More Big News from the 3DP World: Carbon gets $80M+ Investment – Commentary

Silicon Valley investors and business partners invest in a CLIP future

Within a week of GE’s announcement it was spending $1.4B to purchase two major players in the metal printing market, we have more big investment news from the 3D Printing world.  This time, the buzz comes from Silicon Valley, and it is Carbon’s announcement that they’ve secured a more than $80M Series C round of financing.  So what do we make of this development?  Who is Carbon?  Why are they getting all this cash?  What do they intend to do with it?  And what implications does this have for the additive manufacturing market more broadly and Carbon’s competitive set specifically?  Below I try to offer a few thoughts on each question.

Who or what is Carbon?

Carbon is an additive manufacturing equipment manufacturer that developed the Continuous Light Interface Process (CLIP).  It manufactures the M1 Printer, which utilizes CLIP technology to create custom parts – currently in a handful of urethane materials.  With CLIP, a focused UV-light projector is shined on a panel at the bottom of a pool of photo sensitive resin.  The image projected on each layer cures that layer of material, then pulls the cured material upward allowing for the next layer of resin to flow into the void to be selectively cured.  CLIP technology is similar in many respects to Digital Light Processing (DLP), another “vat photopolymerization” process that utilizes projected light to “grow” parts.  The main difference, Carbon highlights, is the panel of oxygen it uses to accelerate the pace at which the resin is cured.

It is that speed which helped Carbon burst onto the scene a year and a half ago.  At a Ted Talk, Carbon’s CEO Joseph DeSimone dramatically completed an interview on stage while a latticed ball gradually materialized out of the pool of resin in a nearby M1 Printer.  It was a striking moment – one that captured the imagination of many – especially considering DeSimone mentioned Terminator 2’s liquid metal villain as a source of inspiration for the technology.

Why are they getting all this cash?

From that day to now, Carbon has done a solid job of advancing its technologies, developing promising partnerships, and demonstrating great marketing savvy.  So part of this investment is rooted in execution to date.

The second leg of this is the promise of a 3D Printed production future.

As it sits, 3D Printing is a metaphorical gnat relative to the elephant that is global manufacturing.  As of the latest Wohler’s and Associates estimate, 3D Printing represents around a $5B global market, which is still less than 1% of the $10.5T global manufacturing industry.  But while 3D Printing is still small in relative terms, its growth has been meteoric, at a roughly 30% year-over-year clip for the last half decade.  It also carries the promise that it will not simply displace existing manufacturing applications like machining, molding, and casting, but create new opportunities.  The consensus feeling is that 3D Printing is turning a critical corner from being a prototyping technology to a production technology.  I can attest to this transition – 3Diligent was born because engineering grade plastics and metals for heavier duty applications were coming to market and we believed an online platform to access these emerging technologies and materials seamlessly and on-demand would provide huge value to customers and service providers alike.

Carbon is riding – and on some level doing a significant bit in building – this same wave.

Leveraging DeSimone’s experience as a material science professor at the University of North Carolina, Carbon has developed a number of custom urethanes that they believe are superior to competing resins produced by industry incumbents.  Carbon runs these materials on their M1 machines using parameter sets developed and refined by Carbon based on every part build.   The hope of Carbon and its investors is that combining their speedy hardware, software processing, and material science will roll up into truly functional custom parts that can be built at scale.

This is the same vision being pursued by 3D Systems, Stratasys, HP, and Envisiontec, Carbon’s key competitors in the polymer 3D Printing space.  Notably at this weeks International Manufacturing Technology Show (IMTS) in Chicago, both Stratasys and 3D Systems unveiled systems geared toward production rather than prototyping.  It remains to be seen whether this investment will get Carbon to true production runs in the tens of thousands of parts first.

What are they going to do with the funding?

An investment in Carbon right now signals that Carbon and its partners believe they are truly onto something, have demonstrated sufficient market traction, and should start investing in a full-fledged build-out of its technology.  The first thing this will likely extend to is a ramping up of their manufacturing capability.  DeSimone anticipates growing from 50 installed units now to 100 by year end and 500 next year.  Scaling up manufacturing – both for M1 hardware and related consumable resins – is a costly endeavor.

Beyond ramping up production, it appears that Carbon also has designs on pursuing global growth.  Whereas it has primarily focused its growth in the United States to date, it seems to recognize that companies around the world are looking to position themselves for a 3D Printed future.  The extent to which Carbon can be the machine of choice that R&D engineers, designers, and plant managers across the world can become that technology of choice has to be top of mind for DeSimone and his team at Carbon.

Lastly, you can assume that Carbon will push some of that capital toward existing operations.  Carbon has offered up a roadmap to extend beyond the five materials they currently offer – that will require material science research funding.  And while Carbon has stated with its subscription model that it should be able to simply perform “over-the-air” updates to keep its machines up to date, it stands to reason that Carbon will continue to explore enhancements to its hardware and explore ways to broaden the application of its technology.  Currently, Carbon’s printer has a relatively tall and thin build chamber, meaning that there are certain part geometries that isn’t currently well equipped to build (e.g., an iPad) without splitting into pieces for assembly.  It’s possible that it will allocate some resources to a future model with a larger build chamber.

What are the implications of this for the industry?

At this time, it’s safe to say that incumbents 3D Systems, Stratasys, and Envisiontec all must recognize that there’s another new kid on the block.  Less than a year since HP signaled it’s going all in on 3D Printing as well with its new Multi Jet Fusion technology, Carbon has secured the funding to really go toe-to-toe with the biggest in the industry.  This investment values the company at over $1B, which puts it within 70% of the market cap for 3D Systems – the original 3D Printing company and inventor of the stereolithography technology that CLIP builds upon – and nearly the same value as Stratasys, the other major publicly traded polymer 3D Printing company.

Aside from the fact that Stratasys, 3D Systems, and Envisiontec face another credible threat for market share beyond the threat that HP poses, my sense is that this doesn’t necessarily serve as a signal for consolidation in the market.  Whereas GE’s deal last week creates a single player in the metal printing market with disproportionate resources, the polymers space remains fragmented with a number of viable players.  I think you can expect these companies – plus some others that are also making a push for this market at a global level (e.g., Prodways) – to continue duking it out for a while before any clear winners emerge.  It’s possible you could see pairing up in an effort to consolidate the market in the face of these new competitive threats – or potentially another purchase from GE (they’re invested in Carbon) or HP.  But because the polymers market is older, the growth is a bit slower, and the battle lines longstanding, the calculus in polymer 3D Printing doesn’t add up in quite the same way as it does in the metals market.

What are the implications of this for you?

