STOCKHOLM Jan 23 Sweden's Arcam was
2013's best performing 3D printer maker, with investors
desperate for exposure to a metal printing technique that is
making manufacturing more efficient.
Shares in the tiny company whose clients include GE Aviation
, Boeing, Airbus and GKN Aerospace,
surged 530 percent in the past year rocketing ahead of 3D
printing giants 3D Systems and Stratasys.
3D printing is still in its infancy on most factory floors
and in some industries where bulk production is required it may
never be fully adopted but McKinsey estimates that it could have
a huge economic impact by 2025, explaining why investors are so
keen on the sector.
Arcam's machines print metal parts for the aerospace and
implants industries where they make complicated pieces in
smaller volumes, allowing companies to save on expensive metal
such as titanium.
"There's a clear advantage to using it in aerospace...Because
you can design different you can therefore lightweight
something," said Richard Hague, a professor at Nottingham
University and an expert in additive manufacturing.
"For aerospace if you can lightweight something then you can
save fuel and make it a massive cost saver over the life-time of
3D printing technology has been around since the 1980's, and
is mainly used for plastic modelling. However, there was a
breakthrough in the industry last year when GE Aviation said its
new LEAP jet engine would use 3D printed metal fuel nozzles.
U.S. President Barack Obama added to the hype, noting 3D
printing, commonly known as additive manufacturing, had "the
potential to revolutionize the way we make almost everything".
The McKinsey report from 2013 estimated that 3D printing
could generate economic impact of $230 billion to $550 billion
per year by 2025, mainly from consumer uses and manufacturing.
GE's oil and gas division told Reuters this week it will
start pilot production of 3D printed metal fuel nozzles for its
gas turbines in the second half of this year, a major step
towards using the technology for mass-manufactured parts in the
"Making one of something today we can do with additive
technology. If you want 10,000 then you go back to some of the
older manufacturing technologies," Eric Gebhardt, Chief
Technology Officer at GE Oil and Gas.
"The printing is coming along right now, it's not exactly
where we need it to be for some of the designs we're coming up
with but it's definitely coming along very quickly."
SOMETHING FOR THE FUTURE
Most metal 3D printers use lasers as an energy source but
Arcam uses powerful electron beams to melt thin layers of metal
powder in a vacuum and build up strong metal parts such as hip
implants and jet engine turbine blades.
Lasers are better when it comes to smaller parts with finer
resolution, such as dental implants, while the EBM system wins
for larger parts, such as orthopaedic implants.
Nevertheless, some industries say wide use of 3D printing is
some way off including ABB the world's biggest supplier of
industrial motors and drives.
"It's largely because we don't have components that are
particularly weight-critical. Plus, we're very cost critical, so
we have to find the most cost-effective way of producing any
component and we tend to be high volume compared to, say,
aerospace," said Bill Black ABB's head of quality and
"For ABB's range of products and as the technology is
currently capable, we don't see it being used in manufacturing
any time soon, but we continue to watch it and we continue to
try it because we are sure that in the future it will be part of
Car makers have been using additive manufacturing for
prototyping for many years and analysts at Canaccord Genuity
believe automotive in time will become an important market for
Arcam. But with high production volumes and cheaper materials in
the car industry, this is not likely to be around the corner.
"We may see pre-series and prototypes, but the cost pressure
is completely different than in the industries where we are,"
Arcam CEO Magnus Rene said.
HIPS AND PLANES
With a market value of $790 million on annual sales of just
$30 million, investors are nevertheless looking many years ahead
for Arcam's success.
The value of the five listed 3D printer makers with
industrial exposure -- Arcam, U.S. Exone and German
Voxeljet, 3D Systems and Stratasys is far higher than
predictions for the total market as far out as 2021.
They have a joint market value of $17 billion while Wohlers
Associates sees the total 3D printing market at $10.8 billion in
2021, up from $2.2 billion in 2012.
Out of Arcam's 24 machine orders in 2012 two thirds came
from aerospace, the world's top consumer of titanium. Investment
bank Espirito Santo sees the aerospace market for 3D printing
tripling to just short of $700 million from 2012 to 2016,
according to a recent research note.
GE's Avio Aero, with whom Arcam has worked closely to
develop titanium alloy turbine blades, had 10 of Arcam's EBM
machines installed at the end of 2012 and has just built a new
additive manufacturing facility in Italy which will hold up to
60 EBM and laser sintering systems.
Although not as important for the future as aerospace, the
implant industry also offers potential for 3D printing
companies, with over a million hip replacements a year.
Arcam customer Adler Ortho, an Italian maker of hip and knee
implants, launched its first product made with EBM in 2006.
"We believe Arcam's revenue growth will be well above that
of the 3D printing industry, driven by penetration of tier-one
orthopaedic implant customers and a ramp to volume production by
aerospace customers," Canaccord Genuity said.
Arcam sales shot up 73 percent to 133 million Swedish crowns
in the first nine months of 2013. It logged a steady stream of
printer orders in the fourth quarter, albeit just short of the
record level in the final quarter of 2012.
As aerospace and medical companies churn out a growing
number of designs calling for 3D printing, there are worries
there will not be enough machines and materials to meet demand.
"For example GE Aviation...They may not have the machines,
enough capacity in the world to build the parts they want to
build," said Terry Wohlers, president of consultancy firm
Wohlers Associates which has tracked the industry since the
first steps in the 1980's.
Other aerospace groups including Rolls-Royce, Pratt &
Whitney and GKN Aerospace are also investing in
GKN Aerospace, an Arcam customer, said several challenges
need to be overcome before it is fully embraced including
speeding up the printing and improving post-process finishing.
For Arcam with just 70 employees, adding capacity to match
future market growth poses challenges. It raised 348 million
crowns through a share issue in December to help it fund
expansion and bought Canadian powder metal maker AP&C in a move
to secure supply to meet growing client demand.
Speculation about industry consolidation is rampant.
"Is Arcam an acquisition target? Of course. Are many of the
laser-based companies targets? They are as well," said Wohlers.
3D Systems added exposure to printing in metals with its
acquisition of French Phenix Systems last year. Stratasys still
lacks capabilities in metals and GE's 3D printing push has made
some speculate it could one day make its own machines.
"Arcam would be a good fit everywhere and I can very well
understand if sector companies are tempted," said Thomas
Carlstrom, investment manager at Swedish state foundation
Industrifonden, Arcam's largest owner with close to 16 percent