Thursday, December 6. 2012
With the deflation of the Social Media bubble, people have been asking us where the next bubble is going to be. One that is starting to froth is the "Makers" movement - ever since Chris Anderson's latest book, Makers*, the area has been rocketing up our Bubblewatch, overtaking Internet of Things and Quantified Self. The claims for this area are becoming truly hyperbolic - Chris Anderson in the Grauniad recently:
The nascent Maker movement offers a path to reboot manufacturing – not by returning to the giant factories of old, with their armies of employees, but by creating a new kind of manufacturing economy, one shaped more like the web itself: bottom-up, broadly distributed, and highly entrepreneurial. The image of a few smart people changing the world with little more than an internet connection and an idea increasingly describes manufacturing of the future, too.
The problem with a "new kind of manufacturing, shaped more like the web" is that manufacturing "stuff" is a different game entirely, with very different economics in key areas that makes it very very different to Web software. Manufacturing economics is very well understood by those in manufacturing, but sadly seems to have been largely ignored by the prophets of this New New Thing. The key factors to keep in mind are the following:
- Raw Materials - cost money, and have lead times. There is nothing in Webworld like them
Now to be sure, some of the above applies to ICT products, but it is nothing like the scale of capital required and complexity in manufacturing systems.
To demonstrate, let me look at one example of the Maker Revolution, as it is the one that it is obligatory to quote - the 3D Printer. This is going to revolutionise manufacturing, apparently, by allowing grass roots Makers to produce their own stuff in the Rich West, so no longer do we have to buy mass produced goods from China and India et al.
Lets get very boring and look at the basics of production economics though. Firstly, the good old Product - Process matrix:
Product - Process Matrix as applied to 3D printing. Green = viable, Pink = "depends on other factors", red = non viable
What this says is that the more commoditised an item is, the less you are able to price for value, and it is increasingly about lowest cost - which inevitably means mass production techniques, and it is always cheaper to run dedicated equipment flat out in lowest cost economies to make commodities. It also has a corollary - in order to make beautifully crafted or highly personalised artisanal work, you have to be able to charge added value prices to pay for the added costs. But there are limits to how many people will buy the high value (read: up-market) goods and how much they will pay.
So the Product/Process matrix predicts that 3D Printed goods will mainly be low volume, fairly high value goods. Value, of course, does not just mean "above average quality" - people will pay more for the item being available, here, now - or even just available. But there have always been two ways of ensuring something is "here, now" - to wit:
- "Make it here", and
The interplay here is between the cost differences of making it here via this 3D process, vs the cost of buying something made far more cheaply elsewhere and keeping it in stock, over here. This is an interplay between the higher cost of production here, vs higher costs of shipping something cheaper from elsewhere and storing it here. Suffice to say that the hollowing out of UK (and US) manufacturing from the 1990's onwards has been due to the costs of "importing and storing" being better than the cost of "making it here". Attractive though the idea of "low cost craftsmen" is, 3D printing is not per se a cheaper way of making something if you look at it as "just another producton device" - i.e. look at it in terms of it's setup time, run time per unit, % downtime, scrap levels - all that boring old fashioned Industrial Engineering stuff the new groovers hatez. It becomes clear then that the labour used has not got any cheaper, unless 3D printing shops are to rely on Freeconomic labour like Open Source (or Music) does these days, ie doing it for free while working or claiming benefits on someone else's ticket. These machines are no more reliable than any others (probably less as they are both early day machines and also very flexible) so will waste (expensive) labour in setup, downtime and maintenance, they will still need to sit in (expensive) real estate (it's not clear there is any great space saving either) and they will still consume (expensive, not bought in bulk) raw materials. The argument that 3D printers use less raw material only applies if you assume either that (i) material cost is a significant component of cost or (ii) your low cost competitor will not use the same 3D printers where appropriate, with their lower labour, land, and overhead costs, and not buy materials in bulk.
In other words, its not a slam dunk that just making it "here" vs "there" will yield an automatic advantage. Just ask the hundreds of British and US manufacturers who have gone to the wall in the last 20 years, or replaced in-country manufacture with out-country imports.
Then there is the "good enoughs" to deal with - you can lovingly craft a 3D printout of that item, but if I can make a "different-but-does-the same-job" similar item using different materials, and if mine is way cheaper for no discernable reduction in utility, I win.
The other challenge 3D printing has is that it is limited to one manufacturing process - deposition and (for metals) follow on sintering (now renamed as "additive manufacturing", I note...) - and currently only a small selection of plastics, resins and sintered metal powders are usable in 3D printing. Many products are made in other ways, of other materials, or of composite materials. Even products potentially made by these 3D materials may need to have them treated in different ways (for example, it is not enough to be able to make an aircraft turbine blade shape, as in this Economist article - you also have to be able to get the correct properties of the titanium for jet blade use, from pre and post working the metal. You do not want a turbine blade coming unstuck in midflight because a 3D printer-layered metal lattice does not have the strength of a properly formed one.
