3D Systems has come together as one, with a clear vision to be a holistic solutions provider for AM production. After a period of great expansion and after dealing with the subsequent challenges due to “over-expansion”, the company is now starting to reap the benefits. The new executive team led by Vyomesh Joshi brought a clear vision of the road ahead. And it is one that – for the immediate future – rhymes with AM service and on-demand production. The brand new Advanced Additive Manufacturing Center, just inaugurated in Pinerolo, Italy, clearly shows what the company can do in terms of on-demand production. During the inauguration, 3D Printing Media Network had the unique opportunity of speaking with 3D Systems Executive Vice President of Operations, Phil Schultz, who oversees all back-end operations, including all global production facilities, customer service, AM system and AM materials production, in both plastics and metals. In other words, all aspects of 3D Systems’ global supply chain logistics, including on-demand manufacturing. In the following exchanges, we’ll dive deep with Mr. Schultz into the key elements of the company’s strategy, for all these segments, from here on out.
Davide Sher: It has been quite a journey for 3D Systems in the past few years. Now it seems that the company is ideally positioned for the future. Would you agree?
Phil Schultz: “Yes, it was quite a period, with some 54 acquisitions carried out. Some of us lost our identity at one point, however over the last three and a half years, we were able to truly focus on undergoing a transformational journey. It was really a turnaround time for the company. Now we are ready to really build upon the initial vision, as one of the largest and most productive additive companies in the world and live up to that potential.”
DS: Even Proel, here in Pinerolo was one of those acquisitions and yet it has now become a stronghold for you in Europe.
PS: “Exactly. You have to consider that 26 of the 54 acquisitions were in the OD space. And some of those are now the most strategic. We now have a presence at five locations across Europe, four for OD and one that is more like a factory in Leuven. We are able to offer an ideal blend of services. High Wycombe, just outside of London, is our center of excellence for metals within OD, here in Pinerolo we are more focused on high volume plastics. In Le Mans, France, one of our specialties is 3D printed patterns for investment casting, while Budel, in South Eastern Netherlands, is specialized in concept modeling. They can do phenomenal finishing, blending both additive and traditional methods. They can make products that look exactly like the final ones, even very complex objects such as an MRI machine or a refrigerator. Leuven, in Belgium, is our design center for metals. It is also a large healthcare and aerospace factory for metals production. So, they are focused exclusively on metals.”
DS: So mostly medical and aerospace applications…
PS: “Yes, those aren’t the quick turn projects that you would get out of an OD facility, where we focus on fast turnaround, small scale production, but rather long term, multiyear projects. Within the OD facilities, the projects we undertake are shorter term – three to six months – with some exceptions. For example, here in Pinerolo, we have a multi-year contract with BMW for the production of frames.”
DS: How do you coordinate so many different activities?
PS: “3D Systems is organized in business units, which are the vertical product generation side of the equation. Then we have the back-end processes, which are more horizontal. The business units are focused on different technology or application segments. Organizing all these aspects of a business requires a degree of flexibility. It needs to be this living conversation because the technology is still nascent. We’re still emerging with it. It’s mature in some respects, but for others, it’s really not. You need to be able to pivot and change as the industry itself evolves.”
DS: What are your primary objectives here and now?
PS: “If you look at the manufacturing sector, I think the estimate right now is that global manufacturing is worth something like $13 trillion. Even if we take the low end of this estimate at $10 billion, AM still doesn’t even register on it. However, the beautiful thing about big numbers is that just 1% of 13 trillion is still $130 billion. I’ll take that or even less than that. We don’t need to hit the center of the target to generate a lot of value and that, quite frankly, is part of the realism you hear from us here and anybody that’s in the industry. We don’t believe that additive, is going to replace traditional industrial manufacturing and it doesn’t need to. We are going to complement and supplement machining because there are some things that those technologies can’t do as efficiently as additive. This changes the nature of how you go about and do your job, how you solve problems and how you serve customers.”
DS: Which do you see as the most interesting growth area for 3D Systems?
PS: “We’re focused on trying to shift the technology from its niche as a prototyping technology to a viable production technology, and that’s across metals, plastics and software. The question we have been asking is ‘how do we move this out from engineers who have known about prototyping with an additive for 20 years?’ In the 1990s I was building R&D prototypes with stereolithography and SLS. It’s interesting and, as my CEO would say, ‘That’s interesting, but it’s not fascinating.’ Today fascinating is how can we move into production, whether with direct or indirect AM processes.”
