11 July 2019 13:55
State of the 3D Printing Industry for AM Service Providers: 4 Key Insights
The week, AMFG released its first State of the 3D Printing Industry Survey Report, which looks at the key trends within the AM service provider market today. We surveyed service bureaus in over a dozen countries to find out, first-hand, how this segment is fairing, and the overall outlook for the next 12 months.
The service provider market in 2019
Service bureaus have been a cornerstone of the additive manufacturing industry since its inception, and they continue to play a pivotal role in driving the industry forward. The ability for companies to outsource 3D printing production, has, in many ways, helped to further the advancement of the technology, particularly as the market shifts to production applications.
In short, service providers are key to the industry’s continued success.
Our research set out to uncover what it is like to operate a service bureau in today’s manufacturing landscape. Additive manufacturing is now, of course, considered to be a viable manufacturing technology, and there are exciting developments across the spectrum of hardware, materials and software.
Through our survey and interviews with experts in the field, we discovered:
- Current trends when it comes to the technologies, applications and industries driving the services market;
- Key insights into how service bureau owners see the industry’s future;
- The biggest challenges facing service bureaus today.
We have outlined the findings in some more detail below. You can also download the full 36-page research report using the link below.
Download AMFG’s State of the Industry Survey: AM Service Providers
1. Lack of education around 3D printing was cited as the biggest challenge facing service bureaus today
As part of the survey, participants were asked the question, “What would you say is currently the single biggest challenge facing the service provider market today?”
By a wide margin, the biggest challenge respondents reported facing was the lack of thorough understanding of additive manufacturing, even among large, industrial clients.
For some, this result may be surprising, given the increased awareness and coverage of 3D printing technologies in recent years.
However, in spite of this attention and public awareness, respondents reported that customers still had vital knowledge gaps when it came to understanding the capabilities and limitations of 3D printing. Additionally, there was a lack of knowledge about the sheer range of technologies available, as well as the types of applications that would be best suited for the technology
Indeed, there is still a common view that parts produced with traditional manufacturing can simply be substituted with additive manufacturing. This, of course, is not the case.
As one respondent noted, “Customers need to understand that for 3D printing to bring value to a product, it has to be designed for the process. It’s not just a case of using 3D printing to reproduce a part that was previously made conventionally.”
There was a call among respondents for a better understanding of the need to design differently for additive manufacturing. This call echoes industry-wide talks around design for AM that have taken place over the last few years, particularly as the industry begins to shift its focus to end-part manufacturing applications.
Additive manufacturing offers great geometrical complexity and freedom of design that cannot be achieved with traditional manufacturing methods. The ability to produce lightweight parts and optimise product performance is another boon.
However, leveraging the benefits of the technology means adopting a new approach to designing for AM. This is because the design considerations for AM and traditional methods differ immensely.
Of course, educating the next generation of engineers, designers and other industry stakeholders is not just in the interests of service bureaus. The further advancement and adoption of the technology rely on all industry stakeholders to proactively disseminate knowledge and educational material to demonstrate not only what 3D printing can do — but also its limitations.
Respondents also raised the issue of better education around the pricing of parts. One stated, “The limited public understanding of 3D printing and an ever-growing market for entry-level printers has resulted in customers with little understanding of how much the service does or should cost.”
2. The 3D printing services landscape is becoming increasingly competitive
On one hand, for OEMs, never has the choice of potential suppliers been more diverse. But for service bureaus operating today, never has the landscape been more competitive.
The number of independent service bureaus is growing, as barriers to entry are lowered. A key contributing factor is the continued reduction of the cost of machines, particularly within the professional desktop 3D printer market. This means that it is now more feasible for new companies to enter the market and provide their services than it would have been a decade ago.
At the same time, there are a number of hardware manufacturers that are also offering services alongside their machines. This, of course, could create a conflict of interest for such businesses, as SmarTech’s VP of Research, Scott Dunham, suggests: “There’s the added complication of running a business that is also driven by selling printers directly to some of the same customers you may be printing parts for. It can be a fine line not to significantly impact one or the other.
“This has pretty much always been an issue as long as these businesses have been around because there is an inherent synergy in providing “access” to your hardware products to those who aren’t ready to buy them by printing parts for smaller customers instead of selling them the machine.”
Online manufacturing platforms are also helping to shape the 3D printing services landscape. Operating a Manufacturing-As-A-Service business model, these platforms offer companies access to a global network of suppliers (for both AM and traditional manufacturing services) on demand.
Navigating this dynamic and constantly evolving market landscape is a challenge for many service bureaus.
That said, there are upsides to this increase in competition. Competition can help to drive innovation within the industry by ensuring that businesses stay on top of the latest technological advancements. It also requires businesses to develop agile and innovative strategies in order to remain competitive.
3. Consumer goods, automotive and industrial goods are the industries driving demand in services — but there are some surprises too
Our research uncovered that the industry most commonly served by service bureaus was consumer goods, with 77% of respondents choosing this option. In second and third place were automotive (75%) and industrial goods (73%). This also corresponded with our follow-up question of which one industry contributed the most company revenue: automotive, consumer goods and industrial goods (medical came fourth in both questions).
That these emerged as the top three industries served by service bureaus demonstrates the range of 3D printing applications that have been found in these industries. For example, 3D printing is being used for a range of applications within consumer goods, from product development to some final part applications, and the same is true of automotive and industrial goods.
Interestingly, 64% of respondents offer 3D printing services to the electronics industry, which was higher than we’d anticipated. We assume that such a high percentage comes from the extensive use of the technology in the prototyping of enclosures for electronic devices. However, direct 3D printing of electronic components is a growing area and could be of interest to service bureaus targeting this market.
4. Polymer 3D printing dominates the AM services landscape, but metal 3D printing is catching up
We wanted to understand which technologies were driving the most amount of revenue for service bureaus. Of all the 3D printing technologies, the oldest, and most established were the most common technologies offered: FFF/FDM, SLA and SLS, which achieved 70%, 64% and 62% respectively.
That said, metal 3D printing came fourth, with 39% of respondents offering metal 3D printing services in some form. As the technology continues to mature, we expect that a greater proportion of bureaus will begin to offer metal AM services, due to the added complexity of adopting this technology in-house.
Conclusion: Despite increased competition, the sector is optimistic
In spite of the increased competition and challenges faced, the majority of respondents reported feeling positive about the year ahead, both in terms of their business and in the growth of the industry more broadly.
One pointed to the increase in the number of companies finding use cases for 3D printing: “We’ll see more and more parts being produced with AM, and customers ramping up with flexible and local production. AM will be increasingly used as an alternative for — and extending beyond — turning, milling and injection moulding.”
Another anticipated continued business growth: “We have seen steady growth year on year, and I don’t see that changing in the next 12 months. I think awareness is steadily growing and we are yet to peak.”
These responses, and others, point to a sector that is optimistic about the future of the industry. And there’s much to be optimistic about. The 2018 edition of the annual Wohlers Report reports that independent service providers generated an estimated $2.955 billion in revenue worldwide in 2017, up 36% from the $2.173 billion reported for 2016.
With the additive manufacturing industry poised for continued growth in the year ahead, service bureaus will continue to play a pivotal role. Ultimately, however, success in this dynamic and ever-evolving market will require agility, innovation and, above all, differentiation.
Download AMFG’s State of the Industry Survey 2019 report here.