So in summary, yes, 3D Printing is a fascinating new technology, and will be highly effective in certain niches, and will surely get better over time - but it is not going to facilitate a "second industrial revolution" anytime soon, if ever - there is a vast arena of manufacturing processes it cannot do, materials it cannot work, and products it cannot make. There will remain a vast number of products it can make, but that can be made better/cheaper/faster in another way or place. My bet is the biggest medium term sales will be in areas where its damn difficult to get essential spare parts, for artisanal "uniques" where user involvement in design is a huge part of the value proposition, and in large manufacturing plants who will use some 3D printers as flexible and/or prototyping capacity (as with other CNC machines, the minute something is worth making in volume, you set up a dedicated production system of simpler and cheaper gear).
What is far more likely to facilitate any "second industrial revolution" is the increasing cost of "cheap" labour in those offshore countries, so the economics of making it in China plus long shipping lead times and logistics costs - ships, trucks and sheds - plus teaching your competitors how to copy your stuff, starts looking a lot worse an option than bringing it back home. That is what is driving the current "re-shoring" dynamic. And smart OECD States or regions may perhaps start looking at creating "bring it home" incentives in these straightened times....
*Anderson, you may remember, also proseletysed the Freeconomics concept, which we debunked. 3D Printing, like Freeconomics, is something with limited applicability and only works in certain environments, not a new paradigm shift. It is interesting to note that he has moved from editing Wired to making DiY Drones. I happen to think that is going to be a growth industry, but I would argue that it has little to do with new "Maker" style manufacturing economics and everything to do with mass production of cheap, small and light motors, batteries, GPS and other computing systems, which enable the "Internet of Flying Things", as we have discussed before.
Update - actually, DiY Drones are a good illustration of the limitations of the 3D printer and "maker" logic. There is very little on a Drone you would print rather than use another process, and many of its components need significant assembly as well (eg a motor or a PCB card), and they would cost a fortune to make as one-offs. A Drone also has a significant final assembly cost. Anderson's compamy is seling to the early adopter enthusiast today, who is selling his or her time for free to do the drone building - but I'd bet if this takes off - - they will be going for bulk manufacture and assembly of kits in low wage countries.
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Fascinating analysis. I've been a fan of the maker movement for a decade now (and a casual dabbler myself), but I think this is a good dose of reality that needs to be addressed more. Your post got me thinking, however. Since I'm a designer with some business training and experience, your article makes me want to treat all of the obstacles as design constraints and try to work around them. I know I'm over-simplifying your analysis, but the two core issues are raw materials and distribution/stocking (obviously more complicated than that, but still primary obstacles, nonetheless). From a scenario standpoint, what if:
1) The 3D printer is truly democratized (as it appears to be heading). Let's say it costs roughly the same price as a standard computer printer (about $100 bucks USD). While the materials are currently less than desirable (my cornstarch iPhone won't be too sexy), let's assume that the availability and quality of materials gets a little better.
- If there's enough demand for the printing materials, the costs might stabilize at a reasonable level; and
- If everyone possesses a 3D printer in their own home; and
- Behavior is modified so customers understand that they take on the responsibility of the burden of production...
You could have a scenario where the model shifts and people buy "design" but make themselves in their own homes. There are constraints, of course. The size of objects would obviously be limited unless the technology gets to a point of "print small, grow big" but that's too sci-fi for this conversation. Also, printing the designs you like (and buy) still supports your assertion that the type of goods this movement would focus on are the high-value, low production goods.
2) The model could evolve so that new businesses (or existing Big Box retailers shift their business model amidst a declining value proposition of their business today) take on the responsibility of production. So, you could purchase your neat new design (online or on-site) and drive over to Walmart 3D to pick it up. Walmart might have a small store front, but the bulk of the store would now include advanced 3D printing equipment. They could take on the more advanced printing needs, but the 3D printing movement could reduce the costs so much that it becomes economical to build products on site at the store. An on-demand(ish) model would address the stocking problem, if the technology allows it. This results in business starting to fall into two camps: the designers and the builders. Designers compete to get your attention based on the quality of the design and the need the product fulfills. The builders compete on quality, speed, and cost of production. I know this is starting to drift away from what Anderson is proclaiming, but it might be a more realistic resolution to the movement.
Maybe that's a little too crazy, but not impossible. Your issues with the cost of materials are still completely valid, and make my second scenario challenging. But if someone could crack that nut, you might have a scenario where off-site production of today isn't necessary (at least for some types of goods). And, that may mean that rather than being constrained by the Product-Process Matrix, we alter the dynamics of the process itself by pushing the crosshairs of the diagram down and to the right, incorporating more of the product types into the 'green zone' if you will.
