Who will industrialise additive manufacturing? who will own the value chain? part 2
Director of AD Global comments on what’s next for the big players in Additive Manufacturing.
In part 1 of this post, I assessed the various moves that have taken place within the AM value chain and considered the positions taken up by some of the key players. It is clear that more integrated solutions combining multiple digital manufacturing technologies will be where competitive advantage and industrialisation of AM will take place. Oerlikon, Siemens, GE and HP have all taken up different positions within the market and all will play their part…. but what next for the big players?
In my last article I didn’t consider EOS alongside the others mentioned, however I think it is important to consider the part they have played in the industrialisation of AM to date and their ongoing role. While they are not in the same league, purely in terms of size as the others outlined, they are quietly building platforms and partnerships that will protect their position in the market and ensure they remain at the forefront of innovation and development of AM Technology. In addition, I believe EOS are building within Additive Minds, a differentiated service offering for clients, that adds a crucial layer of value on top of the organisation.
When considering value creation it is widely known that consulting and service offers significantly greater margin than manufacturing. EOS are moving to position themselves as a Solutions Partner who will provide Hardware but more as part of complete ‘turnkey’ solution. Having clarified they are not for sale and with cash available for investment, I see EOS pursuing strong organic growth strategies combined with strategic alliances and partnerships like the ones recently announced with Premium Aerotek and Daimler to develop the Digital Factory of the Future.
It was interesting to read this week that GE Additive were planning to build their first Customer Experience Center in Munich. A nod to EOS I am sure, and positioned to compete no doubt with the offering of Additive Minds. This is further evidence of the intent of GE Additive to try and dominate the market, and it is hard to argue against this, given the level of investment they continue to make. What I am sure will worry the other players is that they are not ready to stop. Only this week Mohammad Ehteshami said, “Our goal is to get into all of these”, when referring to the five principal 3D printing technologies, of which they already own two. He further commented, “We are always studying organic and inorganic possibilities.”
Realistically though where will GE Additive turn next? The clear favourite as a potential acquisition target would be 3D Systems as it would give GE a number of the technologies it doesn’t own and as a publicly traded business would be reasonably easy to snap up. Thinking a little bit wider would potentially bring in the possibility of a software acquisition. Considering the expertise that Siemens have developed and are acquiring, it is easy to make the leap that GE Additive might themselves be in the market to buy a software business. This would enable them to provide a more complete and integrated solution in line with the requirements of a digital factory of the future. Materialise would be an interesting option, however their collaboration with Siemens suggests that is unlikely. More likely in my opinion would be Autodesk. Like 3D Systems they are publicly traded and therefore well within reach for the deep pocketed GE Additive business.
Siemens are the dominant player when considering the software play in AM but have also built significant capability in the development of Digital Factory. The missing piece it would seem however when considering AM within this offering is Hardware. SLM Solutions have not hidden the fact that they are up for sale. After failing to accept the offer on the table from GE Additive, thanks to activist investor Elliott Management Corp, led by controversial Paul Singer, who gambled on a higher offer. SLM Solutions have appointed Lazard to consider strategic options and there are potential suitors including GE rival UTC. A link up with Siemens however could be good for both parties.
HP are delivering their first commercial MJF machines and it remains early days for them in their investment in 3D Printing. It is a couple of years now since they first announced their intentions and by comparison to GE have not been as active. As outlined previously it is difficult to see how they will play a big part in the industrialisation of AM with a single hardware platform. What role do HP want to play in the industry?
If HP are serious about adopting a market leading position, which is strategically imperative when considering the position of HP in every other market it operates in, then they need to innovate quickly or acquire. HP are a business built on great technology and strategic acquisition. With a previous HP employee at the helm of 3D Systems, it is not a crazy thought to think that they could be a potential target. The interesting prospect for me would be XJet. Founder, Hanan Gothait, widely considered an innovator and veteran of the inkjet printing industry sold a previous business, Idanit, to HP Scitex. Based on a similar technology but focusing on metals and ceramics the XJet product would complement the MJF offering in plastics to give HP a wider hardware platform to offer clients. XJet have not yet launched fully so this is definitely one for the future.
Oerlikon made a big acquisition at the end of 2016 when acquiring Citim GmbH. For now, their strategy seems to be heavily focused on organic growth, with the development of new facilities in the US. While there is no stand out move that Oerlikon could and should make next, it would not be surprising to see an acquisition/partnership in the Asia Pacific region. If they want to offer a truly global materials and process solution for AM then they will need to be positioned to serve all markets. While organic growth in the US might be the best strategy, when approaching a market like China partnering with, or acquiring, an existing business might be a better solution.
Who knows though what the next big moves will be? I am certainly interested to hear your thoughts so please use the comments to let me know.
Having explored some of the big industrial players over this and my last post I will move next to consider the innovative start-ups and the positions they have adopted in the market. Carbon, Desktop Metal and MarkForged are all doing exciting things and are certainly building their presence. What about other entrants that are less well known like Roboze, Rize and Vader Systems? I hope to learn more at Rapid this week. If you are going and want to discuss the industry as a whole or catch up on any specific recruitment topic then let me know and we can try to find some time.