What’s wrong with the 3D print industry? The industry leaders seem to have the answers, or do they?
At last week’s Rapid+TCT in Los Angeles we attended a keynote session that included the leaders of several major 3D printer manufacturers, including representatives from Stratasys, Nano Dimension, 3D Systems, EOS and Nikon.
The moderator questioned them about their thoughts on the current state of the industry, but their answers were all quite different.
Everyone knows there’s a problem right now. While there are individual companies succeeding here and there, at the macro scale there are some major issues.
Investment Problems
The crux of the issue deals with investment deals that took place over the past several years. If we were to wind the clock back to those times we’d then find substantial optimism in the industry. Then it was thought that 3D print technology could take a big bite out of the massive US$12T manufacturing industry. Even a tiny bite would still be quite massive.
That concept led a number of VC investment companies to open the floodgates of investment towards several major players, all in hopes of later capturing a healthy slice of that juicy manufacturing market. Existing players’ valuations were boosted by SPACs and IPOs of new market entrants.
This can clearly be seen in the company valuations. We track the valuations of publicly traded 3D companies and have been doing so for several years. We’ve seen these trends quite clearly.
Two years ago the total value of our leaderboard exceeded US$20B. Today that same leaderboard totals something in the US$3B range.
That’s a massive drop in value, with some companies suffering 90% losses in value. That’s extraordinarily bad news for any VC that invested in those companies. Several companies have literally disappeared, taking investment with them. Because of the lack of investment return, today’s VCs have basically turned off the money taps, and 3D companies have to make bank on their own.
3D Print Solution Strategies
This is the situation the leaders addressed in the keynote discussion at Rapid+TCT. The answers seemed to fall into two categories:
We need to help more companies adopt 3D print technology
We need to consolidate the industry because there are too many players
Which is the right answer? Or are they both correct? Or incorrect?
Both adoption and consolidation can indeed make life a bit better. Adoption means convincing more customers to make more use of 3D printing, which would increase revenue. Consolidation means collapsing companies together to reduce redundant products and save on shared expenses.
More revenue, or less costs. Either or both can work.
My question is this: why are we even talking about these options?
3D Print Technology Lacking
To me the answer is straightforward: the technology currently deployed largely does not meet the needs of major manufacturers. If it did, it would be easier to sell and we’d see ongoing growth. We would not see the huge effort trying to persuade small numbers of new customers to adopt the technology. It’s took expensive, too slow, too small, too standalone, etc.
We don’t see the growth. My conclusion is that we don’t have the right technologies for proper manufacturing.
Let’s think about this: most of the major 3D print technologies of today are essentially highly evolved versions of prototyping machines of the past. Prototyping is vastly different than production manufacturing, and I believe that’s where things are jammed.
The prototyping technologies tend to be slow, expensive, and set up for single job operation. Sure, these aspects have been improved, but fundamentally they may not be the most appropriate for large-scale manufacturing.
Future 3D Print Options For Manufacturing
My belief is that the future lies with new 3D printing approaches that directly address manufacturing needs with new processes and concepts. Companies like InkBit, Evolve Additive, SAF, VulcanForms, Seurat and other newcomers seem very appropriate for manufacturing, and the ability to vastly scale up.
Most of those technologies are still in the early stages, however, and often being developed by small startups with limited resources. It’s a bad situation for them because the VCs have been turned off by the larger players — but VC disinterest carries forward to every company, even the startups.
Don’t get me wrong here: adoption is good, and should be pursued. But don’t believe that adoption of the majority of manufacturers will ever occur with current technology.
Consolidations are likely to occur. Without the investment money coming in, companies have to make a profit. Unfortunately, many of these companies are NOT consistently (or sometimes at all) profitable. They are basically burning down their cash reserve with each monthly loss, and eventually that reserve will be used up.
Because of that we’ll definitely see some consolidations, perhaps even in the next few months.
But we won’t see a manufacturing breakthrough until the new technologies mature and begin major deployments.
