Following in General Electric's (GE 1.05%) footsteps, Rolls-Royce (RYCEY 2.79%) has begun testing 3-D printed parts for upcoming aircraft engines. Investors should think of this development as further confirmation that the 3-D printing revolution is slowly but surely inching toward its true calling: finished goods manufacturing.
Getting into the details
Like GE, Rolls-Royce wants to capitalize on how 3-D printing invites new design possibilities and efficiencies that are prohibited by conventional manufacturing methods. Thanks to the freedom 3-D printing offers, a design team can have a part made in any shape it likes, which could help reduce the overall weight of an aircraft engine, improve fuel efficiency, and free up any resources surrounding a conventionally made part's assembly process. Currently, Rolls-Royce will be focused on printing fuel nozzles and brackets and will utilize ceramic and metal printing technologies.
Technologies in focus
Given the strength requirements of airplane engines, Rolls-Royce is likely going to utilize selective laser sintering, or electron beam melting 3-D printing technology, because it is capable of creating highly dense parts strong enough to withstand the rigors of being inside a jet engine.
The additive manufacturing process is very similar between the two, which uses an extremely precise laser or similar electron beam to selectively heat and melt a bed of powder material layer by layer. Because this technology is so specialized, there are fewer than a handful of major players out there. On the selective laser sintering side, the biggest players are 3D Systems (NYSE: DDD) and EOS from Germany, which isn't publicly traded. On the electron beam melting side, Arcam AB (NASDAQOTH: AMAVF) owns the market.
What GE's playbook tells us
GE's ultimate goal is to 3-D print 45,000 fuel nozzles a year, but its current base of 35 printers from EOS and Arcam won't even come close to meeting this ambition. Instead of buying the 60-70 additional printers that could cost upward of $1 million each to meet its annual production goals, GE has instead opted to invest "tens of millions" in improving the 3-D printing supply chain to build out higher-capacity printers. In addition, GE is currently testing out printers from 3D Systems and Concept Laser, a smaller selective laser sintering player, to see if they will play a bigger part of GE's 3-D printing scale-up plans.
More than likely, Rolls-Royce will also have to work closely with 3-D printing companies to help meet the needs of its equally massive manufacturing operations. In the meantime, Rolls-Royce, like GE, will developing an expertise around 3-D printing and how it could benefit its operations.
The driving force of change
The demands of big industrial customers are likely going to be a major driving force of change in the 3-D printing industry. Consequently, 3-D printing companies that cater to these needs are likely well-positioned to benefit over the long term. Investors will likely be best served owning 3-D printing companies that have high exposure to the industrial sector, particularly in the finished goods segment.
At the end of the day, 3-D printing continues to gain momentum from the industrial sector because of the manufacturing innovation it brings to design, affordability, and efficiency. Companies like GE and Rolls-Royce stand to save billions of dollars across their operations over the next decade by implementing 3-D printing technologies. The Economist didn't call 3-D printing the Third Industrial Revolution for nothing.
