Are 3D Printers the future? And which firms would you invest in?

Investment, Technology, Market Growth, Automatisation 

A 3D printer cannot make any object on demand like the "Star Trek" replicators of science fiction. But a growing array of 3D printing machines has already begun to revolutionize the business of making things in the real world.

3D printers work by following a computer's digital instructions to "print" an object using materials such as plastic, ceramics and metal. The printing process involves building up an object one layer at a time until it's complete. For instance, some 3D printers squirt out a stream of heated, semi-liquid plastic that solidifies as the printer's head moves around to create the outline of each layer within the object.

The instructions used by 3D printers often take the form of computer-aided design (CAD) files - digital blueprints for making different objects. That means a person can design an object on their computer using 3D modeling software, hook the computer up to a 3D printer, and the watch the 3D printer build the object right before his or her eyes.

History of 3D printing

Manufacturers have quietly used 3D printing technology - also known as additive manufacturing - to build models and prototypes of products over the past 20 years. Charles Hull invented the first commercial 3D printer and offered it for sale through his company 3D Systems in 1986. Hull's machine used stereolithography, a technique that relies upon a laser to solidify an ultraviolet-sensitive polymer material wherever the ultraviolet laser touches.

The technology remained relatively unknown to the greater public until the second decade of the 21st century. A combination of U.S. government funding and commercial startups has created a new wave of unprecedented popularity around the idea of 3D printing since that time.

First, President Barack Obama's administration awarded $30 million to create the National Additive Manufacturing Innovation Institute (NAMII) in 2012 as a way of helping to revitalize U.S. manufacturing. NAMII acts as an umbrella organization for a network of universities and companies that aims to refine 3D printing technology for rapid deployment in the manufacturing sector.

Second, a new wave of startups has made the idea of 3D printing popular within the so-called "Maker" movement that emphasizes do-it-yourself projects. Many of those companies offer 3D printing services or sell relatively cheap 3D printers that can cost just hundreds rather than thousands of dollars.

Future of 3D printing

3D printing probably won't replace many of the usual assembly-line methods for building standard products. Instead, the technology offers the advantage of making individual, specifically tailored parts on demand - something more suited to creating specialized parts for U.S. military aircraft rather than making thousands of trash cans for sale at Wal-Mart. Boeing has already used 3D printing to make more than 22,000 parts used on civilian and military aircraft flying today.

The medical industry has also taken advantage of 3D printing's ability to make unique objects that might otherwise be tough to build using traditional methods. U.S. surgeons implanted a 3D-printed skull piece to replace 75 percent of a patient's skull during an operation in March 2013. Researchers also built a 3D-printed ear mold that served as the framework for a bioengineered ear with living cells.

The spread of 3D printing technology around the world could also shrink geographical distances for both homeowners and businesses. Online marketplaces already allow individuals to upload 3D-printable designs for objects and sell them anywhere in the world. Rather than pay hefty shipping fees and import taxes, sellers can simply arrange for a sold product to be printed at whatever 3D printing facility is closest to the buyer.

Such 3D printing services may not be limited to specialty shops or companies in the near future. Staples stores plan to offer 3D printing services in the Netherlands and Belgium starting in 2013.

Businesses won't be alone in benefiting from 3D printing's print-on-demand-anywhere capability. The U.S. military has deployed 3D printing labs to Afghanistan as a way to speed up the pace of battlefield innovation and rapidly build whatever soldiers might need onsite. NASA has looked into 3D printing for making replacement parts aboard the International Space Station and building spacecraft in orbit.

Most 3D printers don't go beyond the size of household appliances such as refrigerators, but 3D printing could even scale up in size to build objects as big as a house. A separate NASA project has investigated the possibility of building lunar bases for future astronauts by using moon "dirt" known as regolith.

Limitations of 3D printing

But 3D printing still has its limits. Most 3D printers can only print objects using a specific type of material - a serious limitation that prevents 3D printers from creating complex objects such as an Apple iPhone. Yet researchers and commercial companies have begun developing workarounds. Optomec, a company based in Albuquerque, New Mexico, has already made a 3D printer capable of printing electronic circuitry onto objects.

