3D printing scales up

Back in April we published a report saying that reshoring of manufacturing to the US was in fact happening, that vertical integration was making a comeback and that robotics was poised for fast growth. Six months on and all of these trends appear to be on track. One thing we largely missed, however, was the sudden importance of 3D printing as a strategic factor in manufacturing strategies. Having looked into it a bit more deeply over the past week or so, it seems there’s plenty to watch.

“Additive manufacturing” (the less cool sounding name for 3D printing) has been around for many years and is in wide deployment for speciality applications like rapid prototyping, fabrication of oddball spare parts and hobbyist uses. Problems with the technology include speed of production, cost of materials, and significant post-production processing to give a decent finish.

As long as 3D printing was limited to engineering shops, garage enthusiasts and the folks at NASA, these limitations were not much of a problem. Today, however, applications have widened substantially and manufacturing strategists are beginning to notice. Align Technologies, for instance, has built quite a business on 3D printed dental braces that allow people (often grown-ups) to straighten their smile much more easily than with old-school railroad tracks. Align produced 17 million units last year alone.

From prototyping to production

Wohlers Associates (the leading authority on the topic) reckons that a quarter of all units produced with 3D printers in 2012 were production parts, not prototypes. This is a big increase from 2003 when only 4% were finished parts. The trend is clearly away from experimentation and toward scale uses. British retailers Asda and Selfridges are now selling 3D printed statuettes in their stores. Silly, perhaps, but certainly something to spark the creative urge of the masses.

At the other end of the spectrum, lower volume but more mission critical items such as replacement parts for old aircraft, including the ubiquitous MD80 passenger plane or F18 fighter jet, extend service lives and save millions of dollars. Next-generation aircraft take this further: the new F35 strike fighter incorporates as many as 900 3D printable parts. Improvements in materials and processing machinery are expanding the range of applications both for small scale, light duty consumer uses and heavy duty industrial applications.

As for size, limits to 3D printing are beyond the horizon with at least one machine operating in China that reportedly produces wings on an apparatus that is 12 metres long. Visionary companies like General Electric are taking a lead here, investing intensively in both the technology and process knowledge necessary to transform traditional manufacturing technologies that start with a big piece of expensive material like titanium and chip away at it with milling, boring or grinding steps.

Market validation

Technology inflection points tend to manifest in hot stocks, and 3D printing has at least two that deserve attention. Stratasys, which is based in Eden Prairie, Minnesota, has been around for a while and with 2012 revenue of around $215 million is the smaller of the two. In its most recent quarter, the company racked up $106 million in sales and enviable growth. The company’s stock has rocketed from around $18 in 2011 to $107 now, giving it a market capitalisation of $4.2 billion.

The other big player is 3D Systems of Rock Hill, South Carolina. Also a veteran in the field, 3D Systems has seen recent surging growth with 2012 revenue of $354 million followed by second quarter sales this year of $121 million. Its stock has risen too, from about $12 a share in 2011 to $54 now. With a market cap of $5.5 billion, 3D Systems may be a small step ahead of Stratasys, if on a slightly slower pace.

As is typical of hot technology trends, the two companies feel less like bitter rivals and more like complementary players in a thriving market for innovation. And fits and starts should be expected. But with everything from precious metal to human tissue fabrication up for grabs, and a complete reversal of manufacturing philosophy in the works, supply chain strategists must keep an eye on, if not a hand in, this movement.

Please contact me directly with any comments, questions or suggestions. I welcome your feedback.

Kevin O’Marah

Chief Content Officer

SCM World