McKinsey: 3D printing could change just about everything
3D printing could be worth $550 billion a year by 2025. That’s the view expressed by McKinsey Global Research. And it is going to alter the whole business of manufacturing — and have (potentially) an enormous impact on the graphite market. As my colleague Alessandro Bruno reported recently, Lomiko Metals’ partner has filed a patent application to use graphene-enhanced material in 3D printing, the revolutionary technology involving the creation of three-dimensional, solid objects from a digital file, of virtually any shape. As Alessandro pointed out, the possibilities for 3D printing “seem endless and range from sensors to pasta, sweets, bras, Lego bricks, dentures and even weapons“.
3D printing is also known as additive manufacturing and, according to McKinsey, it is evolving quickly. The technology is now at a tipping point: it appears ready to emerge from its niche status and become a viable alternative to conventional manufacturing processes in an increasing number of applications.
Manufacturing would be transformed. Development time would be slashed, tooling costs would be eliminated and production runs simplified. The McKinsey authors (Daniel Cohen, Matthew Sergeant and Ken Somers) say 3D would also allow the manufacture of complex shapes and structures not previously feasible.
So, they say, get ready for five big changes.
1. Product development cycles are going to be whole lot quicker. “Additive manufacturing is already being used to get prototypes into the hands of customers faster, for quicker and more detailed feedback,” they write. Making prototypes without tooling is a big breakthrough: companies can test products through customer research using multiple configurations. “Companies could even go into production using 3D printed parts and start selling products while the traditional production tools were still being manufactured or (even) before the decision to produce them had been made”. When you think about that forecast by McKinsey, the impact of 3D printing starts to sink in, doesn’t it?
2. We will see new manufacturing strategies and footprints. As of 2011, only 25% of 3D printing was used in the direct manufacture of end products. Just watch that proportion increase as costs fall and the capabilities of 3D printers increase. For example, Boeing is now using the technology to make some 200 part numbers for 10 different types of aircraft. Medical companies are using 3D printers in hip replacement manufacture.
Get our daily investorintel update
But this change won’t be uniform or entire. The authors say 3D printing will be especially viable for components with high labour costs such as ones involving secondary machining; 3D printing will overcome the cost barriers for parts where small volumes are required, which would otherwise involve high tooling costs in relation to the number of items required.
The technology also has its implications in terms of globalisation, although the McKinsey people don’t draw that conclusion. How they put it is that companies could find that the fully digital nature of 3D printing makes it possible to produce complex parts in remote countries with lower labour and electricity costs.
3. Costs could be slashed, profits enhanced. Just take orthodontic braces: how much cheaper it could be to manufacture braces shaped to the need of individual patients. But, while helping some companies, others could get an unpleasant surprise or, as McKinsey puts it, “the combination of mass customization and new design possibilities will up the ante for many companies and could prove very disruptive to traditional players in some segments”.
On the plus side, how much easier it might become for companies to keep an inventory of parts for older, legacy products. Warehouse sizes could be scaled back as relatively small sites are set up with 3D capability; small fabricators could be located at airports or hospitals.
4. The design business could be transformed. Architects can’t design houses without considering construction techniques, and engineers can’t design machines without taking in account the limitations of casting, forging, milling, turning and welding. Those industries have not got to grip with design for printing. Says McKinsey: “Our conversations with executives at manufacturing companies suggest that many are aware of this gap and scrambling to catalogue their design know-how”.
5. Will lower-cost entry mean more competitors? New players could come in to manufacture even at low volumes or to serve niche segments. New businesses are already popping up to offer highly customized or collaboratively-designed products. “These businesses are gaining insights into customer tastes and building relationships that established companies could struggle to match,” the report says.
And a final headache: the availability of open-source designs for 3D printed firearms shows how such technologies have the potential to create ethical and regulator quandaries.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.