The 3D printing boom could eventually prove disruptive in both a positive and negative sense. For instance, the ability to easily share digital blueprints online and print out the objects at home has proven a huge boon for do-it-yourself makers.

But security experts worry about 3D printing's ability to magnify the effects of digital piracy and the sharing of knowledge that could prove dangerous in the wrong hands. Defense Distributed, a Texas group, has already begun pushing societal boundaries by working on the world's first fully 3D-printable gun.

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Yesterday I was honored to be one of the featured speakers at the TEDxReset Conference in Istanbul, Turkey where I predicted that over 2 billion jobs will disappear by 2030. Since my 18-minute talk was about the rapidly shifting nature of colleges and higher education, I didn't have time to explain how and why so many jobs would be going away. Because of all of the questions I received afterwards, I will do that here.

If you haven't been to a TEDx event, it is hard to confer the life-changing nature of something like this. Ali Ustundag and his team pulled off a wonderful event.

The day was filled with an energizing mix of musicians, inspiration, and big thinkers. During the breaks, audience members were eager to hear more and peppered the speakers with countless questions. They were also extremely eager to hear more about the future.

When I brought up the idea of 2 billion jobs disappearing (roughly 50% of all the jobs on the planet) it wasn't intended as a doom and gloom outlook. Rather, it was intended as a wakeup call, letting the world know how quickly things are about to change, and letting academia know that much of the battle ahead will be taking place at their doorstep.

Here is a brief overview of five industries - where the jobs will be going away and the jobs that will likely replace at least some of them - over the coming decades.

Until now, the utility companies existed as a safe career path where little more than storm-related outages and an occasional rate increase would cause industry officials to raise their eyebrows.

Yet the public has become increasingly vocal about their concerns over long-term health and environmental issues relating to the current structure and disseminating methods of of the power industry, causing a number of ingenious minds to look for a better way of doing things.

Recently I was introduced to two solutions that seem predestined to start the proverbial row of dominoes to start falling. There are likely many more waiting in the wings, but these two capitalize on existing variances found in nature and are unusually elegant in the way they solve the problem of generating clean power at a low cost.

Both companies have asked me to keep quiet about their technology until they are a bit farther along, but I will at least explain the overarching ramifications.

I should emphasize that both technologies are intended to work inside the current utility company structure, so the changes will happen within the industry itself.

To begin with, these technologies will shift utilities around the world from national grids to micro grids that can be scaled from a single home to entire cities. The dirty power era will finally be over and the power lines that dangle menacingly over our neighborhoods, will begin to come down. All of them.

While the industry will go through a long-term shrinking trend, the immediate shift will cause many new jobs to be created.

Jobs Going Away

• Power generation plants will begin to close down.
• Coal plants will begin to close down.
• Many railroad and transportation workers will no longer be needed.
• Even wind farms, natural gas, and bio-fuel generators will begin to close down.
• Ethanol plants will be phased out or repurposed.
• Utility company engineers, gone.
• Line repairmen, gone.

New Jobs Created

• Manufacturing power generation units the size of ac units will go into full production.
• Installation crews will begin to work around the clock.
• The entire national grid will need to be taken down (a 20 year project). Much of it will be recycled and the recycling process alone will employ many thousands of people.
• Micro-grid operations will open in every community requiring a new breed of engineers, managers, and regulators.
• Many more.

Over the next 10 years we will see the first wave of autonomous vehicles hit the roads, with some of the first inroads made by vehicles that deliver packages, groceries, and fast-mail envelopes.

The first wave of driverless vehicles will be luxury vehicles that allow you to kick back, listen to music, have a cup of coffee, stop wherever you need to along the way, stay productive in transit with connections to the Internet, make phone calls, and even watch a movie or two, for substantially less than the cost of today's limos.

Driverless technology will initially require a driver, but it will quickly creep into everyday use much as airbags did. First as an expensive option for luxury cars, but eventually it will become a safety feature stipulated by the government.

The greatest benefits of this kind of automation won't be realized until the driver's hands are off the wheel. With over 2 million people involved in car accidents every year in the U.S., it won't take long for legislators to be convinced that driverless cars are a substantially safer and more effective option.

