GE announced yesterday that it intends to purchase both Arcam and SLM Solutions, two of the largest metal 3D printing companies worldwide, for a combined $1.4 billion. These companies make EBM and DMLS which are both Powder Bed Fusion 3D printing technologies. Both Arcam and SLM Solutions are amongst the top 5 players in the metal 3D printing industry. In my opinion GE is making a very astute and aggressive move into 3D printing. In press releases the company mentions that it thinks 3D printing is a good business with good growth prospects. There is however significantly more going on beneath the surface.
Arcam is a Swedish company that makes Electron Beam Melting (EBM) machines. With EBM titanium powder is melted with an electron beam. EBM, along with Direct Metal Laser Sintering (DMLS) is the most suitable technology for making detailed accurate end use 3D printed metal parts for industry. The density, strength and accuracy of these parts makes them suited for a whole host of applications. Arcam’s machines are used to print tens of thousands of orthopedic implants each year as well as aerospace parts for example. Crucially Arcam has its own powder manufacturing company and through its subsidiary DiSanto manufactures orthopedic implants. Through making its own powder and doing its own manufacturing Arcam is able to control more of the entire 3D printing tool chain. By optimizing powder for their machines and by using it for manufacturing it can also learn more and learn more quickly than other companies do. GE subsidiary Avio Aero is already an extensive user of Arcam machines to make turbine blades for aircraft. Indeed Arcam’s A2X machines were developed specifically for Avio Aero. GE is therefore very familiar with this technology and the company.
SLM Solutions makes DMLS machines. The company has been expanding its model lineup and creating higher throughput printers with more automation. The machines are reliable and GE already has several of them in use. Crucially SLM Solutions has access to the Trumpf/EOS patent portfolio. These are the core patents that govern all aspects of DMLS. Many people continually mention the expiration of patents in 3D printing but many metals patents are much newer than the oldest plastics patents. Additionally these patents have been ringfenced making it difficult to “invent around them.” If one were looking to create any kind of powder bed fusion type technology there simply at the present is no way around the Trumpf/EOS portfolio. Even if one obtained a license it would take several years to develop a working prototype. DMLS and EBM are competing technologies, and depending on your part or application one could be more suited than the other. Traditionally EBM has been seen to have a rougher surface texture which makes it ideal for bone growth adhesion in implants but less suited for mechanical parts. So, why buy both companies?
What are the advantages of 3D Printing and this purchase for GE?
- With 3D printing parts can be made with identical strength but lower weight. This is of course a huge advantage in aerospace where any weight saved goes straight to the bottom line of the airline.
- Parts can be manufactured in one piece and in one production step whereas with other technologies the same part would have to be made up of a dozen parts which would each require assembly and perhaps new tools, more materials etc.
- Spare parts for aircraft could be printed out on demand (or with intelligent planning) worldwide locally rather than shipped.
- GE can therefore focus its manufacturing risk and eliminate errors by concentrating its manufacturing risk on the Additive Manufacturing/3D Printing process.
- Parts can be designed, printed and tested quickly making for quicker more accurate test driven product development.
- Designers and engineers can iterate more designing more versions of parts to explore the technical limits and optimal designs of the part.
- 3D Printing has demonstrably shown to be quicker and lower cost than traditional manufacturing methods in aerospace part manufacturing including in rocket engines.
- Designers and engineers can make parts in new shapes that previously could not be made. This may lead to more efficient engines for example.
- New developments such as gradient metals (whereby the hardness of a metal can vary throughout the part for example) will make new designs possible.
- Things such as the optimization of internal topology mean that leaps forward could be made with the technology. With 3D printing for example you could apply a texture to the inside of a combustion chamber to make it more efficient.
- Dual purpose parts can be made with 3D printing, so your bolt could be optimized to be a heat sink for example.
- They need to be able to control their entire supply chain in order to ensure that the LEAP nozzle and other new 3D printed products are launched well.
- The 3D printing market is growing by approximately 30% per year in revenue.
- 3D Printing sells, ecomagination does not.
- SLM Solutions and Arcam are both well regarded products and companies.
- By purchasing two technology companies with different technologies GE adds some resilience and redundancy to their supply chain.
- GE would also not put itself at the mercy of one laser vendor to its vendor for example.