If you’re reading this as someone who uses or is interested in using 3D Printing technology, this is good news for you.  Whereas GE’s play in the metals market may deter competitive investment, accelerate consolidation, and potentially deter innovation, Carbon and HP being added to the mix has demonstrably pushed market incumbents to take notice and try to innovate at a faster pace.  The likelihood that we’ll arrive at true production 3D Printed polymer end-use parts – and distributed mass production of custom goods – has gone up with this announcement.

While we wait for any sort of clear leader to be established – if that day ever truly comes – 3Diligent is the perfect partner to support you with our 3D Printing services.  3Diligent was built on the premise that this sort of tectonic shifting in the market was inevitable and likely to continue for at least the next decade, if not longer…the market opportunity is just too big for us not to see more players pursuing innovation breakthroughs and market share.  That’s why we are focused on developing innovative procurement software and developing relationships with service providers that are investing in and developing expertise with these different technologies.  We are pleased to offer 3D Printing services across Carbon, 3D Systems, Stratasys, Envisiontec, and more than a half dozen other brands across plastics, metals, and more.

We look forward to supporting you on a project soon – perhaps with a Carbon printer manufactured with the proceeds from this funding round…

 

Cullen Hilkene is CEO of 3Diligent, “the 3D Printing Partner for Every Business,” an online rapid manufacturing service that supports designers, R&D engineers, and procurement officials across a multitude of industries.  He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting.  

 

The Evolving State of American Manufacturing

Automation driving productivity gains but retraining programs needed

A really insightful article was published by Ylan Q. Mui of the Washington Post today.  It spoke about the current state of American manufacturing, which has obviously been a topic of immense focus in this election cycle.

What the article tells us is that American manufacturing is actually doing very well, at least from an aggregate production standpoint.  In fact, total output is nearing the all-time high levels that occurred immediately prior to the Great Recession.

american manufacturing, automation impacts on productivity
The Fed notes that total American manufacturing production has climbed significantly in the last few decades.

It is true that the total number of Americans employed in manufacturing has gone down significantly in recent years.  But that inherently implies that the people doing the manufacturing are reaching new levels of productivity on a per person basis.

We can speak to this first hand.  Every day at 3Diligent, we interact with companies pursuing more effective production of their next generation prototypes, production parts, replacement spares, and custom tools to support some of their traditional manufacturing processes.  All of these companies recognize that advancements in technology are providing them new and better ways of doing things.  Injection Molding, CNC Machining, and most recently Additive Manufacturing (a.k.a. 3D Printing) are all examples in that progression.  Our rock star contract manufacturing partners utilize those tools to accelerate innovation and make our customers more competitive in the global marketplace.

Automation is a good thing.  It allows us to innovate faster and produce more products locally that otherwise would need to be sent overseas to be price competitive.  While the pace of change can sometimes make us uncomfortable, we have to recognize that short of an international truce on technological advancement, continued automation is going to happen.  Because America doesn’t have a monopoly on processors, memory chips, and the internet, trying to pump the brakes on technological advancement only stands to leave us behind those countries who are pushing forward aggressively.  Better to be the ones doing the innovating and creating the next generation technologies than the ones having to buy them from overseas once foreign countries have developed them.

With that said, whether it be to automation or overseas labor, there are a significant number of manufacturing professionals who have been lost in the shuffle.  So for all the macro benefits that faster times to market and lower unit costs provide the American economy, at the micro level, there are some very real consequences for those individuals displaced by technological advancement and their families.

The number of American workers in the manufacturing sector has declined in recent years
The number of American workers in the manufacturing sector has declined significantly in recent years

It is of critical importance then that America develops retraining programs for manufacturing workers displaced by automation and globalization.  Such retraining programs can equip those displaced workers with the skills to tackle jobs for the new manufacturing economy or transition them into other industries.

That is one of the reasons that we at 3Diligent are big supporters and proud members of America Makes, the National Additive Manufacturing Innovation Institute.  In addition to funding a wide number of research programs helping foster American innovation in the area of 3D Printing, they are also starting to really tackle the challenge of helping train the next generation of American manufacturers in how to get the most out of additive manufacturing technology and take this innovation from the R&D lab to the shop floor.

American manufacturing is doing admirably but it isn’t without some serious growing pains.  We are excited to support innovative companies that are embracing this evolution and organizations like America Makes doing the right things to help retrain American manufacturing workers to succeed in these times of rapid change.

3Diligent: The Next Generation 3D Printing Service

3D Printing is naturally and uniquely suited to distributed production across many sites.  3Diligent has qualified and networked the providers to do distributed manufacturing right.

Preface

Despite less than stellar stock performance from a few publicly traded market leaders who placed unfortunate bets on consumer 3D printing, the additive manufacturing industry as a whole is indisputably in a state of rapid expansion.

Innovation is happening across myriad industries.  Surgeons are improving patient recovery times and care through custom 3D Printed implants.  Aerospace companies are shedding pounds off their planes and months off their time to market with topologically-optimized designed-for-3D parts.  Manufacturing companies are creating highly complex jigs, fixtures, and molding inserts with 3D printing to bring down costs of production and increase efficiency.

 

The Catalyst: Proliferation of Industrial 3D Printing Processes and Materials

All of this is brought about by a proliferation of new 3D Printing technologies and materials that are allowing for ever-expanding applications.  No longer exclusively the province of 3D Systems and Stratasys, innovation is coming from all corners.

The metals world is led by a mixed bag of companies including EOS, Concept Laser, Arcam, SLM Solutions, ExOne, and Renishaw, with prospects like XJet and Desktop Metal on the way.  With respect to plastics and resins, just look to the recent launch of Carbon and the impending market arrivals of flagship products from Voxel8 and HP as indications that competition is not just from imitators, but true innovators, with each bringing unique capabilities to bear.

 

Arcam, EBM, Concept Laser, Lasercusing, EOS, DMLS, 3D Systems, SLS, stereolithography, Envisiontec, DLP, 3SP, Stratasys, PolyJet, FDM
Parts from Arcam, Concept Laser, EOS, 3D Systems, Envisiontec, and Stratasys machinery

The Problem: Identifying the Right Process/Material Combination to Meet Your Additive Manufacturing Needs

In aggregate, it’s clearly an exciting time for the industry.  But if you’re a user rather than manufacturer of these technologies, where does all this leave you and your company?  Advancement in technology is wonderful – it brings the promise that you’ll soon be able to do more, faster.  But it comes with a very clear caveat emptor.  With rapidly evolving technology comes risk of ownership.  The costs of buying equipment and material, training staff, and servicing the machinery are significant – and come with the threat that it will all be for naught when the next big thing hits the market.

3d printing decision, 3d printing options
Balancing process tradeoffs when no single machine can do it all can be a source of real frustration.

 

It’s no wonder then that many companies often choose to offload that risk and learning curve onto outsourced service providers – or service bureaus as they are otherwise known.

