OM in the News: 3-D Printing and the Future of Global Manufacturing

Now that much of the hype around 3-D printing has died down—no more of that 2010s-era talk about a Star Trek-style replicator in every home—a funny thing is happening to this technology. It’s becoming a widely used, and in some respects quietly revolutionary, update to the way that people manufacture and process things we rely on every day—from cars to industrial machinery to food. “What’s more, the way this technology is being used could have implications for the shape of global supply chains to come,” writes The Wall Street Journal (Jan. 14-15, 2023).

A quick refresher from Chapter 5 (see p. 290): 3-D printing, also known as “additive manufacturing,” generally works by adding tiny layers of material—usually powdered metal or plastic—one at a time to form an item, and fusing them with binding agents, lasers or other methods. Thus, parts are “grown” instead of forged, cast, molded, or machined as in traditional manufacturing. Just a decade ago, this kind of manufacturing was, with rare exceptions, suitable only for creating prototypes. What’s different now is that newer technology lets these systems print objects strong enough to be used in finished products—and relatively quickly.

Cadillac Celestiq’s new “ultra-luxury” $300,000+ vehicle has more than 100 3-D printed parts

Recently, for example, GM made 60,000 weatherproof seals using 3-D printing, in plastic, rather than making them the old-fashioned way, to make sure it could deliver its 2022 Chevy Tahoe on time. BMW is making broad use of 3-D-printed parts throughout its lineup. Mercury Marine is producing its newest V12, 600-horsepower outboard motor with 3-D-printed molds.

3-D printing is making rapid inroads into conventional manufacturing all over the world. Globally, the entire industrial additive-manufacturing market grew to $13 billion in 2022, from $5.7 billion in 2016. That growth should accelerate in the next 5 years, with the size of the industry reaching $37 billion by 2026, as industrial 3-D printing displaces traditional mass manufacturing.

Companies can also use 3-D printing to do away with some of their inventory of spare parts, many of which can sit on warehouse shelves for years. Both Caterpillar and Saudi Aramco, for example, are digitizing their libraries of old parts so that they can print them in 3-D as needed, when machines that may have working lives of decades break. During the pandemic, Caterpillar began using some 3-D printed parts, made in the U.S., in place of conventionally manufactured versions that had become difficult to import from India.

Classroom discussion questions:

  1. Explain the concept of “additive manufacturing.”
  2. Why does the new Cadillac have so many printed parts?

OM in the News: Want Caterpillar’s New Plant in Your State?–Then Start Bidding

“Forget Kindle Fires and iPads”, writes The Wall Street Journal (Nov.26-27, 2011).”The holiday gift most coveted by local officials across the US is a new Caterpillar Inc. construction-equipment factory”. The planned $150 million factory (location announcement in the next few weeks) comes with 1,000 jobs– and election time bragging rights. So far, 2 dozen states, plus Canada and Mexico, have found enough cash for incentives to set off this major bidding war. Because Caterpillar is such a well-known brand with a long track record, it will be “asking for an awful lot from state and local governments”.

This is a great article to use in class when you discuss location decisions in Chapter 8.  First, we find that the firm is moving production of small excavators and bulldozers from Japan to North America –“to be nearer to customers”. Second, Caterpillar “says it is looking for good ports and other transportation links, as well as an established base of suppliers”. Third, the incentives. Caterpillar expects free land, road improvements, help with other infrastructure, tax relief, worker training programs, and cash. The firm is also adept at playing states against one another, and has released letters from governors of four states urging the company to move there. “If Illinois doesn’t want your business, Texas does”, writes Governor Perry.

Are these outrageous expectations? Electrolux AB, the Swedish appliance maker, won about $180 million in incentives from Tennessee when it located its new $190 million factory in Memphis last year. The plant created 1,200 jobs.

Discussion questions:

1. How would your state or local government justify a bidding war for a new plant like this one? Who pays the incentives?

2. Make a list of a dozen factors you think Caterpillar considers in its final selection process.

OM in the News: Caterpillar’s New Approach to the Supply Chain

In the past, equipment giant Caterpillar did not have to focus on collaborating with suppliers. Along with Komatsu, it was dominant in its field. But Caterpillar is starting to recognize  what Honda and Toyota have long known, namely that competition is based on the supply chain, not individual companies.The company’s attitude in the past was one of servant-master with suppliers, according to Businessweek (Oct.21,2010).

So Caterpillar decided to partner with supplier Tenneco to design  new emission cutting components, rather than set specs and pick the cheapest vendor, as it had done in the past. The joint effort cut costs on the part by 20%.  The firm’s CEO expects the Tenneco relation to be the new benchmark and will work more closely with 200 companies it believes are critical to its growth.

Caterpillar was not prepared for the global growth spurt of 2006-2008 and saw flat profits even with a 24% sales increase. This was because it paid more for raw materials and faster parts deliveries.

Discussion questions:

1. Compare Caterpillar to Boeing (see Ch. 2’s Global Company Profile) in terms of partnering.

2. How did Caterpillar move to change its corporate supply chain culture?