Ford and Daimler Embrace 3-D

Ford Motor may have a mammoth research, development, and engineering budget of $5.3 billion, but it also recognizes the value of spending micro amounts to invigorate its innovation. Recently, Ford engineers have utilized open-source 3-D printers made for the home market to improve their development process for new vehicles. In Ford's Silicon Valley lab, engineers email design files for small parts such as gauges and gear shifts to their counterparts in Dearborn, Mich. The Dearborn engineers then use the files to generate plastic, three-dimensional prototypes on a desktop 3-D printer that can be ordered off the Internet from MakerBot Industries at a cost of $2,200.

Based in New York City, privately held MakerBot manufactures personal 3-D printers for DIY ("do it yourself) consumers. MakerBot competes with 3D Systems , which targets the personal, educational, and industrial markets with its range of 3-D printers. 3D Systems is a market leader in the emerging field of 3-D printing, and as one of the few public 3-D companies, it's a beneficiary of the growing interest in the market potential of this technology. 3D System's stock gained nearly 250% last year, and sports a market capitalization of $3.47 billion. MakerBot, while backed by a mere $10 million in venture capital, has attracted the interest of some shrewd investors, Jeff Bezos among them. It also has grabbed market share of 22% in the personal 3-D printing market.

Ford intends to put MakerBots in the hands of every engineer in 2013. Here's an image of MakerBot's latest model, the "Replicator 2," to give you an idea of how personal 3-D printers are coming to resemble the familiar desktop paper laser printer, although it must be acknowledged that the Replicator 2 is one sleek machine and more inspiring than anything you'll find printing in 2-D:

Source: MakerBot Industries website.

The Replicator 2 "prints" in nontoxic PLA filament, a corn-based polymer similar in look and texture to plastic. As with most other 3-D printers, it builds objects in very small layers, 100 microns thick, or one-tenth of a millimeter, to be precise.

What's in it for Ford?
One of the most tangible benefits of collaborative 3-D printing in automobile design is reducing the long cycle from dreaming up an automobile to rolling the first model out onto car lots. The "time to market" from concept to production for a new automobile can range anywhere from two to four years on average. For a high-selling model like the Ford Escape, which ranges in price from $22,000 to $32,000 and which averaged U.S. sales of 21,750 per month in 2012 , this can mean upwards of $1.5 million in revenue in Ford's sales ledger for every day that is reduced in time to market.

Ford's global auto development system is destined to wear out the heads of its MakerBot printers. Designed to facilitate efficient vehicle design, Ford's engineering process is described by the company as a "hub and spoke" approach. One product engineering hub is allocated to each global vehicle line. The spokes are regional engineering centers that help tweak vehicle design for local markets. Ford will certainly shoot for faster local market customization using rapid 3-D prototyping.

Additive manufacturing: adding lasers
Daimler AG is also using advanced processes during development to cut time to market. Daimler works with German company Concept Laser and R&D center ILT Fraunhofer to bypass the time-consuming die casting process. Concept Laser develops "additive manufacturing" machines. Additive manufacturing can refer to any additive process (such as 3-D printing with PLA filament), but in the automotive industry, it also refers to a process in which metal powders such as aluminum, titanium, nickel, and cobalt are fused by laser to produce lightweight, super-strong alloys. The alloys are fused on a plate, and similar to 3-D printing, objects are built in very fine layers.

To assist Daimler, ILT Fraunhofer supplied its knowledge of laser melting, and worked with Concept Laser to develop an industrial machine, dubbed the X line 1000R . Rather than outsource dies to automotive suppliers, Daimler can use the X line 1000R to churn out dies for parts in-house, which should also facilitate experimentation in the development phase. In the future, Daimler will also be able to manufacture larger lightweight automotive parts and structures using this and similar machines.

While laser-based additive manufacturing is still evolving, the potential payoffs for Daimler are impressive. An example is the use of lightweight materials in its truck division. Lightweight materials mean greater payloads, better fuel economy, and reduced environmental impacts for commercial trucks. All are competitive selling points for Daimler. The X line 1000R or variants will eventually be used in high-volume production. At nearly 29 billion euros, the truck division represents 27% of Daimler's revenue. A little leverage from additive manufacturing should go a long way both in terms of revenue and margin for this division. Incidentally, Daimler's North American truck segment uses printers from 3D Systems in its pre-production quality-control process.

Current investment, future impact

In the fast-changing global automotive market, it can be difficult to tell whether an entrenched manufacturer is retaining its long-term edge over its competition. By embracing 3-D printing and additive manufacturing, Ford and Daimler are exhibiting a desire not only to maintain their respective edges but to sharpen them. Long-term investors should appreciate the outsized benefits to be realized by both companies from pocket change investments in these technologies.

3D Systems is at the leading edge of a disruptive technological revolution, with the broadest portfolio of 3-D printers in the industry. However, despite years of earnings growth, 3D Systems' share price has risen even faster, and today the company sports a dizzying valuation. To help investors decide whether the future of additive manufacturing is bright enough to justify the lofty price tag on the company's shares, The Motley Fool has compiled a premium research report on whether 3D Systems is a buy right now. In our report, we take a close look at 3D Systems' opportunities, risks, and critical factors for growth. You'll also find reasons to buy or sell, and receive a full year of analyst updates with the report. To start reading, simply click here now for instant access.

The article Ford and Daimler Embrace 3-D originally appeared on Fool.com.

Fool contributor Asit Sharma has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Ford. The Motley Fool owns shares of 3D Systems and Ford and has the following options: Short Jan 2014 $55 Calls on 3D Systems and Short Jan 2014 $30 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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