If you prefer data that comes straight from the proverbial horse's mouth, you might find the results of a report on 3-D printing in the manufacturing sector enlightening. The highlights of the report were released last month by consulting firm PricewaterhouseCoopers and The Manufacturing Institute. The data was obtained by surveying more than 100 industrial companies.
If you're invested in one or both of the two leading 3-D printing companies -- 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS) -- or other companies in the 3-D printing space, here's what you should know.
How companies are now using 3-D printing
The survey found that manufacturers are currently using 3-D printing technology as follows:
- 25% are using 3-D printing for prototyping only.
- 10% are using it for both prototyping and the production of final parts.
- 1% is using it for final parts production only.
- 64% apparently aren't using it at all.
The fact that a sizable percentage of manufacturers aren't yet using 3-D printing at all is a big positive, in my mind. (I would assume the survey involved large manufacturers, though that information wasn't released.) This means there is much room for growth. And that growth will come as 3-D printing technology continues to improve in terms of speed, materials capabilities, and built-in quality control measures.
How companies believe 3-D printing will be used in three to five years
The survey showed that half of the respondents believe that it is "likely" or "very likely" that 3-D printing will mostly be used to produce low-volume, highly customized products over the next three to five years.
I'd have to generally agree with this take, but there will surely be exceptions. The teaming of 3D Systems and Google for Project Ara comes to mind. If successful, Ara will provide an example of 3-D printing being used for at least medium volume, customized products. This partnership involves 3D Systems developing a high-speed, continuous, fabrication-grade 3-D printing platform to produce Google's customizable, open-source modular smartphones. 3D Systems told analysts at its investor day event last month that it expects the platform to be 50 times as fast as current 3-D printing systems.
Further, the survey addressed obsolete and aftermarket products, which are replacement parts. According to the survey, 70% of respondents believe that 3-D printing will be used to produce obsolete parts in the next three to five years, while 50% believe it's likely that the technology will be used for production of after-market products.
Top two barriers to implementing 3-D printing
These were stated to be the top barriers to implementing a 3-D printing strategy in a manufacturing environment:
- 47% -- the uncertainty of a 3-D printed product's quality.
- 45% -- the lack of talent to exploit the technology.
Another top concern relates to intellectual property protection. Manufacturers seem quite aware that 3-D printing could open the doors to patent infringement issues. Additionally, manufacturers were concerned about whether 3-D printed parts could gain certificate or approval for use by regulatory bodies. (This seems like it's part of the larger overall "quality" concern to me.)
There have been great recent strides in the quality of products that are able to be 3-D printed, and we can surely expect further improvements. It's well known among 3-D printing investors that General Electric plans to use the technology to manufacture fuel nozzles for its new Leap jet engine. GE announced last week that it's investing $50 million in a high-volume 3-D printing operation at its Auburn, Ala., facility. This is where it will produce the nozzles starting next year. There is no way that the industrial powerhouse would be planning on using 3-D printing to produce such critical end-use components if it wasn't very certain that the technology was able to produce extremely high quality parts. GE is now in the final stages of selecting the manufacturers for this endeavor – surely, selection by GE will be a nod of approval for the quality of the 3-D printers made by the company or companies chosen.
As to quality, it's also important to keep in mind that 3-D printers made by 3D Systems and other 3-D printing companies are already producing select orthopedic implants that have received FDA approval and CE marking. (CE is the European equivalent of the FDA.)
The lack of available talent is an issue that has been echoed by many. In fact, securing talent was surely a major reason why both 3D Systems and Stratasys recently acquired larger 3-D printing service bureaus.
Foolish final thoughts
The recent survey about 3-D printing use in the manufacturing sector found that there is plenty of room for growth in the use of this technology. This is a positive for investors in the 3-D printing space.
According to surveyed manufacturers, quality-related issues and the ability to secure talent are viewed as the two primary barriers hindering the adoption of 3-D printing technology. It would seem, therefore, that 3-D printing companies that best address these concerns should prove to have a competitive advantage over their peers.
If you're a believer in investing in megatrends like 3-D printing, don't miss this.
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. A new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement. Its stock is up more than 100% over the last year, but it's still early in the game. This stock could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to learn more.
Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends 3D Systems, Google (C shares), and Stratasys. The Motley Fool owns shares of 3D Systems, General Electric Company, Google (C shares), and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.