The privilege of driving is about to be redefined.

Jobs Going Away

• Taxi and limo drivers, gone.
• Bus drivers, gone.
• Truck drivers, gone.
• Gas stations, parking lots, traffic cops, traffic courts, gone.
• Fewer doctors and nurses will be needed to treat injuries.
• Pizza (and other food) delivery drivers, gone.
• Mail delivery drivers, gone.
• FedEx and UPS delivery jobs, gone.
• As people shift from owning their own vehicles to a transportation-on-demand system, the total number of vehicles manufactured will also begin to decline.

New Jobs Created

• Delivery dispatchers
• Traffic monitoring systems, although automated, will require a management team.
• Automated traffic designers, architects, and engineers
• Driverless "ride experience" people.
• Driverless operating system engineers.
• Emergency crews for when things go wrong.

The OpenCourseware Movement took hold in 2001 when MIT started recording all their courses and making them available for free online. They currently have over 2080 courses available that have been downloaded 131 million times.

In 2004 the Khan Academy was started with a clear and concise way of teaching science and math. Today they offer over 2,400 courses that have been downloaded 116 million times.

Now, the 8,000 pound gorilla in the OpenCourseware space is Apple's iTunes U. This platform offers over 500,000 courses from 1,000 universities that have been downloaded over 700 million times. Recently they also started moving into the K-12 space.

All of these courses are free for anyone to take. So how do colleges, that charge steep tuitions, compete with "free"?

As the OpenCourseware Movement has shown us, courses are becoming a commodity. Teachers only need to teach once, record it, and then move on to another topic or something else.

In the middle of all this we are transitioning from a teaching model to a learning model. Why do we need to wait for a teacher to take the stage in the front of the room when we can learn whatever is of interest to us at any moment?

Teaching requires experts. Learning only requires coaches.

With all of the assets in place, we are moving quickly into the new frontier of a teacherless education system.

New Jobs Created

Unlike a machine shop that starts with a large piece of metal and carves away everything but the final piece, 3D printing is an object creation technology where the shape of the objects are formed through a process of building up layers of material until all of the details are in place.

The first commercial 3D printer was invented by Charles Hull in 1984, based on a technique called stereolithography.

Three-dimensional printing makes it as cheap to create single items as it is to produce thousands of items and thus undermines economies of scale. It may have as profound an impact on the world as the coming of the factory did during the Henry Ford era.

Jobs Going Away

• If we can print our own clothes and they fit perfectly, clothing manufacturers and clothing retailers will quickly go away.
• Similarly, if we can print our own shoes, shoe manufacturers and shoe retailers will cease to be relevant.
• If we can print construction material, the lumber, rock, drywall, shingle, concrete, and various other construction industries will go away.

New Jobs Created

• 3D printer design, engineering, and manufacturing
• 3D printer repairmen will be in big demand
• Product designers, stylists, and engineers for 3D printers
• 3D printer 'Ink' sellers

We are moving quickly past the robotic vacuum cleaner stage to far more complex machines.

The BigDog robot, shown above, is among the most impressive and potentially useful for troops in the immediate future-it's being developed to act as an autonomous drone assistant that'll carry gear for soldiers across rough battlefield terrain.

Nearly every physical task can conceivably be done by a robot at some point in the future.

Jobs Going Away

• Fishing bots will replace fishermen.
• Mining bots will replace miners.
• Ag bots will replace farmers.
• Inspection bots will replace human inspectors.
• Warrior drones will replace soldiers.
• Robots can pick up building material coming out of the 3D printer and begin building a house with it.

New Jobs Created

• Robot designers, engineers, repairmen.
• Robot dispatchers.
• Robot therapists.
• Robot trainers.
• Robot fashion designers.

In these five industries alone there will be hundreds of millions of jobs disappearing. But many other sectors will also be affected.

Certainly there's a downside to all this. The more technology we rely on, the more breaking points we'll have in our lives.

Driverless drones can deliver people. These people can deliver bombs or illicit drugs as easily as pizza.

Robots that can build building can also destroy buildings.

