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 / Winter 2013 / Issue 73(originally published by Booz & Company)


A Skeptic’s Guide to 3D Printing

The world of 3D printing presents a vastly different scenario. A printer for metal cannot print ABS plastic, and one that prints ABS plastic may not print any other type of plastic. And although designers continue to make digital printers simpler, there remains a required minimum level of technical know-how that is far greater than that needed to operate an ink-jet or laser printer. Moreover, even if we assume digital printing will get simpler over time, we should recall that despite the ease and convenience home printers offer, many people still outsource larger jobs to FedEx Office or Staples. It’s therefore a stretch to envision a near-term future in which the typical consumer uses a 3D printer at home to make a plastic fork or a chess piece rather than buying it from Walmart.

Perhaps we’re wrong, and the 3D printer will become as easy to use and as ubiquitous as a smartphone. If the industry produces millions of printers per year, the high volume would move the device down the experience curve more rapidly—but with how steep a curve, and how fast would volume doubling occur? Under even the most optimistic forecasts, growth in digital printers’ sales would pale in comparison to the unit sales of the ubiquitous microprocessor. Digital printing will get cheaper, but it will likely not have the volume to emulate Moore’s Law. Furthermore, unlike microprocessors, a 3D printer is an assembly of various older technologies. The microprocessor running the printer will drop in cost rapidly, but many of the parts, such as the actuators moving the print head, are already far down their own curves and have limited further potential. And a significant portion of the cost is in the physical structure or casing of the printer, which does not benefit from miniaturization (unless you care to print only really small items). Thus the experience curve for 3D printing is likely to be more like that of the gas range than that of the microchip: a significant but not earth-shattering slope, and a relatively slow doubling.

Manufacturing Cost Drivers

Experience curves offer one way to analyze the viability and potential of a new technology. But assessing the predictions of structural changes to the manufacturing industry, such as those prompted by the current hype around 3D printing, requires the application of two other well-tested concepts: economies of scale and total landed cost. When considering how and where products will be manufactured, size matters, but so do location and the cost of transportation around the globe.

The concept of economies of scale dominated business thinking in the early stages of the Industrial Revolution. The theory built on Adam Smith’s observations about the benefits of the division of labor, concluding that larger companies would have greater opportunity to create specialized labor categories. Over time, the focus shifted away from simple division of labor to automation for eliminating labor. Larger companies could invest in advanced production technologies, creating more output with fewer resources. The proof of the concept could be seen in the growth of focused corporate behemoths such as Cadbury, General Motors, Siemens, and U.S. Steel. During the first half of the 20th century, such companies exploited their manufacturing prowess and resulting scale economies to serve the global market.

Midway through the 20th century, the application of scale economies to shipping helped drive the current paradigm of extensive global manufacturing. In 1956, trucking entrepreneur Malcom McLean purchased a shipping company to pursue his idea of standardizing intermodal shipping containers. He realized that global supply chains could be leveraged more efficiently if truck trailers could be loaded onto ships and unloaded without emptying the containers and repacking the contents. Container ships allowed manufacturers to take advantage of low-cost labor in developing markets by cost-effectively shipping the goods back to developed markets.

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