The Outgrowth of Service Providers

In the last several years, a number of new materials for additive systems have been developed that greatly increase the ability of parts to be used as functional prototypes. As a consequence, the demand for functional prototype parts is expected to increase and service providers will likely fulfill the bulk of this demand.

Tom Mueller and Terry Wohlers

The following was published in the November/December 2007 issue of Time-Compression Technologies 
as a part of the special Service Provider Supplement.

Editor’s Note: The following was excerpted from Wohlers Report 2007, a global study on additive fabrication for applications such as modeling, prototyping, pattern making, replacement part manufacturing and custom and short-run production. Details on the report are at http://wohlersassociates.com

Service providers, also referred to as service bureaus, offer part-building services to design and manufacturing organizations as an outsourced service. In addition to part building, many service providers offer design, CAD/CAM/CAE, data translation, tooling, urethane casting from silicone rubber molds, reverse engineering and other engineering and manufacturing services.

Service providers have been a fixture in the industry since the systems were first introduced, offering part-building services to organizations that were reluctant to invest in a new technology, could not afford the systems or could not justify the purchase of a system.

Industry’s relentless pursuit of time-to-market reduction stimulated the initial growth of service providers. In the boom times of the 1990s, corporations operated on the belief that first-to-market wins and all others languish. This drove the demand for services.

Over the past few years, service providers have had to contend with a business climate that places as much emphasis on cost reduction as time to market. They have also faced the challenge of delivering value to their clients in an environment of much lower cost additive systems that are safe and easy to operate.

While service providers continue to play a valuable role in the industry, the nature of that role is changing. Many of the services provided in the 1990s by service providers, such as concept models, are largely being done by in-house systems. Most service providers have changed the types of services they provide to adapt to changing demand.

Improving Conditions

For many years, Wohlers Associates has conducted an informal survey of service providers to gauge the state of the industry. In early 2005, Wohlers Associates began a more formal survey of service providers to determine the industry’s health. Participation is confidential and completely voluntary. It is believed that companies who are doing well are more likely to respond than those who have a bad year. Consequently, there is a margin of error in the data gathered.

This year, 56 organizations in 16 countries participated in the survey. Thirty were from the U.S., five from Germany, three from India, two each from Australia, Belgium, England, South Africa, and Turkey and one each from Brazil, Canada, Italy, Japan, Malaysia, New Zealand, Sweden and Thailand.

While the industry went through a slump in the early part of the decade, it is clear that there has been a positive trend over the last three years. In fact, both the mean and median rates of growth in the primary market (sales of additive fabrication services) have steadily increased over the last three years, as shown in the following chart. The top line represents the mean growth, while the bottom line represents the median growth.

Possibly a better indicator of service providers’ confidence in the market is whether they are adding capacity to handle the increased business. If a provider does not feel that increased demand will continue, it will be reluctant to invest thousands of dollars in new equipment to handle the demand.

The following chart shows the percentage of respondents that added additive fabrication capacity for each of the last three years. Confidence is increasing with nearly two-thirds of service providers expanding capacity in the recent past.

The Future

The demand for prototyping services, while growing, has changed significantly since the heyday of the 1990s. The demand for concept models is increasing significantly. However, the bulk of demand is now being met by low cost systems owned by designers, not by service providers.

In the last several years, a number of new materials for additive systems have been developed that have greatly increased the ability of parts to be used as functional prototypes. In fact, it is now possible to reasonably simulate the characteristics of most injection-molded plastics and actually draw conclusions about the viability of a production part from testing the prototype. As a consequence, the demand for functional prototype parts has increased. Service providers will fulfill the bulk of this demand. Functional prototypes typically require more costly systems, and to simulate a range of plastics, a range of materials must be stocked. Most end users will not want to deal with the additional cost and complexity, and will outsource these needs.

An outgrowth of the service business has been what might be called “indirect rapid manufacturing.” It is creating an intermediate step in the manufacturing process to avoid the need to create tooling. An example is using additive fabrication to create patterns for investment casting. While it does not create an end-use product directly, it allows castings to be made quickly without the use of tooling. Such applications are growing quickly and now make up a significant part of many service provider revenues. Such applications are expected to grow significantly over the next few years.

A market for direct rapid manufacturing is becoming a reality. While it has taken years to develop, it is expected to grow steadily. Service providers will do a great deal of this work. It represents only a small percentage of most service providers’ business, but that percentage is anticipated to grow steadily over the next several years. TCT

Tom Mueller is partner and co-founder of Express Pattern (Vernon Hills, IL), a supplier of rapid prototyping services and a leading provider of patterns for investment casting. For more information, visit expresspattern.com. Terry Wohlers is president of Wohlers Associates (Fort Collins, CO), an independent consulting firm that has provided assistance to more than 150 organizations in 20 countries. For more information, visit http://wohlersassociates.com.