Major News for the 3D Printing Industry
Major news from the 3D Printing world broke today when it was announced that GE is to purchase Arcam and SLM Solutions, two major players in the metal 3D Printing industry. We highlighted those companies a year ago in a blog post emphasizing metal 3D Printing as a clear growth spot in the industry as some publicly traded polymer printing giants were cratering. Arcam is up 57% today and SLM Solutions closed up 40%. Clearly, GE sees a lot of growth, as the news pushed Arcam’s stock to a price to earnings ratio of 214:1 vs. SLM’s PE Ratio to 342:1.
GE Considerations for the Purchases
While GE buying both companies in a single gambit is impressive and earth moving as far as the fledgling metal printing industry is concerned, that they bought a printer manufacturer is not a major surprise. GE has been pushing the boundaries of the technology for years, having announced two years ago that it would 3D Print all of its next generation LEAP fuel jet engine nozzles. With sticker prices over $1M for high end metal machines and the need for thousands of machines to support their growth plans, the $1.4B in acquisitions may be entirely justified by GE’s need to control its supply base.
Other Potential Strategic Implications of the Purchases
At the same time, the move is likely to have significant strategic implications beyond sheer supply chain management for both GE and the industry at large.
Arcam has an effective proprietary choke hold on powder bed Electron Beam Melting (EBM) technology, which is especially valued in the med tech and aerospace industries for its abilities to effectively print titanium. It is possible, albeit unlikely, that GE will restrict its level of support for competing aviation businesses that have invested in EBM machines. Instead, GE could could choose to primarily support its own endeavors with the technology and selectively sell machines into the market or not sell them at all. Whereas Arcam before was clearly motivated to generate profits by selling machines, it’s unclear whether GE’s most profitable course would be to continue doing so or selectively withhold the technology from the market.
With that said, the most likely scenario is that GE simply puts its weight behind refining Arcam technology and marketing the heck out of it. At an America Makes meeting I attended at GE’s Global Innovation Center a couple months back and on many occasions before, GE spoke of its desire to grow the industry and collaborate with industry participants. And until probably today, Electron Beam Melting technology was only known to a select set of companies and leading service providers. GE’s acquisition will likely drive a new level of interest and willingness to buy the technology. Recognizing that competing EBM technologies will eventually enter the market once Arcam’s patents expire, GE may simply choose to sell as many printers as possible and enjoy dominant market share.
The SLM Solutions investment, in contrast, would clearly seem to be a play for supply chain support. SLM Solutions battles with comparable equipment from EOS, Concept Laser, and Renishaw especially. SLM Solutions is well known for offering a relatively open architecture, providing users an opportunity to experiment with different parameters to “dial in” high quality prints. However, considering that Renishaw and Concept Laser offer similar levels of openness, it wouldn’t seem that this is acquisition offers clear strategic benefits beyond the obvious ones. The SLM Solutions purchase bolsters GE’s supply chain and provides a solid new product for GE to sell.
Who is impacted?
While time will tell whether GE will continue to actively sell these machines into the market or keep the technologies to themselves as a competitive advantage in developing additive end use parts, GE CEO Jeffrey Immelt’s comments would lend support the former. “We are poised to not only benefit from this movement as a customer, but spearhead it as a leading supplier,” he stated. If it can be taken at face value that GE is going to push sales of its machines beyond the walls of GE, the news would seem to be a shot across the bow for EOS, Concept Laser, Renishaw, and 3D Systems, which has made a number of smaller metal acquisitions in recent years. To a lesser extent, it might also be concerning for Stratasys, which does not market a metal printer at this time, but recently invested in metal printing startup Desktop Metal presumably in hopes of getting a piece of the metal printing pie. GE soon after invested there too.
The plot thickens in the metal additive manufacturing world…
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.