But does an outsource service provider really solve the problem?  Overall customer satisfaction with service providers suggests the answer is no.  Prices are sometimes insanely high, material availability is spotty, and lead times can be weeks.  Of course, this makes sense.  These service providers face the same constraints that their customers do – they can realistically only carry a subset of machinery and materials, and as a result, customers are constrained by what providers are running when.  It seems as often as not, service providers are calling a friend at another provider for a quote, adding a few percent to that price, and seeing whether the customer will take it.  It’s no wonder that for a technology that is supposed to bring down costs and increase speed, things tend to feel expensive and slow!

3Diligent: A Next Generation Solution for a Next Generation Technology

One Los Angeles-based startup is looking to solve this industry dilemma: 3Diligent.  In light of the rapidly evolving landscape for this next generation technology, the team at 3Diligent believes a next generation service solution is required.

3Diligent is in some ways like Uber or Amazon for industrial grade additive manufacturing.  Both of those companies created a superior customer experience by creating digital connective tissue between demand and sources of supply that might otherwise go untapped.  Both also provide you a range of mid-to-high end options depending on your need at the moment.  Just think, on Amazon you might buy a TV from a retailer you wouldn’t find online in a million years, or via Uber you might hitch a ride from a guy named Jim that you couldn’t have known was game to drive you halfway across town at a moment’s notice.  Both provide tremendous customer benefit by connecting the dots of the market with hyper efficiency.

3Diligent's network of industrial additive manufacturing service providers spans across North America and more than a dozen processes. So this challenging question is answered...and well.
3Diligent’s network of industrial additive manufacturing service providers spans across North America and more than a dozen processes. So this challenging question is answered…and well.

3Diligent is bringing this distributed supply, on-demand model to the industrial 3D printing world.  Over the past two years, the 3Diligent team has vetted and qualified industrial service providers for its 3D printing service.  The 3Diligent network now represents several dozen industrial service providers across North America representing roughly a half billion dollars in annual manufacturing capacity.  At any given point, there are hundreds of 3Diligent-networked machines ready for a new project, running dozens of different resins, plastics, and metals.

Implications of a Distributed Industrial Manufacturing Partner for Your Business

What does this mean for you as a customer?  An expectation of faster turnarounds and highly competitive prices on your prototyping for a start.  Customers across many industries visit 3Diligent.com to submit RFQs, which the 3Diligent algorithm then analyzes to identify capable vendors and facilitate real-time bidding for the work.  Customers accept bids on the platform, and 3Diligent guarantees the quality of parts, offering customers a full refund unless agreed upon specs, tolerances, and delivery deadlines are met.

3d printing partner, 3d printing service bureau, 3d printing company, 3d printer, 3d printing service, 3d printing service provider, service bureau
. 3Diligent’s algorithm and team of experts analyze RFQs and identify the most capable vendors for that particular job.

Figure 4.  3Diligent’s algorithm and team of experts analyze RFQs and identify the most capable vendors for that particular job.

Pushing toward production runs?  Again, 3Diligent offers the prospect of a flexible and scalable partner by operating as a general contractor for project runs across its distributed network. By its nature, this network provides more capacity than any single provider along with the ability to rapidly scale up.  3Diligent also offers a hedge against supply chain disruption, as its distributed network across North America prevents local calamities from impacting your broader production.

Closing Thoughts

It is an indisputably exciting time for innovation in 3D printing.  Hardware is advancing rapidly, which is good news for speed and reliability.  New materials are being announced regularly, opening the door to new applications.  And 3Diligent continues to advance its software and service offering, ensuring customers can access this rapidly expanding universe of opportunities through its next generation 3D Printing service.

 

Cullen Hilkene is CEO of 3Diligent, a 3D printing service provider.  He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting.  

A version of this article previously appeared on Engineering.com.

Key 3D Printing Takeaways from CES 2016

3Diligent Goes to Vegas

A couple weeks ago, members of the 3Diligent team paid a visit to Sin City to take in the sights and sounds of the International Consumer Electronics Show.  Since we’re all about industrial grade 3D Printing, we don’t go looking for the next generation of personal printers on display there.  We go to connect with our customers displaying at the show and to take in the 3D Printing discussion track, where some of our industry’s heavyweights offer perspective on how they are positioning themselves to support the next wave of consumer products – whether it be toys, electronics, or household durable goods.  The sessions didn’t disappoint.  And whereas last year “generative design” ruled the day, this year it was “bespoke materials.”

So without further ado, here are five key 3D Printing takeaways from CES 2016:

  1. The Lewis Lab – and presumably Voxel8 with it – have some cool materials in the pipeline.

    Jennifer Lewis has become somewhat of a brand name in the 3D Printing industry for the advanced 3D Printing work she’s done in her lab at Harvard.  At a biomedical conference we attended in 2015, the buzz was about work the lab was doing to print vascular systems.  At CES, she led a discussion about material science.  The most publicized breakthrough they’ve made is in the silver-based conductive ink used in the Voxel8 printer.  But they plan to release a number of different “inks” that take 3D Printing “beyond form, and start to integrate function” in the near future.  Conductive, epoxy, flexible, and battery inks are all in the pipeline and have been tested with compelling results in their lab.

  2. Carbon3D’s angle isn’t just speed, it’s materials too.

    Carbon3D’s Joe DeSimone used the CES platform to make some notable announcements about their offering, although we haven’t seen much of it made in the press just yet.  The big announcement – that they are rolling out 4 resin-based materials – is significant for a few reasons.  First is that they’ve developed custom polyurethanes that their data suggests are comparable to a number of thermoplastic counterparts.  These include rigid, semi-rigid, high heat, and elastomer, providing a decent range of options for varying applications.  Second is that if those resins are truly industrial strength and the Carbon3D speed is what it’s cracked up to be, then Carbon has offered a meaningful step in transitioning 3D Printing from being a primarily prototyping to production technology.

  3. The ISS is open for business, via Made In Space.

    Made in Space is a super cool company, solving a major supply chain problem…getting things to space is really expensive.  Not only do you need to buck up for a rocket that can get you there, but you also have to massively over-engineer anything making the trip to space strictly for the few minutes it’s taking on big G forces to get out of our atmosphere.  With Made In Space’s “space-grade” 3D Printer, astronauts on the International Space Station can simply have files beamed to them and then printed by the crew.  That’s cool by itself, but perhaps not the basis of big business.  Now MIS is taking things a step further now, by opening up the ISS 3D Printer for business.  Made In Space has designs on having companies beam designs for cube sats (small, high powered cube satellites) and other high value assets for printing in space that would otherwise have to hitch a ride on a rocket.