- If Haas or another CNC vendor went out of business it would not be very difficult for a company such as GE to find a new vendor. It would also not be difficult for them to make their parts to spec using the new machines. Due to the highly complex nature of metal printing however this is not the case with metal 3D printing. A company may take months to dial in and optimize the same part on a new machine.
- Effectively if Arcam went bust GE would not be able to indefinitely continue printing out the parts for its aircraft. Since it may need to have spare parts on hand for two decades or more, in the case of 3D printing metal, it would have been too high a risk for them to rely on an outside vendor. Arcam or SLM’s demise would mean that GE could eventually not service its own engines.
- The same part will have different characteristics when 3D printed on various metal 3D printers.
- Due to the high number of variables in the process and in post production switching from one OEM vendor to another, even if planned, would be difficult, time consuming and risk prone.
- When picking one vendor there would be an automatic lock in, and GE would be dependent on that vendor.
- This dependency relationship is so extensive and would have such a high impact on GE’s bottom line and 3D printing implementation that the company has no other choice but to be completely vertically integrated.
- A complete industrialization process ending up in certified civil aviation parts is expensive and locks one even deeper into vendor relationships in 3D printing. Powder supply for example would have to be assured since any variability in this would have a high impact on the end use parts.
- More control gives GE not only more 3D printing knowledge but additionally also more room to tackle error rates in production.
- When compared to many other processes 3D printing error rates are very high. By taking the entire process in house and industrializing two technologies GE can using its SixSixma and manufacturing experience drive down error rates significantly. This can give the company a comparative advantage in aerospace manufacturing in both cost and capability.
- If GE implements this successfully using its stringent manufacturing standards and methodologies, companies new to 3D printing would be highly likely to opt for a GE 3D printer rather than one from another brand.
- GE is known for its manufacturing and process prowess and makes high end critical systems in many industries. The core capabilities of the company would seem to be well suited to solve the challenge of turning 3D printing into a manufacturing technology at scale.
- GE typically excels in markets where if someone would offer you a cheaper alternative you would be likely to not even want to consider it. Who cares if an aircraft engine is 30% cheaper than another? I just want it to always work. The best business cases for metal 3D printing (orthopedics, dental, aerospace, UAVs, motorsport) are also industries like this.
- Many orthopedics companies are obtaining certification for implants using EBM and DMLS. Metal 3D printing has already come close to wiping out traditional manufacturing in titanium hip cups. 3D printed titanium cups are five times cheaper than ones made with other technologies. With all of the new applications coming online just the orthopedics business is shaping up to be a very healthy one. Due to its surface roughness aiding bone growth EBM is the natural technology that many of these orthopedics companies are turning to. GE now owns the EBM technology outright. Indeed several companies already tied to it because it is specified in their FDA certifications and processes which technology and which machines they use. It would be costly for them to recertify.
- SLM’s multi laser and Arcam’s multibeam are productive metal 3D printing innovations.
- Along with Additive Industries, Concept and EOS both SLM and Arcam are the furthest along in automating their 3D printing and post processing.
- Arcam EBM is quicker than competing technologies in terms of the part build rate (depending on the part and the requirements post processing could be much longer than this).
- Arcam EBM has demonstrable lower internal stresses in its parts than competing technologies.
- While DMLS has smoother surfaces and so (typically) requires less machining, EBM parts (typically) require less support structures which reduces labor cost in builds (again to a certain extent and this is dependent on part geometry).
- Their purchase now of both these companies puts other aircraft engine manufacturers in a tough spot. In my opinion other aero engine suppliers have to purchase a DMLS company of their own for fear of falling behind GE or not being given access to the technology.
- If GE were to take the Arcam and SLM machines off the market (as they did with Morris’ 3D printing service capacity, reducing global metal 3D printing capacity by around a quarter) the company would have the orthopedics and aerospace industries by the throat.
- Essentially GE has gone from a partner and vendor in the space to a supplier of key technology for which there is limited supply in terms of companies allowed to and able to deliver that technology.
What are the effects on the 3D printing industry?
- Existing companies will face competitive pressure from one of the most well capitalized and formidable engineering companies on the planet.
- GE’s market entry will validate the space and spark renewed interest from investors.
- GE is now more than committed to in a very public way create reliable industrial parts for aerospace using metal 3D printing.
- GE’s brand and reach will ensure that new customers and implementations for the technology will be found.
- GE’s internal use of the technology to accelerate product development will, if successful, be a huge boon to the acceptance of 3D printing.