All of this technology could make us fat, dumb, and lazy, and the problems we thought we were solving become far more complicated.

We are not well-equipped culturally and emotionally to have this much technology entering into our lives. There will be backlashes, "destroy the robots" or "damn the driverless car" campaigns with proposed legislation attempting to limit its influence.

At the same time, most of the jobs getting displaced are the low-level, low-skilled labor positions. Our challenge will be to upgrade our workforce to match the labor demand of the coming era. Although it won't be an easy road ahead it will be one filled with amazing technology and huge potentials as the industries shift.

About the Author
Thomas Frey is the innovation editor for THE FUTURIST magazine and author of the bookCommunicating with the Future: How Re-engineering Intentions Will Alter the Master Code of Our Future.

...or, in unstable times, small-to-mid-sized firms have the right stuff

In unstable environments, there is no sustainable competitive advantage, only multiple temporary competitive advantages (Cavanagh, 1991; Fiol, 2001). If this is true, small-to-mid-sized firms may be the big earners of our time.

Why?

If they've succeeded beyond start up stage while holding onto their entrepreneurial spirits, then chances are good they've developed a workforce of individuals who identify with the firm's values and desired outcomes.

At the same time, they probably haven't yet coalesced into an entrenched culture with set reactions to external stimuli. This means they are agile in the face of new opportunities. An unstable environment requires quick reflexes to respond on a dime, impossible in large, top-down organizations steeped in bureaucracy.

Tom Peters, in "Rethinking Scale" (1992) presents the work of both Gunnar Hedlund and David Rogers, who pointed out the need, in unstable economies, to move away from an agricultural model ("A" mode) of strategy and toward a hunter-gather ("H" mode) outlook on competitive advantage. "A" mode seeks to render the environment predictable by fighting against threats to crop yields, through weather predictions, technology, and amassing and defending larger and larger land parcels. "H" mode, on the other hand, is all about unpredictability: once plentiful herds migrate away and are replaced by another food source, requiring new hunting methods. Rather than making predictions, hunter-gatherers scan the horizon for opportunity, figure out what skills are needed to put food on the table, then act - quickly.

The connection to corporate strategy is obvious: stable environments call for long-term strategies and sources of sustainable competitive advantage. In large, established firms, size can equate to greater resources, one way to edge out competition. They have had the time to develop distinct corporate cultures that become impossible for competition to duplicate - another advantage.

Unstable conditions, like the ones we face today (and will, most probably, for a long time to come) require flexibility and a willingness to cannibalize current advantages in the face of their inevitable demise. Entrepreneurial firms are best poised to survive in these times. Most advantaged of all are entrepreneurial ventures that have survived start-up and entered into a professionally managed, small-to-mid-sized success. Here are some reasons why:

1. At such a point in their organizational development, these firms have defined (whether they know it or not) core values and have amassed a work force of folks who identify with those values. The firm is small enough to have maintained a focused goal, or desired outcome for it's products/services.

The glue that holds them together may not always be a stable, fully elaborated culture, since this can lead to core rigidities. Rather, organizational members' eep identification with what they value and with the outcomes they wish to produce may bring coherence to multiple temporary advantages (Fiol, 2001).

2. These companies are less compartmentalized than the big monsters, allowing a freer interaction flow between work disciplines. This allows for unplanned connections, increasing the possibility of "ah has" - moments of inspiration and creation. Additionally, the company's manageable size allows it to take action on that "ah ha," rather than getting bogged down in endless chains of command.

3. Less bureaucracy = better information = quicker response time. Smaller firms can easily gather information from many sources - suppliers, consumers, middle managers, etc., with fewer filters in the way. In turn, that information can be quickly absorbed and put to use for process, pricing and production improvements.

4. Ability to respond to new niche markets: "H"-mode strategy is about moving, searching for new opportunities and developing new methods of responding to them. Hedlund uses the analogy of going over the mountain to another region and inventing a new kind of fishing net. According to Hedlund, "in today's mercurial business environment, rapid product development and niche-creation are the most likely paths to survival."