DS: Which are some of the most successful examples of this transition?
PS: “One of the clearest examples of this is Invisalign, one of our largest customers: they produce 340,000 dental aligners a day. Every one of them is unique, never to be produced again, but it’s an indirect manufacturing process. We also participate in the gold jewelry market where we probably have a 30%-35% penetration for making wax patterns. One of the more recent applications is again in dental, for crowns and bridges: we can produce a bridge at 90% cost savings versus traditional methods, in hours instead of days or weeks. These applications are taking full advantage of our technology: a success case is based on choosing the right application with the right material set and the right economics.”
DS: There seem to be so many cases that clearly show the benefits of AM. So why aren’t companies using it more?
PS: “I’ll give you an analogy for my personal background. My original training is in electrical engineering. Microprocessors changed the way we solve problems, and if you look over the course of the next 10 to 15 years, it led to us digitizing the world. That’s how we solve our problems today: we digitized it, we turned it into math, and we processed it, right? But that was a 20-year journey. Additive has got to have the same transformational journey within the way we design. If you think about designing with additive in mind, you effectively have to unlearn 30 years of practice that you were taught about draft angles, geometry, and how complexity is your enemy. Now, Additive comes along, and we say: ‘Forget all that’.”
DS: Now part complexity is your friend…
PS: “That’s where the emphasis needs to be in getting that next generation of engineers to come through, finding those trigger applications, finding the specific cases that really hit that intersection of attributes really is pivotal to us achieving the next level of adoption.”
DS: How is that reflected in what you are building here in Pinerolo?
PS: “We have two facilities similar to this. Another here in Europe and one in the US. We refer to them as streamlined facilities or Advanced Additive Centers of Excellence. In this center of excellence, we can demonstrate the ability to scale from prototyping to more medium and long term production. In this particular facility, a large portion of the clientele is in automotive. Probably 70% of what flows through here is destined to the auto industry. We work with all the big names that you could think of BMW, Fiat, Ferrari… they all go through this facility. We’re looking for long-term kind of innovation, long-term use of the technology.”
DS: It’s fascinating to learn that business and work is brought here from abroad, a true opportunity for the local community.
PS: “A big chunk of the revenue here does flow from outside of Italy. We have a global network. We have competency centers based on different technologies. For metals, I’ll take you to High Wycombe because that’s where the metal center is. If you want casting patterns, we’ll go to France because that center that’s where it is, but I’ll give you the same level of delivery. I’ll give you the same level of quality, I’ll give you the same consistency. Here is more about the core SLA technologies, with a little bit of injection molding that supports CNC, because again, it comes back to the central theme that we have to be a holistic solution provider. If we had a narrow approach and said, ‘we only do Additive’ we’d be missing the boat.”
DS: 3D Systems wants to be a holistic advanced manufacturing service provider, but you are also, ultimately a hardware manufacturer. Do you expect there would be a lot of companies that would bring this kind of production capabilities in-house?
PS: “Absolutely. From a 3D systems perspective, if you ask us why are we in the business of service bureaus? We make machines, we make materials and that’s just where we started our business. We sell hardware to service bureaus, in fact, that is one of our target segments and there are a few reasons for this.”
DS: Can you go into more details?
PS: “The first and foremost is business development. How do we get AM from $6 billion to $12 or $20 billion? We need to lower the barrier to entry so I that it is easier for customers to understand the technology. What better way to do that than by providing a service? Rather than forcing them to make a large capital investment, we’ll make parts for them. After a while, we see that companies realize that they are spending a lot of money on parts that they could make in-house, so they buy the systems. The very interesting part is that we see that at that point they don’t stop being a service customer. Some of our largest machine customers are also some of our largest services customers because you might buy one or two machines or three machines or five machines with some set of materials, but you want access to all the other technologies and materials as well. You want access to our expertise so, we actually move you down that journey to the next and the next level.”
DS: Which is?
PS: “The second key reason is that by consuming our own technology we become better technology providers. We run it in our factories so that we get our own feedback faster about how our machines work. Then we can build better machines and produce better materials to solve our customers’ problems.”