  4. HP’s MJF is on its way later this year.

    HP offered some perspective on its 3D Printing endeavor, Multi Jet Fusion.  Scott Schiller of HP provided some detail on the process, which sounds like existing multijet/colorjet printing on steroids, with a lot more nozzles and thermoplastic (nylon, in particular) instead of gypsum powder.  He described the process as building upon the technology in HP’s large form 2D Printers, which are differentiated by a staggering number of nozzles per square inch.  It appears that with so many nozzles in such a small space, curing of the powder can happen much faster and possibly at a higher level of detail/crispness than previously possible.  It did make us wonder though, if you’re going to saturate the powder with all of these nozzles, what does this do to material properties?  Existing MJP/CJP technologies don’t tend to produce especially durable parts, but we’ve seen pictures of HP test parts doing heavy duty applications.  As we approach HP’s launch target of Q4, we look forward to seeing additional testing data.

  5. The 3D Printing market is up to $4.5B globally.

    Joe Kempton from Canalys offered up that consultancy’s current estimate of the global 3D Printing market is $4.5 Billion.  That figure reflects the combination of total annual revenues across printers, materials, and services.  45% of that amount was in the Americas, 34% in Europe/Middle East/Africa, and 21% in the Asia Pacific region.  We look forward to the estimate in the forthcoming Wohler’s Report as another reference point on the industry’s continued growth.

Did you make it to CES and have other big takeaways?  Do any of these developments speak to you?  Let us know in the comments!

Best,

Cullen and the 3Diligent Team

 

Cullen Hilkene is CEO of 3Diligent, the Sourcing Solution for Industrial Grade Rapid Manufacturing. He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting. For more information about 3D Printing and to access 3Diligent’s marketplace of 3D Printing vendors, visit www.3Diligent.com

Key Considerations For Any Company Buying a 3D Printer

As a tidal wave of 3D Printing news has crashed across the headlines of news outlets, corporate leadership has taken notice.  Whether a company has a pressing need or application for 3D Printing, it has become an increasingly common Chief Officer mandate to “take stock of what 3D Printing is, how it can/will impact our company, and come up with a strategy of what to do about it.”

Because 3D Printing already provides a fundamentally more efficient way to prototype most products and increasing ability to print end-use parts on-demand, most companies find that there is a place for 3D Printing in their strategic plans.  Often, the decision boils down to buying a 3D Printer (or several), utilizing a service provider or providers, or some hybrid of the two.

In this three-part series “3D Printing – Buy Then Build vs. Buy Built,” we set out to provide a framework to consider purchasing printers and utilizing service providers to fill your needs.

In this first post, we set out to discuss the topic of buying a printer and then building parts in-house.  Below are some of the considerations companies should take into account when assessing whether they should buy a 3D Printer.

 

Hard Costs

This is the most obvious one.  While the most basic desktop printers can be had for a few hundred bucks, industrial grade equipment starts in the tens of thousands of dollars.  For top of the line plastics equipment, you’re looking at several hundred thousand dollars.  Investigating metal printing?  Regularly those machines cost in excess of a million.

You might be thinking, why such a broad range of prices?  It comes down to functionality, reliability, speed, and size.  Industrial printers are capable of printing in a broader range of materials, more accurately and reliably, faster and often with bigger build trays.

But do those differences matter to you?  Can you get what you need or want out of a desktop printer?  Or some percentage of what you need/want out of a desktop printer and the rest from a service provider?  Beyond the hard cost of purchasing, there are also the costs of feedstock and maintenance, so weigh them all.

Get a sense of the hard dollars you have to spend first to make sure you’re looking in the right ballpark of options.

 

Soft Costs

Once you’ve got an operating budget, consider the human impacts within your organization of making a purchase.

Do you have the people to operate and maintain a machine effectively?  Do you have a culture that supports CAD design and will keep that printer humming?

It’s important that you can either carve out time from existing personnel’s schedule to develop expertise on the system, or to hire new staff that can take ownership of making the most out of your 3D Printing investment.  Realize that there is both art and science to operating a machine – we’re not to push button parts yet – and there’s a significant learning curve that comes along with a printer purchase.

Make sure you have the manpower and organizational commitment to support your investment.  The last thing you want is a high-dollar investment growing cobwebs in the corner of the shop floor.

Breadth/Application

Once you’ve got a sense of what you can spend and how much staffing up will bite out of your budget, then consider how you’d like to use your equipment.  Different machines are capable of different types of printing, and no single printer can do it all.

First, are you looking to print in metal or plastic?  If metal, there are powder bed and blown powder options to consider.  All are capable of end use parts, but different machines and processes lend themselves to different applications.

If plastic, do your prints need to be functional?  Or are you simply looking for accurate models?

If you need functional models with some durability, a Fused Deposition Modeling (FDM) or Selective Laser Sintering (SLS) machine might be best for you.  Those machines offer a range of thermoplastics, some of which are quite durable.  Ultem 9085, for instance, is an FDM thermoplastic that has received FAA certifications for its high resistance to heat and fire.

If your models don’t need to be durable, PolyJet or Stereolithography might be a better fit.  Those printer types use resin as the “ink” to build their 3D Printed parts.  As a result of this, they are incredibly accurate – PolyJet can print in 16 micron layers – but not especially durable over time.

Also, what sort of geometries are you trying to achieve?  SLS, for instance, has virtually no limitations on design freedom.  That process works by laying down one layer of fine powder at a time, selectively fusing together those particles in the layer that it wants solid, and leaves the rest of the layer alone.  Then another layer of powder, another run of the laser, again and again, until the part is made.  Because the “extra powder” still sits in the bed, it serves as a support to whatever is being built above.  This extra powder can also be recycled for future parts.

PolyJet can achieve something near this level of freedom, as some machines are capable of  printing both end material and dissolvable support material.  Meanwhile, stereolithography machines require supports for overhanging areas, and FDM parts do as well.  These supports require manual removal.

Do you need color in your prints?  How big do your prints need to be?  Do you need to produce in a very specific material?  All are worth considering.

Build out a list of “need to haves” and “want to haves” (and possibly “can’t haves”), then figure out whether there’s a machine or collection of machines in your budget that fit the bill.

 

Obsolescence

We call out some of the capabilities and limitations of different technologies in the previous paragraph with a hint of hesitation.  That’s because the market is evolving so fast.  Market fixtures like Stratasys, 3D Systems, EOS, SLM Solutions, and Arcam AB who’ve put those products into market may introduce new functions or features to next generation models to refine existing processes.  After all, the list of potential innovators and competitors in the space is growing.  We’ve seen traditional names like Dremel, Renishaw, Mitsubishi, and Cincinnati recently enter the ranks of the 3D Printing world.  As of Wohlers and Associates last count, there are more than 300 “FDM Knockoffs” that utilize plastic extrusion.  Beyond those who’ve already entered the market, every couple weeks we’re also hearing about another “breakthrough innovation” that claims it will soon render existing equipment obsolete.  Many of these innovations are currently still in development, but HP, Carbon3D, and Gizmo3D have all offered compelling prototype videos to announce technologies that may massively accelerate the speed of printing, especially in plastics.

