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A boom in 3D printing will boost local production of manufactured goods and could diminish global trade by 40% by 2040, a new report suggests.

The figure is presented in an analysis by Dutch bank ING, according to which the emergence of 3D printing, otherwise known as additive manufacturing, could radically shake up global supply chains and threaten current trade growth levels.

Albeit on a small scale, the technology has already changed production processes across diverse industries. The automotive industry has been investing in 3D printers for more than three decades. The method has also advanced quickly for medical devices: almost all hearing aids are now custom-made using 3D printers. Airbus uses 3D-printed parts in its aircraft. The technology has even been used to print prosthetic limbs.

ING stresses that 3D printing is currently still in its infancy, accounting for “only a fraction” of worldwide production of goods and services. Consultancy Wohlers Associates has estimated that companies worldwide spent US$6.6bn on 3D printers and related services in 2016, which is less than 0.7% of global manufacturing and 0.1% of world GDP.

For the time being, 3D printing is most commonly used to make prototypes or to produce a few units, and is not yet sustainable for mass production.

But this will change. ING notes that “the role of 3D printing in the economy will increase fast”, and that the technical steps have already been taken. The annual growth rate for investment in 3D printing has been 29% over the past five years, compared to only 9.7% investment growth in traditional machines.

“Recent technological advances indicate that high-speed and thus mass production with 3D printers is becoming a reality,” the report reads.

In fact, the bank estimates that 3D printing could be the source of half of manufactured products by 2040, which would result in a 40% reduction in world trade compared with a benchmark calculation for global trade without 3D printers.

The prediction is based on one of two scenarios the bank has calculated. This ‘acceleration scenario’ assumes that investment in 3D printing doubles every five years, an acceleration which according to the bank is a possibility with a disruptive technology that companies are still getting to grips with. Over time, as the technology progresses, 3D printing will be a growing source of revenue for companies, which could spur the rate of investment.

ING’s other scenario, a more conservative estimate, is based on the assumption that growth of investment in 3D printing will continue at its current level. In this scenario, half of manufactured products will be 3D printed by 2060, which will see world trade reduced by 22%.

Whichever scenario holds true, the report serves as a “warning” to businesses operating in affected industries, explains Raoul Leering, head of international trade analysis at ING and author of the report.

“It functions as a wake-up call for our clients because this can certainly influence almost all manufacturing sectors. There is a possibility that this could evolve quickly,” he tells GTR.

Automotive, industrial machinery and consumer products are the industries that will see the biggest impact.

 

Impacting bilateral trade flows

As 3D printing uses far less labour, it reduces the need to import intermediate and final goods from low-wage countries, which companies have traditionally turned to because of their low labour costs. The cross-border flow of raw materials also is also likely to diminish because 3D printing is more efficient and leads to less wastage.

Leering mentions the likes of China, Bangladesh and Vietnam as examples of low-wage countries that will be influenced the most by the change of the value chain, where local production replaces outsourcing or offshoring.

The changes will not only impact today’s manufacturers, but also the services sectors involved in cross-border trade, such as transportation companies and other players in the trade finance industry.

“Trade is going to be more regional. We would see a substitution of long-distance exports with short-distance supplies, which could mean a shift in finance as well,” Leering says, adding that it will “have a negative influence on certain sectors like transport, logistics and harbours, everything that has to do with the cross-border distribution of goods, which makes certain countries like the Netherlands, Hong Kong and Singapore vulnerable”.

He also points to the fact that a decrease in long-distance exports would mean less need for trade finance, because traditional trade finance products such as letters of credits are often not required when developed countries export to one another.

Nevertheless, for innovative banks, the 3D printing revolution could see a boost to other types of financing, such as leasing. “If high-speed printing really pushes through, companies will need financing of 3D printers. Banks could look into the leasing of 3D printers instead of currently used capital goods. The banks that set this up the quickest will have a competitive advantage over others.”

The report highlights the US as one of the countries that will benefit the most from the changes in bilateral trade flows – at least from the perspective of the current administration’s pledge to cut the country’s trade deficit with big world economies.

“If one considers a bilateral trade deficit as a problem, as the current US administration does, the rise of 3D printing is good news,” Leering says. “In the leading 3D printing sectors, the US has large deficits with China, Mexico and Germany. So once American companies start printing those products locally instead of importing them, there is a lot of potential to get those deficits and the overall US trade deficit down.”

This would also give a boost to local jobs in, for example, US-based automotive factories.

Leering also emphasises that although the report’s conclusions may seem like bad news to certain industries, the predictions should serve as good news for the world economy as a whole.

“We shouldn’t see this as a negative for the world economy. It’s a shift, it’s a change, and it will, in the end, make products cheaper and boost purchasing power, which will be a positive for economic growth,” he ends.

Read more about 3D printing in GTR’s recent magazine feature.

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