strategy+business Winter 2013 : Page 24

strategy+business issue 73 essay technology 24 because the capital intensity and de-sire to protect intellectual property far outweigh the higher labor costs. Sewing factories, in contrast, exhibit limited scale economies, because a larger factory would just have more operators sitting behind more iden-tical machines. To produce a steep scale curve, incremental volume has to enable a superior process technol-ogy that would be uneconomical at smaller volumes. Sewing doesn’t of-fer such an option; therefore, most sewing factories are small and found in low-labor-cost countries. Because the best scenario varies by product, manufacturing strate-gists across all industries constantly examine the trade-offs of scale econ-omies, labor arbitrage, and transpor-tation costs in search of the lowest nologies such as injection molding and casting still offer scale econo-mies through mass production. Furthermore, regardless of how cheap a 3D printer becomes, a man-ufacturing plant will continue to of-fer scale economies in the raw mate-rials for printing the artifact. Digital printers typically consume plastic costing roughly 84 cents per cubic inch—dramatically more than the cost of a finished plastic product produced in a typical factory half-way around the world. Brooklyn-based MakerBot Industries LLC offers a one-kilogram spool of ABS plastic for $48, whereas an injection molding plant buys plastic resin in tanker car quantities for a fraction of the price. Home consumers will never procure plastic for their 3D Although we don’t buy all the hype around digital printing, we remain hopeful about its potential for driving change. total landed cost. And the optimal answer changes over time as cur-rency, wage rates, and production technologies evolve. The advent of 3D printing, with fundamentally different trade-offs, thus demands a fresh analysis. Paradigm Shift vs. Hobbyist The argument for displacing Chi-nese workers stems from a question-able assumption that 3D printing eliminates the need to seek econo-mies of scale. However, even though 3D printing enables small-scale pro-duction at the point of need—a sin-gle plastic part could be printed in a home or office—traditional tech-printer at a truly competitive cost. Homemade items offer a nice hob-by, but not a practical alternative to mass-produced goods. That said, although our forecast for 3D printing does not suggest a seismic shift in the fundamental paradigms of manufacturing, it can still have a profound effect on the production location and business models for certain artifacts. For ex-ample, San Francisco–based Mod-dler LLC serves everyone from the casual hobbyist to medical device manufacturers to movie studios by producing customer-designed ob-jects using a $250,000 3D printer. Though the company is initially producing only plastic parts, found-er John Vegher envisions making items from glass, metal, and ceram-ics. Staples has made a foray into this new form of printing in Europe with equipment from Mcor Technologies Ltd., which prints by coloring, cut-ting, and gluing layers of paper into a solid, wood-like object. Proponents of 3D print-ing should focus on how additive manufacturing could provide value in certain niches. For example, the European Aeronautic Defense and Space Company NV has already used 3D printing to manufacture remotely controlled aerial vehicles that provide greater strength at a lower weight than the company had been able to achieve with any other manufacturing method to date, ow-ing to its ability to print the entire wing instead of assembling compo-nents. Building all the parts simulta-neously—or transforming multiple parts into a single part—results in a final assembly that is less susceptible to errors and that sometimes elimi-nates the assembly step altogether. Perhaps the most promising near-term industrial application for 3D printing involves the produc-tion and inventorying of spare parts. For example, NASA is exploring 3D printing for making spare parts and tools aboard the International Space Station. This could be partic-ularly valuable in cases of very slow moving inventory, such as tools or unique replacement parts. In other words, carrying all the tools needed to work on every item in the space station or a spare part for all non-critical items would take a signifi-cant amount of space (and weight), much more than a single printer. Although this is an extreme case (with very low “sales” volume), it’s also possible that companies such as

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