- GE is betting that it can use this investment to outperform other aerospace companies. If it does this will be a huge boon to it and the community.
- In order to not fall behind GE, aerospace vendors such as Rolls Royce and Pratt & Whitney (UTC) must, in my opinion, either buy one of the remaining DMLS companies or commercialize their own technology.
- Other aerospace vendors such as GKN, Lockheed, Boeing, Northrop, Raytheon and Honeywell will have to seriously consider commercializing their own metal 3D printing companies or buying a DMLS company. Especially given their investment in the space.
Is this a good move?
It’s a doozy, I’ve been predicting it for years but I love love that they went ahead with this. It’s beautiful. It may seem like there are lots of 3D printing companies and start ups out there. But, there are very few mature metal 3D printing vendors that can at this moment make aerospace parts like the ones GE, Honeywell, Raytheon, Boeing, Rolls Royce, Pratt & Whitney, Lockheed, Space X, ULA and the rest of the aerospace industry need (and are all using!). All the major aerospace Tier 1 vendors and beyond are certifying parts and processes for metal 3D printing. If they want assured supply of 3D printers and to keep up with GE there are precious few companies they could consider buying.
EOS is the market leader in metal printing and also the leader in Selective Laser Sintering for plastics. The company is private and would have been more expensive than Arcam and SLM together.
ConceptLaser has machines that are widely used in dental and jewelry. This could have been an alternative.
Trumpf is a new market entrant as well as a market leader in lasers and cutting equipment. The company is however held by a family and they want to stay a family company.
Renishaw also has DMLS printers but it is a $600 million revenue company with 3D printing being only a small part of this. Renishaw is a market leader in CMM and other measuring equipment. It would seem to be rather a chunky asset to buy if one only wants just one part.
Realizer also makes DMLS printers but these are mainly used for dental and jewelry.
3D Systems has a metal printing technology but its systems are currently not as well regarded as the others and they may have some patent flak. The company is also a $300m revenue company with service businesses, plastics 3D printers, scanners and much else besides.
Additive Industries has sold its highly productive machines to aerospace companies but it has only recently launched its first machines and is much smaller than Arcam/SLM.
Aspect is a Japanese company that makes SLS systems and developed a metal 3D printer last year. Matsuura has a very innovative Lumex DMLS and milling combo unit but it is virtually unknown outside Japan. OPM Laboratory has recently launched a similar system but both are aimed at the mold making industry not aerospace.
There are a number of Chinese companies such as Beijing Long Yuan, EPlus3D, Huake 3D, Farsoon, etc. But, these are virtually not sold outside of China. There may also be some patent issues with some of the Chinese companies as well.
DM3D (Pom Group) is a DMD (Direct Metal Deposition/Direct Energy Deposition) service. Crucially it has access to key DMLS patents. I’m guessing they’ve popped open the champagne today.
In total worldwide the number of companies that sell machines that can 3D print metal parts that can be used for mechanical aerospace components is 17 (I’m not counting POM because they currently don’t have a DMLS machine on the market even though they do make large structural aerospace parts using DMD). Of those there are only six that have been selling machines to manufacturing companies and aerospace for over 5 years: Realizer, Arcam, ConceptLaser, EOS, 3D Systems and Renishaw. For Renishaw and 3D Systems metal 3D printing is a small part of their business. Of the remaining four GE just bought two of them. The combined Arcam/SLM Solutions unit would be the third largest metal 3D printing company worldwide behind EOS and ConceptLaser.
I think that GE has made a very astute purchase. They’ve bought a leader in metal 3D printing. They now have access to two different metal 3D printing technologies. Apart from these businesses and the general market growth in 3D printing itself this purchase could bring them advantages across their businesses. By owning a powder manufacturer, manufacturing orthopedic implants and manufacturing machines they could speed up their industrialization of 3D printing.
The universe of metal 3D printing OEMs for aerospace parts is very limited at the moment. In combination with their previous purchase of Morris they will have acquired a wealth of institutional knowledge as well as patents and 3D printing for manufacturing know how. A slight advantage in making their aero engine components lighter and more efficient could mean huge gains for the company. This forces competitors to acquire or develop their own metal 3D printing technologies. If using 3D printing across GE can accelerate their product development than this may well be a huge boon for the company in its own right. All in all, they cut a big check for a check. Let’s see if they can turn that into a checkmate.