Is the 3D Printing Industry a Growth Opportunity?

Is the 3D Printing Industry a Growth Opportunity?

Congress recently renewed a ban on firearms that can't be detected by metal detectors. Part of the driving force behind this renewal was an increasing fear that 3D printing technology could be used to create "undetectable" guns for criminals on a large scale. While those more familiar with 3D printing tend to agree that this is an unlikely scenario, the hype grows each time a new 3D-printed gun is unveiled or test fired.

Despite the fear that occasionally surrounds the popular notion of 3D printing, the industry as a whole is doing quite well. This is due to both an increased industrial presence and a growing consumer interest in 3D printers. Unfortunately, this has also led to a "gold rush" effect where people who may not spend much time analyzing specific industry players are trying to buy in early because they think that 3D printing is going to change the world. Getting in on the ground floor is well and good, but buying blindly can lead to you missing the best opportunities in the industry.

So what is 3D printing, anyway?
Before buying into any industry, it's always a good idea to know at least a little bit about it. In the case of 3D printing (also sometimes referred to as "additive manufacturing"), there's a lot to know. While the popular image of 3D printing is that of a machine that prints three-dimensional objects using various plastic filaments, a wide range of materials and techniques are actually used in 3D printing.

The most common forms of 3D printing are extrusion and laser sinistering. Extrusion is the "classic" form of 3D printing, in which a filament is heated to the melting point and pulled through a nozzle to create thin layers on the print bed. Laser sinistering, on the other hand, uses powdered materials such as plastic or metal and selectively focuses a laser into the powder to melt particles together. Other forms use lasers and reactive liquid resins, sandstone, or other non-metal/non-plastic powders, and even pneumatic-driven plungers to deposit and form wet materials ranging from clay to potatoes. Each printing method operates slightly (or sometimes significantly) differently, so the term "3D printing" is more of a catch-all term than an actual manufacturing process.

Is 3D printing a growth industry?
Because 3D printing can use such a wide range of materials and has the ability to create complex representations of 3D models in a relatively short period of time, it's likely to be in demand for quite a while. Industrial demand is greater than commercial demand because of the usefulness of rapid prototyping and complex tooling to industry. That doesn't mean that there is no commercial interest, though; 3D Systems produces a full line of commercial 3D printers that are sold through retail outlets including and Staples, while its primary competitor Stratasys purchased the well-known commercial-level 3D printer manufacturer MakerBot earlier this year.

There are a number of smaller companies in the industry as well, and this makes it ripe for growth through acquisition. In addition to the MakerBot purchase, Stratasys has purchased companies such as Objet to gain access to new printing technologies and expand its potential market. 3D Systems has made a number of acquisitions as well, including its recent acquisition of filament maker Village Plastics and the acquisition of laser sinistering firm Phenix Systems in July.

Is 3D printing the way of the future?
There's little doubt that 3D printing is changing the way that industry works. Highly diversified companies such as GE are very interested in 3D printing because of its uses in fields such as aeronautics and manufacturing; complex metal parts and plastic prototypes can often be made faster and cheaper using 3D printing technology than traditional tooling methods. In time, some parts of industry might transition significantly toward 3D printing technology once it can consistently create production-level results.

That said, 3D printing technology isn't likely to completely replace traditional industry. Some parts of the industrial process will likely remain cheaper if the work is done manually, and 3D printing has a long way to go before it can replicate the on-the-spot fixes and quality control that human workers provide. Consumer-level 3D printing is also unlikely to replace traditional shopping anytime soon simply because of the costs and limitations inherent in the medium.

As industrial and commercial acceptance of 3D printing technology becomes more widespread in the coming years, expect some very interesting changes to occur. Just keep in mind that while 3D printers may help to drive that innovation, it's the individuals and companies that use them that are the true innovators.

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John Casteele has no position in any stocks mentioned. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys and has the following options: short January 2014 $20 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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