Now, it remains to be seen whether any company’s innovation renders your printer obsolete in the truest sense of the word.  Printers will continue printing as long as the manufacturer continues providing technical support, and probably a good while longer depending on the model.  Consider the implications of this for you and your business.  If a printer with markedly faster speed, accuracy, material breadth, or build size hit the market, would you need it, or could you keep getting by with this investment without being put at a competitive disadvantage?  If you would want or need that new printer, how quickly do you need to recoup your investment vs. utilizing a service provider during that time?

Make sure that you’re going to be comfortable with your purchase when the “next big thing” hits the market.

Consider Alternatives

So you’ve considered cost, printer options, and obsolescence risks.  And now you have a plan reflecting the fixed and variable costs of your investment, a few target printers in the right range, an estimate of the time/resources required to staff the printer(s), and a degree of comfort with the state of that machine on the obsolescence curve.

If you didn’t hit any snags along the way, you’ve got yourself a viable option.  You could call it the Buy Then Build Option.

But is it necessarily the right option?  Better take a second to consider alternatives.  You could do some core printing in-house and outsource the rest.  Or you could outsource all of it as you wait for the market to mature.

An exploration of the “Hybrid” and “Buy Everything Built” options will appear in our next posts.

 

Cullen Hilkene is CEO of 3Diligent, the Sourcing Solution for Industrial Grade Rapid Manufacturing. He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting. For more information about 3D Printing and to access 3Diligent’s marketplace of 3D Printing vendors, visit www.3Diligent.com.

AT Kearney’s 3D Printing Industry Report – Key Takeaways

AT Kearney, a leading global consultancy with expertise in the 3D Printing industry, recently released 3D Printing: A Manufacturing Revolution.  Lots of great content in there, outlining their belief of how the market will evolve and grow at an average growth rate of 25% over the next five years en route to being a $17B global industry by 2020.  This is a bit less than the Wohler’s Report’s estimate of $20B by 2020, but they are clearly believers in a continuation of the aggressive market growth we are seeing at 3Diligent.

The 16-page report has a number of interesting takeaways, but here are the big ones:

1. The question is not if but when companies need to consider 3D Printing.  This is the very first line of the report.  AT Kearney fundamentally believes in the disruptive nature of the technology, and that most every company will need to incorporate 3D Printing into their operations at some point – whether it’s simply for prototyping or as a more central part of the supply chain for mass production.  Smart companies will get ahead of the curve and start down this road to 3DP integration sooner.

2. There are 5 dimensions upon which 3DP offers breakthrough benefits relative to traditional manufacturing.  Those are: 1) making custom designs for end users (mass customization), 2) producing complex products with much lower capital investments and lower variable costs (New Capabilities), 3) faster speed to market through accelerated R&D (Lead time and speed), 4) eliminating inventory requirements through on-demand part manufacture (Supply chain simplification), and 5) reduction in scrap (Waste reduction).

3.   Value chains will be disrupted by 3D Printing.  AT Kearney foresees a world where mobile and 3DP integration will allow for customers to see an item they like, customize it via their phone, and have it printed on demand to be picked up within hours.  Naturally, this uproots the existing system, where decisions on inventory stocking are typically made months in advance, leaving customers to take or leave what’s there, with the power of the internet to hopefully aid them in finding a viable option.

4.  The fastest growth will come from the jewelry and energy sectors.  3D Printing has been most readily adopted so far by aerospace, industrial, healthcare, and automotive companies, and significant growth of 15-25% per year is expected for each of those sectors.  However, the most rapid growth is anticipated for the jewelry (25-30% per year) and energy (30-35% per year) industries.

5. Hardware improvements are needed to achieve production levels for many industries.  While 3DP serves as a viable solution for prototyping and limited production run products, the end goal is to achieve rapid manufacture of production parts at significant scale.  Gating criteria to achieving mass production are printer speed, available materials, assembly and testing, and achievable tolerances.  While they expect these criteria will be achieved in the next 5-7 years for such products as cameras, biomedical device kits, and iPhone cases, scale production of such items as cars, apple watches, cosmetics, and helmets are likely to farther away.  

6. New software platforms will be vital to support 3DP applications.  To support this new ecosystem, software will need to be developed that supports the evolving supply chain.

We here at 3Diligent generally think AT Kearney has done a very nice job of setting the stage, and we encourage you to give the report a read yourself.  For a bit of additional detail on applications and possibilities of 3D Printing, have a look at our Possbilities of 3D Printing report.  Additionally, if you’re curious to know more about the prototype/production crossover point, you might be interested in having a look at the 3DP Crossover Point Post within our Economics of 3D Printing series.

 

 

Economics of 3D Printing, Part Two: The 3DP Crossover Point

In our last post, we touched on the evolution of manufacturing from the days of antiquity to today.  Per its closing comments, we’re in the midst of a paradigm shift in manufacturing.  While Globalization has been defined by subtractive manufacturing at tremendous scale in low cost economies, this next generation will be defined by something quite different.  While global manufacture of simple parts in low cost locations will persist for generations to come – with simple, standard parts, it will probably always be the way – additive manufacturing for fast turn, complex parts will increasingly integrate into the supply chains of corporations around the world.  In this post, we’ll dive deeper into a comparison of the “globalization” manufacturing approach relative to 3D Printing, discuss how key cost inputs are likely to evolve, and how that impacts the “3DP Crossover Point.”

A Quick Recap

To level set from our previous post, we find it useful to track the evolution of key inputs that have driven the cost of goods over time.  The key inputs we looked at were Material, Labor, Shipping, and Overhead.  As time has gone by, costs on the whole have gone down.  At each step of the way, a different lever or combination of levers were pulled to drive down this cost.  For instance, raw materials grew cheaper through better extraction techniques, labor cost went down through outsourcing to lower cost markets, and shipping cost dropped through advances in transportation.  We’ve generally seen an increase in what we’re calling overhead as an overall percentage of cost, as sales, marketing, and management layers grew.  But in recent years, we’ve even seen the cost of that layer reduce with the offshoring of white collar jobs, as supported by advances in telecommunications support increasingly global work forces.

The New Cost Calculation

CAD-based manufacturing more broadly, and 3D Printing more specifically, stands to take this evolution a step farther.  To recap some of the detail provided in the previous post, the comparison between Globalization-style manufacturing and 3D Printing is summarized here:

Globalization vs. 3D Printing_V2

As it stands, 3D Printing has markedly higher raw material costs, comparable labor cost (due to a lower amount of labor required), and  lower shipping costs (because it tends to be shipped a shorter distance).  3D Printers are expensive, but so too are traditional lathes, mills, etc.  The net effect of these tradeoffs is that certain jobs lend themselves to one process or the other.  For now, the jobs that tend to make sense for 3D Printing / CNC Machining are rapid turn parts in small quantities.  For these smaller job, the investment in tooling required to run a traditional manufacturing process can simply be too high.  For instance, an injection molded part might cost tens of thousands for the mold but just a few dollars in variable unit cost.  To 3D print the part might only cost $10 per unit with virtually no setup cost – so long as a the print bed is filled, maximum .  As you can ascertain from this example, a crossover point tends to exist where it’s better to make a bigger up front investment and smaller unit cost.  But up to that point – so long as there aren’t material limitations – 3D Printing or CNC Machining is the better choice.

