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2021: The Year Of Additive Manufacturing Market Consolidation?

Four major 3D printing acquisitions as of early 2021 [Source: Fabbaloo]

It’s only January, but 2021 already shows an overarching theme in 3D printing: market consolidation.

Historical 3D Printing Industry Consolidation

We’ve seen significant merger and acquisition activity in this industry before. Previously, the biggest players of the day were the biggest drivers as 3D Systems and Stratasys scooped up smaller operations by the dozen. This was literally true at least for 3D Systems, which, by Kerry’s count in 2015, had acquired no fewer than 54 companies. Stratasys had closer to nine acquisitions over that span, but these strategic additions included the likes of Objet and MakerBot, which have since formed foundational parts of the Stratasys 3D printer portfolio.

Kerry also, in that 2015 review, pointed out something interesting in terms of industry consolidation:

“For both companies, we didn’t include patents and other intellectual property gained outside of corporate acquisitions – and there has certainly been some of that, too. Nevertheless, these organizations have been responsible for consolidating at least 62 3D print-related companies into just two.”

The 2000-2015 period was transformational for the 3D printing industry. The technology was growing and gaining interest. However, as we’ve seen since, the hype far, far exceeded the actual capabilities. There’s been, for example, no evidence of “a 3D printer in every house” on the desktop side. Over these years, the industry was doing a lot of growing, a lot of shaping into an actual industry in its own right.

Those years were also headlined by individual market leaders. These were, primarily, Stratasys and 3D Systems. These two public companies captured a hefty amount of both new acquisitions and overall 3D printing headlines.

Then something happened: the hype bottomed out. Around 2015-2016, 3D printing was often declared “dead” in mainstream media headlines. While you know and I know that it was far from “dead”, outside interest dropped significantly as the desktop 3D printers available at the time were expensive, inconsistent, and carried too steep a learning curve for a new casual user to maintain interest.

The “death” of 3D printing was, though, a fantastic time for the industry. The technology kept going. More companies developed more technologies — and more and more of these actually worked. New players emerged on the scene. Some on Kickstarter, to varied levels of realizable impact, but others on the industrial side. New startups focused on new 3D printers, new applications, new software capabilities, new materials. Some of the long-held promises of 3D printing began to deliver. Complex geometries, topology optimization, usable tooling, part consolidation, lightweighting, obviously rapid prototyping; these phrases and more started to pervade reporting on 3D printing technologies. More people started using the phrase “additive manufacturing” as these processes came into play in actual manufacturing operations.

By the late 2010s, we had huge new players on the global 3D printing scene. Unicorns like Carbon, Desktop Metal, and Formlabs proved out their technologies with huge valuations and high-profile partners and customers. HP, Mimaki, and Xerox entered the third dimension. New software companies like Dyndrite and Teton Simulation emerged with promising new approaches to foundational design issues. Autodesk, Dassault Systèmes, Microsoft, Siemens, and other large entities increased and enhanced their 3D printing functionalities. Design itself became a discipline, with design for additive manufacturing (DfAM) an increasingly sought-after skill set. Traditional chemical giants entered the 3D printing materials scene, with high-quality and familiar formulations available from the likes of BASF, Clariant, Covestro, DSM, Evonik, Henkel, SABIC, and Solvay. Certifications — ISO, FDA, and so many more — became pivotal and visible, if not ubiquitous.

And, importantly, companies like Materialise led a call to action for collaboration. While competition ramped up in the industry, large players like HP began to point out with increasing regularity that 3D printing currently accounts for a very small share of the overall global manufacturing industry. Inch by inch, the industry began to realize that collaboration is a necessary way forward for everyone. All boats rise in a rising tide, as it were.

Today’s 3D Printing Industry Consolidation

And here we are now in the 2020s. While we can look back with great clarity on what’s happened in 3D printing, understanding with the benefit of a retrospective where each piece fit into the growing puzzle, we don’t have the same ease in looking ahead. We all have our crystal balls, of course, and can point to trends here and there that we expect to see in a new year. But generally it takes things actually happening to point with greater clarity to overarching themes.

Fortunately, 2021 has started us off in just that way. Not quite three weeks into the year, we already know a few major developments either closing soon or already settled. And those major developments are acquisitions:

None of these things happens in a vacuum, of course. We could quickly see a trend emerging from the Stratasys and Desktop Metal moves, in that polymer 3D printing for production is a priority in business strategy today.

And, naturally, there have been many steps on the way to each of these moves. Desktop Metal, for example, is newly a publicly traded company — which, as that company’s CEO had told us, was a move to position them as an acquiring entity. 3D Hubs pivoted its entire business strategy some years ago to focus exclusively on manufacturing capabilities, positioning them nicely to become part of a larger distributed digital manufacturing company. Origin rejected Stratasys’ original acquisition approach, but working with the company in a partnership to 3D print and distribute COVID-19 nasopharyngeal testing swabs may have swayed the decision to not only work together but fully integrate together.

Each of these four major acquisitions highlights different histories and strategic approaches, but the result overall is too large to ignore: the 3D printing industry is seeing increasing consolidation.

As the technological capabilities continue to develop across the board in 3D printing, more consolidation was all but inevitable. Smaller players with appealing technologies will always be a target for larger entities seeking to augment their powerful portfolios. Such acquisitions are in turn appealing for those smaller players because they immediately gain access to a more expansive network: more marketing, more distribution channels, more expertise and market access — more capital.

Tomorrow’s 3D Printing Industry Consolidation

If 2021 is the year of market consolidation in 3D printing, that opens up an obvious question: who’s next?

As the Desktop Metal x EnvisionTEC deal showed us, the next move may be all-but-impossible to predict. But as the Stratasys x Origin and Protolabs x 3D Hubs transactions show, sometimes they are perhaps something we could predict or at least make sense of immediately. With the Covestro x DSM acquisition, the additive manufacturing materials business was not the first priority in the deal — but ultimately makes a great deal of sense for the two teams.

As more players come together in increasing M&A activity, the 3D printing industry as a whole is repositioning itself on the global stage. This industry is working rapidly to leverage the headway made during the supply chain disruptions that hit in 2020 as the pandemic closed international borders. Distributed manufacturing, powered by digital manufacturing processes like 3D printing, is set to play an ever-larger role in global industry.

Collaboration opened the doors for consolidation. Additive manufacturing is set to see a very interesting year ahead as more strategic moves position the full industry, every “boat”, to rise on this rising tide. We’re sure to see more consolidation — and, of course, still more intra- and inter-industry collaboration.

With the Desktop Metal and Protolabs acquisitions announced within mere days of one another, I know I feel like I’m just waiting for the next power move to be announced.

So, who’s next? In the immortal words of one Mr Bennet, following the engagement of his second daughter within a few days: “If any young men come for Mary or Kitty, send them in, for I am quite at leisure.”

If any new acquisitions come for the industry, send them to my inbox, for I am at the ready.

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