Well, just a few ideas that are food for thought. Thanks for motivating my thinking on this. I'd love to hear what you think (I'm sure there are plenty of holes in my argument).
Guess I better get my butt in gear and get this idea posted on my blog, too (I'll certainly link back to yours). I appreciate your blog, it's very insightful. Keep up the good work.
- Brian Haven
@Brian - taking your 2 points:
1) There are plenty of democratized machine tools around already, and have been for decades - lathes, milling machines, welding gear etc - and these have singularly failed to bring about a 2nd industrial revolution so far. Ditto, home printers have, I would argue, had a niche effect in certain verticals (have actually created some too) but have left the printing industry largely unscathed. Apart from early adopters, people have shown no inclination to take on the burden of production in the past (excepting artisanal or one off craft goods) so I don't believe they will do so going forward.
2) I think this is very likely, it was how PC desktop printing started - you saved the file and then went down to Prontaprint or whatever and they ran off your 100 newsletter copies. But it still didn't supplant industrial scale printers.
The really huge amount of work input in 3D printing is to create a machinable 3D shape of any complexity (ie value). It also requires fairly high skill levels today - and that has a big labour cost for small quantities.
I hypothesisize the real high value industry here is creating the software and designs that makes 3D CAD/CAM shape printing accessible to less skilled people. The downside is that means that large numbers of low wage country, less qalified engineers can outcompete high cost western liberal arts graduate "makers" even more.
Where the value of 3D printing may come is the idea of ownership. Right now there's a lot of cheap junk floating around in the world that is mass-produced but really doesn't have a market. It's just cheaper to make lots of it. It's depressing to go into WalMart and see t-shirts priced cheaper than what you'd pay at a thrift store and still no one wants them. They have been made and shipped to stores, but they are waste.
In contrast, 3D printers allow people to have fewer things, but more custom-made items, and produced when they want them, not when the items are available at a retailer. It's on-demand production, which fits in with an economic system less focused on consumption for consumption's sake. (Similarly, Kickstarter is allowing people to preorder items before they are even made. The items don't get made unless there sufficient demand. Again, it's right-sizing the production to fit the demand.)
The world doesn't need commodity pricing on many things, but we have it because that's the way the machines work.
Right now the maker movement is mostly making little art stuff, but the technology is being used in rapidly increasing ways: airplanes, buildings, scientific tools. It can shake up manufacturing precisely because it can reduce the cost of items that aren't mass produced.
I take your point re a lot of mass produced stuff being "made as junk", but I think there is a reason for that. The lesson of history is that, given teh choice, most people buy most things on price.
Evidence that people will value higher cost, more personalised goods is largely limited to the better off social classes, for a few categories of items.
I think the view thatt 3D printing will "shake up manufacturing precisely because it can reduce the cost of items that aren't mass produced" is one I see a lot of, but it doesn't bear up under scrutiny. Material usage is not dramatically lessened (and probably at higher cost as makers are not buying in bulk), labour input is not lessened (its likely to be more, in fact, of more expensive people), and these machines are highly flexible (aka inefficient) and are still new technology (ie unreliable) so if anything production cost per item will increase.
The assumption that it will be cheaper is driven by the assumption that the expensive labour will be "open sourced" or "free" - ie subsidised in some other way - is fine as a hobbysit or grass roots industry, but it can't scale.
Now Kickstarter et al are very interesting, but they are doing the exact opposite of "making to order" - they are trying to aggregate a big enough order batch to make it as cheaply as they can - get 1,00 orders of something and they can (for eg) make a die-mould and mass cast the product
I think the expectation is that just as photography evolved from a technology that required specialized equipment and an understanding of how to make photographs to what we have today (smart phones enabling anyone to take photos) and just as music evolved from an industry that used expensive recording studios to one where anyone at home can make their own recorded music, 3D printers will put a lot of creative functions in the hands of average citizens. By doing that, the cost of creating those products will ultimately go down.
The "revolution" may not happen immediately, but people have seen how technology in homes (e.g., computers) changed many dynamics, so they anticipate the same will happen with 3D printers.
"people have seen how technology in homes (e.g., computers) changed many dynamics, so they anticipate the same will happen with 3D printers"
There have been CNC hobbyist machiness around for many years, no sign of a 2nd industrial revolution yet.
This does remind me more of the home PC, I was around for all the breathy predictions of information craftsmen and hollowed out corporations then too..... so I therefore predict short term it will be the boosters, and medium term the suppliers of the 3D printers and peripherals who are going to make the most money in the 3D printing game
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