Graph of Rapid Manufacturing and Traditional Manufacturing Crossover

The Evolving 3DP Crossover Point

 

We only see the point at which 3D Printing gives way to traditional manufacturing processes gradually pushing out in the future:

Graph of 3DP - Traditional manufacturing crossover
As advances in material and equipment cost open the door to localized manufacturing (lower shipping costs), the crossover point between rapid manufacturing and traditional manufacturing will push to higher volumes

Currently, material costs are very high because manufacturers have operated with a razor and blade model – often selling the printers at relatively thin margins and capturing profit on proprietary materials to be used in those printers.  With that said, the rapid expansion of the market and recent announcements of new entrants stands to suggest an increasingly open materials marketplace.  In this future state, materials prices stand to go down – especially as large materials companies who have been waiting for the industry to mature begin pushing into the market themselves.

Labor costs are positioned to drive down in a similar way.  3D Printing is driven by Computer Aided Design (CAD) files – they read a design that’s been uploaded into the printer, and it builds the part.  Currently, there is a significant degree of art to go along with the science of 3D Printing, which means engineers play a significant role in managing the production.  But while even industrial machines are not simple push-button part machines, that is the direction printer manufacturers are going.  In this way, labor rates in a given location don’t matter, because there are virtually zero man hours allocated against production of a given part.

This then leads to Shipping costs, which also stand to be lower with 3D Printing.  Because 1) material cost should be fairly equal around the world and 2) labor cost should be a non-factor, then the need to utilize far away markets for production is significantly diminished.  Instead, customers can bring production in-house or, as our platform facilitates, utilize service providers who’ve invested in the technology.  Doing so massively drives down the cost of shipping.

Conclusion

 

Now that production quality materials have become available for industrial 3D Printers, there are many occasions when 3D Printing is a better alternative to traditional manufacturing techniques.  For now, those projects are the ones with limited volumes, high complexity, and quick turnaround needs.  That limited 3DP to a prototyping niche for the past few decades.  However, the door is opening to spare parts manufacturing and limited run production parts in the present, and in the not-too-distant future the larger scale fabrication of production parts.

We’ll discuss the implications of this in a future post…

 

 

Economics of 3D Printing, Part One: A Brief History of Manufacturing

After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. After locating plants in other countries like China, Intel is opening its most advanced plant right here at home. And this year, Apple will start making Macs in America again.

There are things we can do, right now, to accelerate this trend. Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. A once-shuttered warehouse is now a state-of-the art lab where new workers are mastering the 3D printing that has the potential to revolutionize the way we make almost everything. There’s no reason this can’t happen in other towns. 

– President Obama, 2013 State of the Union Address

 

There is no shortage of buzz about the potential of 3D Printing to bring manufacturing back to America.  Much of this buzz is justified.  As we’ll talk about in Part Two of this post, 3D Printing stands to fundamentally alter the economics of manufacturing.  But to appreciate how this will unfold, we first need to look at the history of manufacturing.  We need to understand where we are today and how we got here.  With this understanding, we can better foresee where we’ll go, and the implications of that evolution.

With that in mind, this post is dedicated to discussing the evolution of manufacturing since its earliest days – with an emphasis on the massive advancements of the last two centuries.

 

Primer on Input Costs

As we embark on this journey through the history of manufacturing, I think a few input costs prove most useful to track over that time.  These input costs are the key variables that make up the total cost of a product, and they have evolved significantly over time.  You’ll readily find these variables in an economics text book or the revenue statement of just about any business around.

Material – This is the component of cost for the raw material inputs to a product.  Basically, the stuff used to make a product.

Labor – This is the cost of manual labor included in a product.  Basically, the cost of the folks who are working in the assembly line or warehouse to get the product made and out the door.  When combined with Raw Material cost, you get COGS as listed in a typical revenue statement.

Shipping – This is the cost of getting finished products from your business to the market your products service.

Overhead (Machinery, Property, SG&A) – This is the cost of having a business and keeping the lights on.  It includes the machinery purchased to make goods, the lease/mortgage to house your operations, and the basic personnel required to oversee a business’ operations.

As we talk through the evolution of manufacturing, we’ll try to be consistent in our rankings on the basis of historical comparison.  So you might think of a high/medium/low rating as a comparison to the historical level for that input cost to create a single product.  In other words, cost of labor today is lower today than in the past based on the productivity of that labor – even though the wage might be higher than in the past.

 

Pre-Industrial Era (2000BC – ~1800AD)

Pottery in ancient Greece, manufacturing in the classical era
Pottery in Ancient Greece is one the first examples of manufacturing

In the early days of manufacturing, you wouldn’t call it manufacturing.  You’d call it making.  People simply made stuff.  Think in terms of Homer’s Odyssey through to Colonial times.  In this era, the stuff people made was based on what was handy and local.  Aside from colossally expensive feats like the Pyramids, people manufactured with what was in their proverbial back yard.  And even with the Pyramids, goods were just floated down the Nile.  Fast forward to the Colonial era, people still used what was local to them or what was easy to ship down a river.  The invention of roads and nautical trade routes allowed for things like luxury goods to be transported across longer distances – for instance the Atlantic and the Silk Road – but large scale transport of basic goods simply didn’t exist.  Here’s how the economics of that looked:

Material – Medium.  People just used whatever stuff was lying around.  This eliminated the cost of extraction, but it limited the materials used.  The notion of using materials from anywhere other than “over that hill there” basically was a non-starter.

Labor – High.  It was whoever was around to make it.  And to make something took a lot of manpower.  So much, in fact, that people in power would often choose to tip the scales in favor of keeping costs down through vassalage or slavery – so artificially low despite still being pretty high.

Shipping – High.  Roads as we know them now hardly existed.  And the stuff moving across them was a horse, donkey, or camel – not exactly geared for massive shipment.

Overhead (Machinery, Property, SG&A) – Non-existent.  Quite simply, there weren’t a lot of machines around to do work – it was all hand labor.  Machinery costs didn’t exist, property costs were somewhat irrelevant due to the lack of outside competition, and formal sales and marketing divisions didn’t exist.

Summary: It was expensive to make just about anything, so you used what was handy.

