3D Printing: Investment Opportunity or Fad?

Interview with Wohler's Tim Caffrey

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smoke stack factoryAs a speaker at last fall’s Investment Innovation Conference in Palm Beach, Florida (November 4 to 6), Tim Caffrey, senior consultant, Wohlers Associates, will talk about 3D printing, and the investment opportunities. We asked Tim a few questions on the various kinds of 3D printing technologies, why they have risen to such prominence now and where the investment opportunities lie.

Why are 3D technologies, which have been around for 25 years, getting such attention now?

It’s become a lot more mainstream in terms of consumer products. In the mid-2000s, some of the patents started to expire and an organization at the University of Bath in England started a project called RepRap, which is shorthand for self-replicating. RepRap is open-source and there has been, over the last six or seven years, this explosion of low-cost, personal 3D printers.

The mainstream press started to notice this rapid growth of personal 3D printers. On the other side, maybe not getting as much press, is the industrial side. That’s where the real money is and that’s where the real development and innovation is taking place. The technology was once called rapid prototyping, because it was used, almost exclusively, to make prototypes from digital datasets. It has evolved into an option for some production applications: actually making parts that go into final products, parts that are used by customers in industry and also by consumers. There are niche products in the medical, dental and aerospace industries being made with additive manufacturing. So that transition to production is also one of the big reasons why it’s gained so much attention recently.

So this is a new way of manufacturing. Does it have applications to the auto industry?

Not as many. Of course the automotive industry uses this technology for prototyping and rapid product development and even for tooling – for prototype tooling for proof of concept before they invest in a large amount of tooling. But the thing about the automotive industry that is different from the aerospace industry is that the production volume is very high. So when you make a certain part in automotive, you make millions of them. Building a tool is still the economical way to produce parts.

The place where additive technology really works for production today is low-volume production, including custom, one-of-a-kind things, and also very complex high-value parts. For example, GE Aviation is making the fuel nozzles for its LEAP engine using additive manufacturing. Twenty different parts were welded together to make previous fuel nozzles, and now, with additive, it’s produced as a single part. It’s been under development for 10 years. These parts will be manufactured in volumes that are much lower than what you see in the automotive industry.

How do institutions get access?

There are several publicly traded companies and several that have actually had IPOs in the past year.  Also, there’s a fund of 3D stocks that’s available. There certainly are private equity opportunities.

The industry is evolving from a prototyping past to a production future. There are a lot of growing pains that go with that. Still, we may see a situation where demand is going to exceed supply.

Where is the industry in its growth path right now?

We look at it three different ways. It’s a group of technologies with a range of different applications. As a prototyping tool for design iteration and optimization for product design and development, it’s very mature. It’s been around for 25 years.

For tooling, it’s still in the early innovator stage where some companies are making prototype and production tools. For example, injection mould tooling inserts can be made using additive. In some cases, where conformal cooling is incorporated into the tool, you can increase your throughput by 30%.

When it comes to production parts – manufacturing using additive  – we’re in even an earlier stage – at the beginning of the early innovators. And really what we’re seeing are niche applications that fit perfectly. These niche applications are typically very low-volume production and high complexity.

There are a lot of misconceptions and myths about the industry because it is such a wide family of processes, materials, and applications. You know a bicycle and a Formula One race car have a lot in common. They are both forms of transportation. I would like to make that analogy with additive manufacturing. The $500 3-D printer that you can buy on the Internet and a $1.5-million machine making metal parts for the aerospace industry have a lot on common because they’re both using additive manufacturing. But also they are very, very different. This industry spans a huge area of applications and materials and technologies.

To learn more about the Investment Innovation Conference, please visit the conferences section of the CIR website. If you are interested in attending this event, please email Alison Webb to be considered, as limited space available.

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