Additive manufacturing (AM) has traveled a great distance from its humble prototyping past. In 2014, it stands on the brink of becoming a serious and potentially game-changing method of manufacturing. AM represents a family of technologies being used by individuals, small groups, and large corporations around the world, making parts for a mind-boggling array of applications.
In the past two years, additive manufacturing and 3D printing—terms that are used interchangeably—have received unprecedented interest from corporations, government agencies, individual and institutional investors, do-it-yourselfers, and mainstream journalists. In hindsight, we believe the tipping point for AM technologies occurred around the third quarter of 2012. A series of articles published by the Economist in 2011 sparked interest worldwide. Also contributing has been the growth of personal 3D printers (those priced at under $5,000), which followed the expiration of key patents related to the material extrusion process first commercialized by Stratasys.
Over the past 24 months, the world suddenly discovered 3D printing, even though the first commercial machine became available in 1988. This appetite for all things 3D has continued unabated, and interest has accelerated in recent months.
Several of the largest and most recognizable brands are testing the waters. UPS, Office Depot, and Staples offer 3D printing services in a select number of stores. The latter two also sell 3D printers in their retail stores. Amazon has a complete AM department that offers machines, materials, and accessories, while eBay offers an app for ordering custom 3D-printed parts. Microsoft, Adobe Systems, and Autodesk have added features to software products that attempt to make 3D printing as easy as document printing. Google has partnered with 3D Systems to make parts for Project Ara, Google’s custom smart phone of the future. And Hewlett–Packard plans to make a 3D printing announcement before the end of this year.
Governments around the world are investing in 3D printing research, development, and infrastructure. Last year, China launched aggressive investments in the technology, with one effort involving $245 million over a period of six years. Meanwhile, Singapore is pouring $400 million into advanced manufacturing, which includes AM. Taiwan and South Korea recently announced multi-million dollar investments in AM technologies, joining governments in Australia, Europe, South Africa, and the US that are investing in the technology.
The investment community has taken a real shine to AM, although stocks from publicly traded AM companies have experienced volatility in 2014. Even so, investors are determined to better understand the products, companies, and trends surrounding this dynamic and intriguing industry.
Rock-Solid Growth in 2013
Despite some uncertainty, the long-term outlook for the AM industry remains very strong. Total revenues from all AM products and services worldwide grew 34.9% in 2013 to $3.07 billion, according to research for Wohlers Report 2014. The AM industry’s compound annual growth rate for the past 25 years is an impressive 27%. The CAGR over the past three years (2011–2013) is 32.3%. Regardless of the volatile stocks, misleading articles, and often overhyped capabilities of the technology, AM is an industry that is emerging from its awkward adolescence with solid growth and a strong foundation for further maturation.
The Sky’s the Limit
A big part of that maturation rests with the aerospace industry. Boeing has installed environmental control system ducting made by AM for its commercial and military aircraft for many years. In fact, tens of thousands of AM parts are flying on 16 different production aircraft—both commercial and military. The real bellwether event was GE Aviation’s 2013 announcement that it would be using AM to print a very serious metal part for jet engines. The company has committed to using AM to manufacture more than 30,000 fuel nozzles annually for its new LEAP engine starting in 2015. The new design consolidates 18 parts into one, and is 25% lighter and five times more durable than the previous fuel nozzle.
GE and Boeing are not alone. Airbus has 20 AM projects underway, with a few hundred part numbers flying, or soon to be flying, on the new A350 airplane. A structural cabin bracket made by AM in the titanium alloy Ti-6Al-4V will fly on an A350 mid year. Meanwhile, Pratt & Whitney, Rolls-Royce, Honeywell, MTU Aero Engines, NASA, the Aviation Industry Corporation of China, and other aerospace companies are accelerating their involvement and investment in AM.
Yet just a few years ago, uncertainty surrounded metal AM. Concerns included surface porosity, a lack of full density, and unpredictable microstructure. Today, that uncertainty has all but vanished. AM is producing metal parts that are 99–100% dense. To ensure that parts are free of porosity and 100% dense, companies such as GE Aviation are using hot isostatic pressing (HIP). AM systems are making parts with material properties that exceed the properties of castings, and match the properties of wrought materials.
Aerospace companies are not the only manufacturers embracing metal AM. More than 90,000 acetabular orthopedic implants have been manufactured since 2007. According to EOS, about 19,000 dental copings are manufactured every day using the company’s direct metal laser sintering systems. In many ways, metal AM has come further in 10 years than polymer AM has in 25 years.
Can You Say “M&A?”