 

First Industrial Revolution (~1800 – ~1840)

Cotton Gin
The cotton gin was a game changer that brought the first industrial revolution

With the arrival of the cotton gin, the game changed.  Harvesting cotton became more efficient and suddenly textile mills started appearing near rivers.  That’s where the power of rushing water could be used to power looms and expedite the production process.  During this phase of manufacturing history, the cost of material went up a bit – people were investing in cultivation of the land – but the amount of labor required for a singular task went down.  While knitting a new shirt once took weeks or months (just ask my mom, who’s been at work on family Christmas stockings for the better part of her adult life), it suddenly just took hours or days.  This reduction in labor input singlehandedly offset higher costs of overhead in the form of machinery, and material costs, as “what was lying around” didn’t always work nicely with a loom.  Here’s how the cost picture looked:

Material – High.  As the possibility true manufactured goods arrived, so too did slightly higher input costs.  Looms only run on cotton, so you paid whatever it cost for a whole bunch of folks to manually plant and reap the crop.

Labor – Medium-High.  The cost of manufacturing things was reduced manifold.  What once took months or years took days or months.

Shipping – High.  Rivers were the cheapest means of shipping.  Roads weren’t paved.  And the vessels moving on those thoroughfares were of a distinctly manual nature.

Overhead – Low.  This went up as well.  Whereas before people were just doing their own thing, buildings needed to be put up to house machinery, and some limited management had to be created to oversee the worker bees.

Summary – The first machines significantly dropped the cost of labor.  It was still expensive as heck to ship anything anywhere, and some overhead costs were created to oversee larger groups of people doing a task, but those high costs were more than offset by customer demand for these goods and the relatively lower amount of labor required to make them.

 

Second Industrial Revolution (~1840 – ~1910)

Ford assembly line
The assembly line made manufacturing much faster but increased overhead costs

This phase of manufacturing history was defined by the arrival of the factory as we know it.  Massive facilities were created to process raw materials and turn them into usable ones (e.g., US Steel, Standard Oil) and companies grew up to efficiently turn those input goods into finished goods (e.g., Ford’s assembly line).  During this phase of manufacturing history, the cost picture looked like this:

Material – Medium.  Increasing specificity in material needs – namely coal, steel, and oil – drove up the standard cost of material.  Extracting that stuff wasn’t easy – people mined mountainsides and dug oil wells for these substances that had suddenly become immensely valuable.  To trim down the cost of moving raw material around, factories tended to locate close to the places where mining opportunities existed.

Labor – Medium.  Again, efficiencies in manufacturing drove down the input cost of labor significantly.  But the sheer manpower required to make Model Ts and other industrial products of the era was significant.

Shipping – Medium.  Considering on its march downward, shipping costs declined as railroads began lining the countryside.  Oftentimes, railroads would be run directly into factories so that goods might be delivered straight to market.

Overhead – Medium.  More personnel was required to oversee growing numbers of employees in a factory.

Summary – Shipping costs tracked down a bit with the arrival of railroads.  Labor input for a given part also dropped relative to the cost of the part, as plants and assembly lines made industry as we know it possible.  Sure, a bit of additional management had to be created to oversee the many folks in a factory, but again, market demand for these manufactured goods and the savings created by more efficiently making them more than offset any cost increases.

 

The Arrival of Modern Transport (1950-1980)

Red_B-double_truck
Trucks along the interstate system further drove cost down

On the whole, the manufacturing world tracked on the path that was created for it during the Second Industrial Revolution until this era.  During this time, shipping costs took another step downwards, as the interstate system grew up and rapid transportation from one state to another was possible.   Manufacturing companies began moving their operations out of expensive downtown areas in favor of locations on the periphery of town near “circumferential highways” that circled around a central business district from a few miles out.

Material – Low.  Advancements in extraction continued.  The cost of shipping extracted materials to factories dropped as the interstate system allowed for efficient delivery to factories.

Labor – Medium-Low.  The labor input cost for a given good also continued downward.  Increasingly automated machines required fewer workers to complete what was done in the past.

Shipping – Medium-Low.  With the arrival of the interstate system, shipping costs dropped even lower than before.

Overhead – Medium-High.  The sheer number of workers in the factory didn’t materially change, but the administrative staff did.  Increased specialization in the workforce harkened the arrival of sales and marketing departments.  Companies relocated to the suburbs, reducing property costs relative to more expensive downtown locations.  This offset the cost of more “white collar,” higher dollar workers.

Summary – Labor costs continued marching downward as factories increasingly automated, requiring fewer workers on the line.  Jobs in sales, marketing, and middle management were created, filling this void.  The reduction in shipping cost was really the driving force between overall reduction in cost of goods.

 

Globalization (1980 – 2015)

Shipping routes
Shipping routes show the density of commercial shipping

Globalization has been defined by “offshoring” – the relocation of jobs to lower cost countries.  Free Trade agreements opened the door to moving manufacturing to lower cost locations like China and Southeast Asia.  Then, advancements in telecommunications and the arrival of the internet allowed for the offshoring of various “white collar” jobs like telemarketing and web development.  Globalization has been in many ways defined by the decision of where labor is located, and whether the cost of local labor for a given task can be justified vs. utilizing overseas workers.

Material – Low.  The technologies to extract materials from the earth remained as efficient as they were in the previous generation.

Labor –  Low.  Trade agreements like NAFTA and Trans-Pacific Trade Pact opened the door to lower labor-cost countries like Mexico (NAFTA) and China.

Shipping – Medium-Low.  More efficient vehicles drove down the cost of shipping over land and sea.  At the same time, the distances they had to cover tended to be far greater.

Overhead – Medium.  Overseas properties tended to cost less to lease, although the management layer to manage international operations was higher.  Equipment cost similar amounts wherever it was sold, although local production of equipment sometimes created overhead reductions as well.

Summary – Without anywhere to turn to continue the inexorable march toward more affordable goods, manufacturing increasingly was moved overseas to lower cost locations.  Only those industries deemed worthy by governments of “special protection” could sustain themselves competitively against foreign competitors that were capable of producing similar goods at lower prices.

 

Third Industrial Revolution (2015 – TBD)

3rd industrial revolution
3D printing is bringing the 3rd industrial revolution.

You may have noticed the trend line here.  Companies have been looking for ways to drive down cost since the dawn of time to maximize their ability to win in an increasingly competitive, now-global, marketplace.  Where can companies turn when Material and Labor costs have gone seemingly as low as they can go?  3D Printing offers an interesting potential solution, fundamentally changing cost calculus myriad ways.  Since it is a work in progress, you’ll note that we’ve included trend information in the ratings here.

Material – Medium trending down.  On a historical level, 3D Printed materials aren’t inordinately expensive, but they are in comparison to the hyper efficient extraction techniques developed to date.  For any 3D Printing process, true raw materials aren’t an option – they only accept materials that have been pre-processed into powder, filament, or liquid resin form.  However, as more competitors enter the market and advancements in material science take place, these costs will go down.

