3D Printing Stocks Crushed in Clash of Cultures, Expectations

The lines between technology and manufacturing are blurring fast, and, for many who work and invest in this area, it can be a most uncomfortable and confusing time.


Just ask that bespectacled young developer Owen from those round-the-clock GE commercials, when he tries to explain how he’s changing the world with machine-to-machine communications to a table full of peers engrossed in a silly cat app.




As we enter the Fourth Industrial Revolution, a long list of software and technology companies are trying to transform into providers of manufacturing technology — the technology that helps to make things in a factory.


That list includes HP, which has said it intends to “change industries” and launch a 3D printer, but it also includes companies that have long had a foot in manufacturing, such as Cisco, Microsoft, Dell and others. Throw a rock in Silicon Valley these days, and you have a good chance of hitting a tech company trying to improve its footing in the manufacturing sector, with chatter about the Internet of Things and Big Data.


But the same can be true in the Midwest, where manufacturing technology companies are trying to put more emphasis than ever on the Information Technology (IT), or digital, part of what they do.


As GE Chairman and CEO Jeff Immelt told a crowd at the Minds+Machines summit in 2014: “If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company. … This change is happening in front of us.”


Just this past week, I was in Florence, KY, where Japanese machine tool giant Mazak, in partnership with IT leader Cisco and machine-to-machine software provide Memex, Inc., launched SmartBox, a small networking hub that will help small and medium manufacturers simplify the complex transformation into smart factories.


Apple CEO Tim Cook in 2014 observed this kind of change coming, too, when he said that “the lines between hardware, software, and services are blurred or are disappearing.”


But so far, this whole revolution is causing a lot of confusion — and it’s not going especially smoothly.


Nowhere is this rub more evident right now than in the 3D printing sector, where makers of so-called additive manufacturing technologies are gasping for air.


In December 2013, right around the time of the international Euromold trade show, 3D stocks were running high, awash in the kind of hype that is common to the technology sector where new iWidgets are churned out quickly, along with profits.


Back then, a share of Stratasys, based in Minneapolis & Rehovot, Israel, was $130-plus; 3D Systems, based in Rock Hill, SC, surpassed $90 per share; and metal 3D printing company ExOne, based in North Huntingdon, PA, was in the $60-range. A piece of the German Voxeljet was riding the higher tide in the $30s.


On Friday, shares of 3D Systems closed at $10.06, Stratasys at $25.50, and ExOne at $10.70. Voxeljet was at $6.09. Those are the kind of prices that demand management change, and thus it came.


That week, 3D Systems President and CEO Avi Reichental left the company, which will now be overseen by a management committee chaired by Chuck Hull, regarded as the grandfather of 3D printing. He is also the co-founder, director and chief technology officer of 3D Systems.


Stratasys, co-founded by S. Scott Crump, took a different approach, announcing it had hired Dell Inc. veteran John Gould to serve as president of North American operations.


At ExOne, change came a little sooner, when former President and COO David Burns was reassigned and then quietly departed. A few weeks ago, I bumped into Burns, the highly respected former CEO of Gleason Corp., a machine tool builder in Rochester, NY, at an event for the Association for Manufacturing Technology, where he is now a senior advisor.


After a short chat, it became evident to me that these companies are being bruised and crushed in a massive culture clash.


How so? Technology runs fast. It gets to develop products primarily in a virtual world and solve glitches with upgrades. Typically, nobody dies if your smartphone is a flop or your software crashes.


Manufacturing, however, works in the real world, where repeatable, high-quality results can seriously be life-and-death matters. Go ask GM about ignition switches or Takata about air bags. Better yet, take a closer look at what’s going at Tesla.


The hard truth for investors is this: manufacturing technologies, such as 3D printing, often require decades, sometimes even, gulp, 4-5 decades to develop. 3D printing of plastics has been in development since the 1980s, with metals being a much newer phenomenon, and developing new materials and improving print speeds and quality is painstaking work.


This is why most of the world’s manufacturing technology companies, including many of the most successful ones, such as Trumpf in Germany, Fair Friend Group in Taiwan and Mazak, are privately held, where they don’t have to deliver quarterly reports to impatient investors.


In May, New York Times columnist Paul Krugman, in a piece entitled, “The Big Meh,” asked whether the technological revolution has been overhyped, questioning the real value of it all. “Maybe my friends at Google are right, and Big Data will soon transform everything,” he wrote. “Maybe 3-D printing will bring the information revolution into the material world. Or maybe we’re on track for another big meh.”


Despite all of the challenges and time it’s taking, I can report that many in both technology and manufacturing remain absolutely bullish about the possibilities, which are just beginning to ripen.”We remain convinced of the long-term growth opportunity within 3D printing,” David Reis, CEO of Stratasys, said in a statement after delivering disappointing third-quarter results.


In fact, many within the advanced manufacturing sector remain downright excited about what’s coming.




During a presentation at Mazak, a youthful manager from Cisco, Bryce Barnes, stood under a big PowerPoint slide that read, “A New Way of Thinking About Manufacturing.”


He was awash in excitement about the Internet of Things, smart factories, fog computing, big data and machines-as-a-service. “I think it’s going to become cool again to work in manufacturing,” he predicted. “It’s the integration of the virtual and real.”


I think Barnes is right, of course. But I also know this is going to be one long, complicated road trip. I just hope the technology and manufacturing guys can get along on the trip. And if you’re an investor thinking about coming along for the ride, do your homework about what strange detours and hazards may lie ahead.


This article originally appeared at AdvancedManufacturing.org.

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