The AM industry continues to undergo consolidation from mergers and acquisitions. 3D Systems acquired 43 companies from August 2009 through April 2014. One notable acquisition in the past year is Phenix Systems, the French metal powder bed fusion system manufacturer. The Phenix acquisition gives 3D Systems an offering in the fast-growing metal AM sector. Meanwhile, Stratasys acquired MakerBot Industries, paying up to $604 million for a company selling machines based on Stratasys’ own fused deposition modeling (FDM) technology. 3D Systems, Stratasys, and other AM system manufacturers also acquired material supply companies, as they look to consolidate their respective supply chains.
Acquisitions have had a profound impact on the AM service industry. GE Aviation’s acquisition of Morris Technologies in November 2012 turned out to be an important chapter in this seemingly never-ending story. Stratasys wrote its own chapter in March 2014 when it acquired Solid Concepts and Harvest Technologies, two of the largest, most mature, and respected service providers. Meanwhile, in the past year, 3D Systems absorbed England’s CRDM, Brazil’s Robtec, and Colorado’s Medical Modeling, an expert provider of medical models, metal implants, and surgical guides.
New Stocks, Companies, Opportunities
ExOne went public in early 2013, followed by Voxeljet in September. They joined Arcam, Renishaw, Stratasys, and 3D Systems as publically traded manufacturers of AM systems. The first-ever AM mutual fund, called 3D Printing and Technology Fund, was announced in January 2014. More recently, system manufacturer SLM Solutions and veteran AM company Materialise announced their plans to go public this year.
Crowdfunding sites, such as Kickstarter and Indiegogo, have been excellent matches for 3D printing startup companies. Formlabs raised nearly $3 million for its Form 1 Kickstarter project in 2012. In April 2014, the Micro 3D printer from M3D LLC surpassed the Form 1 after raising more than $3 million. These are not isolated incidents. More than 55 different 3D printing-related fundraising projects are underway or have been completed on crowdfunding platforms.
The range and variety of personal 3D printers, defined as systems costing up to $5,000, has exploded, a term we rarely use to describe any part of this industry. At any exhibition or event around the world, one will typically see several startup companies offering new low-cost 3D printers. What’s more, this category is no longer limited to material extrusion “FDM clones.” Several new low-cost photopolymer-based systems have followed Formlabs’ Form 1 into the market. The final foundation patent on laser sintering owned by the University of Texas at Austin will expire in June 2014. Similar to the expiration of FDM and stereolithography patents, this will likely result in another wave of 3D printers using the laser sintering process to make durable plastic parts. However, the process requires the management of fine powders and a precisely heated build chamber—challenges that may deter some startup developers from producing new laser sintering machines.
Where It’s All Going
In 2003, the use of AM for part production was a mere 3.9% of the industry’s total product and service revenues, according to our research. This important segment of the market has since grown to become nearly nine times larger. The production of parts by AM for final products is growing rapidly because the technology offers unique capabilities to reduce weight, consolidate many parts into one, and improve part usability and performance. When parts are designed—or redesigned—to take advantage of these unique capabilities, AM becomes a candidate for production applications—even for relatively high production volumes, although it depends greatly on the size, type, and finish requirements of the part.
The aerospace, medical, and dental industries were the first to take advantage of these unique capabilities, primarily because low production volumes of high-value parts make AM economically feasible. Final part production with AM is growing beyond this group of bespoke and low-volume industries, and will continue to expand into other industries for new, unanticipated applications. The cost of materials, coupled with the size and speed of machines, will be among the primary drivers in the foreseeable future.
The transition from prototyping to series production presents many challenges, especially in the highly regulated aerospace and medical industries. Even so, companies in these industries are pioneering the use of AM for production because the benefits are so compelling. Manufacturing companies must assure the quality of every AM production part through process monitoring and control and post-process inspection. They must also trace and validate the raw material used for each part, and record the parameter history of every build.
A number of initiatives are underway to meet these requirements. System manufacturers are developing more sophisticated methods to monitor and control key process parameters in real time during the build process. Researchers are creating modeling and simulation software that predicts the behavior of the melt pool, distortion caused by thermal stresses, and the microstructure of finished metal parts.
Summary
Historically, industry forecasts from our company have been conservative. We clearly remember the industry’s downturn in the early 2000s, and the decline associated with the Great Recession, so we prefer to counter the hype with forecasts based on measurable data and historic trend lines. Even though we are looking into the future through these lenses of conservative realism, we cannot help but be bullish on AM, especially as it grows beyond a prototyping solution into meaningful manufacturing volumes. Suppose AM grows to capture a relatively small percentage of the $10.5 trillion global manufacturing economy. If it penetrates just 2%, AM would become a $210 billion industry annually.
Ultimately, many people, companies, and governments will benefit from AM technology, if they are not already. The technology is capturing the attention of some the biggest companies and brands around the world. Using AM to manufacture a seemingly endless range of objects, from bobble heads to jet engine parts, and almost everything in between, is what makes this technology so incredibly exciting.
Authors: Tim Caffrey, Senior Consultant, and Terry Wohlers, President of Wohlers Associates, Inc.
