was 2013's best performing 3D printer maker, with investors desperate
for exposure to a metal printing technique that is making manufacturing
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 .
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.
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.
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
"For aerospace if you can lightweight something
then you can save fuel and make it a massive cost saver over the
life-time of the aircraft."
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.
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
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 industry.
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
"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
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
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.
some industries say wide use of 3D printing is some way off including
ABB the world's biggest supplier of industrial motors and drives.
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 operational excellence.
"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 our landscape."
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
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.
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
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.
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.
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 additive manufacturing.
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.
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 of shares.
© Thomson Reuters 2014