Labor –  Low trending toward zero.  Whereas even the most automated operations require some manual operation, 3D Printing is trending toward almost no labor input.  That is significant, because when you’re multiplying an hourly wage by zero, the product is zero.  The cost advantage on labor-intensive manufacturing that lower-cost countries enjoy gradually fades away.

Shipping – Low trending toward zero.  Because production can co-locate next to its target market – with CAD files beamed via the internet to nearby production options – the cost of shipping is significantly reduced.  In fact, as 3D Printers proliferate and penetrate all corners of the globe, the ability to eliminate shipping altogether is created.  A customer can simply arrange for printing in-house or at a nearby printer and pick up the good rather than have it shipped.

Overhead – Medium, trending down.  3D Printing equipment is expensive – very expensive.  Top of the line plastics printers cost a few hundred grand; metal printers often over a million dollars.  Bringing operations back onshore inherently carries higher cost for a given space, but the spaces required for 3D Printing tend to be smaller.  Instead of a massive factory, a fully functioning 3D Printing service bureau can exist in a space the size of a living room.

Summary – 3D Printing heralds the arrival of a new generation in printing.  Quite simply, the crux of 3D Printing’s economics is the potential savings in labor and shipping vs. the higher costs of machinery and material.  In smaller part runs, 3D Printing is already the more cost effective option.  Our 3D printing customers regularly see significant savings for smaller runs of goods than they would going overseas for a 3D Printed, machined, or injection molded part.  As we watch the cost of equipment and material drop over time, this will only become more pronounced, eventually making larger production runs more cost effective and local in nature.  In this way, the reshoring of manufacturing will take place.

 

 

Conclusion

Over the history of manufacturing, there has been an inexorable march toward reduction in cost.  By pulling the levers of material, labor, shipping, and overhead cost, people are now able to access a myriad of goods at a fraction of the price of even a generation before.

But so what?  Cost coming down shouldn’t be a surprise to anyone.  What are we to make of this evolution?  Why does 3D Printing’s arrival really matter?  Does it signal massive reshoring of jobs?  Will cost really come down significantly?

We’ll answer these questions in a future post…

Why 3D Printing Stocks have tanked, and why that actually signals great news for the industry

A lot has been made in the press of 3D Printing stocks – most notably Stratasys and 3D Systems – over the last several years. First, they were darlings of Wall Street, reaching astronomical valuations buoyed by the seemingly unlimited potential of the technology, corresponding expectations for hyper growth, and their leading market positions. But something happened in the last year or so – the companies that had been grabbing headlines for their burgeoning market caps were getting those headlines for disappointing investors, missing earnings, and plummeting stock prices.

To an outsider, this might signal an ominous sign for the 3D Printing industry. Perhaps the technology has hit a wall – the hype was simply too big and the substance isn’t there to match it. Some have argued that the technology is passing through the fabled “trough of disillusionment,” when a public that had become enamored with a new technology’s potential comes to terms with the hard truth that its actual capabilities are a far cry from the headlines.

While there is cause to temper the most aggressive expectations somewhat – people will not eventually print everything at home, for instance (more on that in another post) – I would argue that these stocks tanking is a good sign, rather than a bad one, for the industry and technology as a whole. 3D Printing continues to retain the same promise it’s always had, and the advancements in the technology are rapid and encouraging. However, 3D Printing stocks have been getting hammered because those companies that are publicly traded are going through a genuine trough of disillusionment regarding their ability to corner this emerging market. They have suffered from some questionable acquisitions, pursuit of a consumer market that isn’t quite there yet, and a number of other factors that have given investors just cause to deflate valuations of those specific stocks.

But the industry marches on, and marches faster.  A few key facts to consider…

  1. Market growth was enormous last year, outpacing consensus expectations. According to Wohlers and Associates’ annual report, the global 3D Printing market revenues – defined as the combination of printers, feedstocks, and services – grew from $3.1B in to $4.2B in 2014. That’s a 35% growth rate, outpacing virtually every industry analyst’s expectation. Major printing stocks couldn’t keep pace with that industry growth – last quarter, DDD was up 8.8% over the same period last year, and SSYS was similarly up 14.4%.  Not bad, but not 35%.
  2. New innovations are introduced to the market on a seemingly weekly basis. Take the eight day span from March 17-25 for instance, when not one, but two companies – Carbon 3D and Australia’s Gizmo3D – publicized videos with prototype printers executing stereolithography-esque printing at speeds of 25x-100x what the market currently offers. Just a few months prior, HP officially announced its intention to become a major player in the market, with plans to introduce its MultiJet Fusion technology to the market before the end of 2016. And a few months later, Cosine Additive showed at RAPID with a large form FDM printer to compete with Stratasys’ Fortus 900mc.
  3. Metal printing is exploding. EOS, Arcam AB, Concept Laser, SLM Solutions – all are signaling significant growth to the market. Take Arcam AB (the only publicly traded metal printer manufacturer of the bunch), for instance, which reported healthy growth and earnings in 2015 with a 105% increase in sales and 208% increase in earnings per share.  Its stock price has also slid in the last year, but one might argue that’s a case of presumed guilt by association with other 3D Printing stocks.
  4. Businesses that have invested in industrial grade equipment are busy and investing in new equipment. Since our company, 3Diligent, is in the business of connecting supply with demand for on-demand rapidly manufactured parts, I can attest to this from firsthand meetings with 3D Printing service providers and corporations.   Quality service providers are busy and continuing to expand their industrial machine base.  Seemingly every company has “Develop a strategy for 3D Printing” in its leadership directives.  The demand is growing and the supply is growing to match it – in some cases, it’s backlogged.  Incorporating additive manufacturing into product design and inventory management activities is simply too disruptive and potentially beneficial to ignore.  And that isn’t to even consider the larger mass manufacturing implications for 3D Printing when a broader swath of designers understand how to optimize next generation designs for the technology.

So it’s important not to conflate disappointing performance by a few publicly traded companies with broader industry performance and prospects. Stratasys and 3D Systems continue to manufacture some of the industry’s most reliable and fully featured printers – particularly when it comes to plastics and resins. It’s just that Wall Street is coming to realize, among other things, that innovation with a technology this revolutionary is going to come from many places, and no two companies are going to be able to corner all of the market’s growth.

All things considered, this is great news for anyone hoping 3D Printing will guide us through another Industrial Revolution. Competition breeds faster innovation, better products, and more competitive pricing.  So don’t lose heart that a few stocks have taken it on the chin the last few quarters – the future of 3D printing is very bright indeed…

 

Cullen Hilkene is CEO of 3Diligent, the Sourcing Solution for Industrial Grade Rapid Manufacturing. He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting. For more information about 3D Printing and to access 3Diligent’s marketplace of 3D Printing vendors, visit www.3Diligent.com.