We seem to worship the big, insisting that size really does matter. But consider: all firms today are coping with shifts in the environment, and attempts at future predictions and environmental controls are futile. Business owners and business consultants alike must embrace the new reign of the mid-sized firm. Together, we can focus our energies on making these firms the power-house producers of tomorrow. Not so that we can grow new, gigantic Fortune 200 behemoths, but so that we can create a world rich with creative companies ready, willing and able to bring to market those goods and services of real use and delight. Maybe it's time to forget about large, established corporate cultures of entrenched norms, and embrace flexible business identities of shared values and desired outcomes.

Rather than seeking to grow to the next level in size, try growing to the next level in capacity to change, in development of skills and on the creation of knowledge gathering and sharing. This could prove to be the best competitive advantage of all.

References:
Fiol, M.C. (2001). Revisiting an identity-based view of sustainable competitive advantage. Journal of Management, 27, 691-699.
Hedlund, G. (1987). Milking cows versus going hunting: Conceptions of corporate strategies. Unpublished paper.
Peters, T. (1992). Rethinking scale. California Management Review, Fall, 7-29.
Rogers, D. (1988). Ride a small horse: The business wisdom of Gehghis Khan. Success, 16.
O'Toole, J. (1991). Big or small. Unpublished paper.

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Julia is an expert in divergent thinking and creativity coaching. Her background in the fine arts affords her particular respect for the creative aspirations of business leaders. Working with them, she digs through and questions absolutely everything in order to get to the heart of their vision. Then she helps make their vision ubiquitous, resonating at every level of the organization. She understands the kinds of thinking and management approaches that drive organizations to sustainable competitive advantage when innovation counts. Doctor of Psychology in Organizational Consulting, Julia has more than 20 years of experience in both management and the arts. She's a former free-lance director (she holds a MFA degree in Directing), and served as the co-artistic director of the critically acclaimed 15 Head - a theatre lab, in Minneapolis, MN.

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There are a small number of public companies in the 3D printing industry today. The leading stocks are 3D Systems ( NYSE:DDD), Stratasys ( NASDAQ:SSYS), and Proto Labs ( NYSE:PRLB). The chart above shows a 6-month comparison of this aggregate 3D printing portfolio vs. the S&P, Dow Jones, and NASDAQ. 3D printing names are up over 180%.

The 3D printing industry, also known as additive manufacturing and rapid prototyping, is at an inflection point.

For those looking to consider an investment in 3D printing stocks, Seeking Alpha's analysis of the leading companies can be helpful.

First a reality check on the current state of the market.

Unfortunately the concept has limited commercial production capabilities and material challenges. Over time, these will naturally become less and less of a problem. For now though, several sectors such as aviation parts and medical devices can benefit greatly from the ability to RP. Not to mention, any wealthy person that wants to make their own iPhone case at home.

Then an analysis of each stock. Excerpts below:

3D Systems is leading the 3D printing market, but unfortunately investors missed the golden opportunity to buy back at the end of December when the stock still traded around $15. It now fetches over $30.

With a forward PE of 23, the stock trades roughly in line with the expected growth rate. While not cheap, it isn't expensive and actually provides a solid earnings profile unlike most of the recent IPOs in the hot sectors of social media and cloud computing.

Stratasys provides another option in 3D printing, but the stock has likewise more than doubled since the lows back in October of last year. The company recently released the Mojo 3D Printer which is the market's lowest-priced professional-grade complete 3D printing system priced at $9,900.

This stock trades at a richer valuation than 3D Systems with a forward PE of over 30. The company also only reported 30% revenue growth for Q112 while analysts only forecast 15% long term growth.

The recent announced merger with Objet is expected to launch Stratasys into a leadership position in the 3D Printing market. The combined company will rival the $1.5B market cap of 3D Systems along with the revenue size.

Proto Labs is an alternative investing option in 3D rapid prototyping and manufacturing short-runs of real parts. The company went public back in February, but the stock appears to have a similar pricey multiple as the 3D printing sector.

The company reported 34% revenue growth and a solid 25.5% operating margin. At a forward PE of 29, the company trades in the range of its long term growth rate. With revenue expectations of around $127M for 2012, the company remains relatively small.

Read the full analysis at Seeking Alpha.

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