DS: The idea, I guess, is when they will have 50 machines in-house, you will have many more than that in your service centers…
PS: “Exactly, and then the last thing ultimately is, we make money. It funds development. It gets customers into AM. We had 136 customers at this inauguration who have traveled from multiple locations to learn about our and capabilities at this production facility. This is key to building up our online presence in Europe. Along with project-based work, we want to cater to the broader dynamic of engineers working on a design at their desk and then just wanting to print it out. Our e-commerce website is very strong in North America and it’s a capability that we want to have across Europe. We’d like to engage with engineers and companies across Europe by offering them full access to everything that we can do.”
DS: How do you deal with the fact that some of your customers in this space are also your biggest competitors?
PS: “It’s true, companies like Protolabs are among our larger customers but it’s not something entirely new. When I worked at HP, we had a similar partner/competitor with Canon. The tech world is full of these relationships where your friends are your enemies and your enemies are your friends, and it depends on who you’re talking to. The way we deal with it is we firewall the different divisions so that we don’t cross contaminate. We run partnerships and events with our partners because ultimately if we grow the market collectively, we all win.”
DS: There’s plenty of room…
PS: “…And if I get worried about market share about today’s tiny market, and don’t have a clear vision for growth, we’re all going to lose. If we scramble around for the table scraps, it’s a waste of time because all of us could go after a seat at the big table. I’d much rather make that investment, and if five years from now, we figure out, hey, the market’s grown and I don’t need to participate in the business development side, then fine. I’ll go spend my energy somewhere else.”
DS: The underlying idea is that AM hardware companies will boom when manufacturers will bring production in-house. Of course, AM services could be doing even better then.
PS: “If you want to hit that high volume there are four key user needs we have to meet. We have to hit productivity, so we have to be faster. We have to offer repeatability, so parts have to be accurate and consistent. We need durability so we have to have material attributes that actually can hold up to the application that customers require. The last one is the cost of operations. So, the cost model and the economics have to work.”
DS: Where do you think you stand on these?
PS: “Over the past decade, we have been working on checking those boxes. In the plastics world, we think we’ve checked three out of the four. We think we’ve got productivity; repeatability and we’ve actually got the cost to where it’s okay. The question mark is do we have all the right material properties necessary for the applications? We believe that is where the battle is going to be. It’s going to be in the materials arena.”
DS: What about metals?
PS: “In metals, we’ve checked some of these boxes for at least some applications. In many cases productivity is still low. It’s hard to get high volume production through a DMP solution just because of the nature of this process. When a build takes 5 or 10 days, you can’t think about that as a volume process. So, you have to have the exact right application for it to justify it.”
DS: Changing the subject, how do you feel about competition from China in terms of AM hardware technology? We generally tend to dismiss Chinese companies, but they are making significant progress…
PS: “Anyone who works in the tech industry and doesn’t respect what Chinese competitors can do isn’t going to be around very long. Of course, we respect that. I spent several years working in China, however, if you look at what we see coming out of China today, particularly in the additive space, we still don’t see a lot of technological innovation. What we do see is ‘good enough at low cost’. It’s good enough, cheaper, and relative to existing applications but this is not going to fuel industry and market growth. Our challenge is to understand where we can truly innovate. If someone becomes able to do what we do for fewer costs, then we are not innovating enough.”
DS: You spoke about innovation and metal throughput. So how do we innovate to the point where metal AM becomes more highly productive?
PS: There are some technologies evolving in this sense. There is binder over powder and a few other ways to make metal parts. Today powder bed fusion still offers the highest quality and best precision of any of those technologies. In this sense, we have a linear progression of this technology, with multi-laser systems and larger beds. Our DMP Factory 500, which is the newest system coming out, has a 500 by 500 by 500 millimeters, so half a meter cube of build volume, with three lasers which results in much higher throughput. But it’s a linear progression, not a disruptive change. I can see us getting there faster on the plastic side. We have things in the works that are potentially disruptive. However, the metal side, at the moment, is still on an evolution curve rather than on a revolution curve.”
DS: Do you think that upcoming metal binder jetting technologies could represent a disruptive change?
PS: “At this time, you can use them to make decent parts. The process is limited by the thermal cure post binding process which makes it very difficult to maintain dimensional accuracy in differential strengths and other aspects. It’s purely an issue with the physics of the technology. It does have its applications: HP and others have proven that you can do some really interesting things with it. Part of the challenge for anyone working in additive is that you need a portfolio of solutions to really solve the customer problems. That’s why we live with the complexity of managing multiple technologies: we think it’s the best service we can offer to our customers.”