John Kawola is the Chief Executive Officer of Global Operations for Boston Micro Fabrication (BMF). He has more than two decades of business leadership experience across the additive manufacturing, 3D printing and materials science industries. BMF is focused on introducing and scaling micro-3D printing technology to a range of industries that demand a high level of resolution and precision.
Additive manufacturing as an industry continues to expand, both in terms of investment in equipment and software, the introduction of new materials, and advancement of more complete services. However, the boom we saw a decade ago has likely reached its peak, with availability and options outpacing demand. As a result, the industry will be forced to consolidate, as we recently saw in the merger announcement between Stratasys and Desktop Metal.
Industry consolidation in 3D printing will be inevitable, but companies that have carved out a niche and continue to deliver and drive value will remain and thrive in the years ahead.
The Current 3D Printing Landscape
Use of 3D printers for design and prototyping has risen to be the norm in most product design processes based on the low cost and rapid nature of development. And while this prototyping function continues to serve immense value across industries, applications for end-part production – especially at lower production volume – continue to expand. This shift has been driven through a combination of supply chain disruption and technological innovation that has allowed 3D printing to compete with traditional manufacturing processes in specific use cases.
Looking back to the early 2010s, there was a wave of industry consolidation in 3D printing and, one could argue, a bit of a valuation bubble. These moves drove interest and investment from venture capital firms looking to latch on to the next big production method. The consolidation wave observed in 2012 and 2013 set the stage for the current scenario, with companies such as Formlabs, Markforged, Carbon, Desktop Metal, and others emerging as significant players. While the expansion was initially great for customers looking for options, it became harder to sort through the choices available.
The abundance of companies offering similar products within the 3D printing space is at odds with market demand. The current market inefficiency necessitates consolidation to establish profitable and sustainable businesses. As the market continues to grow, it is becoming evident that not all companies will be able to thrive independently. Mergers and acquisitions enable companies to combine their strengths, eliminate redundancies, and streamline operations to achieve long-term success.
Thoughts on Industry Consolidation in 3D Printing (Stratasys/Desktop Metal/3D Systems/NanoDimension)
As this industry competition shakes out, a merger between some of the companies in the industry makes a good deal of business sense, and builds a more complete portfolio for their customers. If executed successfully, mergers would allow companies to leverage their technological strengths and accelerate the development of innovative 3D printing solutions.
The mergers will also serve to expand market reach. By combining their customer bases, combined companies can access a broader range of industries and potential clients. This increased market presence enhances their ability to secure larger contracts and capitalize on cross-selling opportunities. Finally, the consolidation of resources and operations can lead to economies of scale, particularly in manufacturing, procurement, and research and development. This can result in cost savings, improved efficiencies, and a competitive edge in the 3D printing market.
However, it’s worth noting that there are always business risks with mergers, and this is no different. Merging two companies with distinct cultures can pose challenges. Differences in decision-making processes, company values, and work styles may create friction during integration. Successful cultural integration will require effective communication and collaboration to ensure a cohesive and productive working environment.
Implementing a merger of this scale also requires careful planning and execution. The combined company will need to navigate the integration of operations, systems, and teams seamlessly. Failure to execute these integration efforts properly could result in operational inefficiencies, customer dissatisfaction, and a negative impact on financial performance.
The success of the merger depends on the ability to create synergies between the two companies – and this applies to any future mergers within the 3D printing industry. These considerations include integrating technologies, optimizing go-to-market strategies, and capitalizing on shared expertise. The new company must demonstrate the ability to generate value for customers and shareholders through these synergies.
In the end, the shareholders who get to vote will have to decide what is in their best interest and which combination will be best for the value of their shares in the future.
Widespread impact and the role of Miniaturisation
As evidenced by the attention and activity around this merger, the 3D printing industry is witnessing significant growth and transformation. However, the proliferation of companies offering a wide range of 3D printing technologies poses challenges in terms of differentiation and profitability. This is surely not going to be the last major merger seen this decade in additive manufacturing. Amid this consolidation in 3D printing, the companies who will continue to thrive and grow all have one thing in common: a deep connection to their customers and the value they can provide through evolution.
The selection process for 3D printing technologies is crucial, requiring companies to have internal experts to leverage the technology effectively. There is also a call for the industry to evolve and provide easier access to the right technology for specific needs, establishing more accessible platforms for the end-user. Instead of continuing to offer the same process, materials or services, additive manufacturing companies must adapt.
Looking ahead, the industry faces the need for scale, differentiation, and profitability. As the market becomes more crowded, companies must navigate these challenges to secure a sustainable future. This may include self-driven innovation, seeking out new use cases for their technology without waiting for customers to come to them. It could also reflect true manufacturing innovation, bypassing complex international and geopolitical supply chains to deliver necessary parts or products quickly, efficiently, and cost effectively for the end user.
The market for high-precision 3D printing is substantial, with industries such as electronics, medical devices, life sciences, optics, and quantum photonics demanding precise and accurate manufacturing techniques. In the electronics industry specifically, 3D printing is revolutionising the design and manufacturing of smaller components, including antennas, spacers, and insulating materials. As the industry transitions from 4G to 5G and beyond, the need for compact and efficient electronic components is increasing. These highly precise, small-scale applications are one area where 3D printing is already carving out a niche, competing and – in many cases – being deemed more efficient and flexible than traditional manufacturing processes.
Technological disruptions, even seemingly modest ones, should not be underestimated, as they have the potential to reshape the industry – particularly as new, niche use cases continue to expand.
The trend of industry consolidation in 3D printing is an inevitable consequence of market dynamics. But overall, the future of the 3D printing industry is promising, driven by advancements in technology, expanding applications, and the ongoing trend towards miniaturisation. Companies within the 3D printing industry must adapt to the changing landscape, seize opportunities for collaboration and synergies, and aim for long-term profitability to be successful in the coming years.
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