in ten years’ time?
In many places, craftsmanship will be unrecognizable – you will see many craftspeople who, in addition to the traditional craft tools, work almost everywhere with modern technical equipment that complements the valuable manual work, that makes processes more efficient, that customers learn to appreciate and that benefits society and the environment.