Problem: As much as 40 percent of trade could be eliminated by 2040 through 3D printing, some studies argue. Others claim that this is a misnomer and that 3D trade is fine. We can dig deeper through an abstract from this recent paper from the World Bank to see that perspective:
In the mid-2000s, the production of hearing aids shifted almost entirely to 3D printing. Using difference-in-differences and synthetic control methods, this paper examines the effects of this shift on trade flows. The analysis finds that trade increased roughly 60 percent following the introduction of 3D printing. Revealed comparative advantage was reinforced, with exports growing most rapidly for middle- and high-income countries. The analysis also finds that developing countries increased their imports of hearing aids as a result of the innovation, benefitting consumers. As a robustness check, the paper examines 35 products that are partially 3D printed and finds positive and significant effects on trade. The results counter widespread views that 3D printing will shorten supply chains and reduce trade.
This business would play both sides of the contentious issue through investing in 3D printing both a bearish hedge and bullish bet on the long-term prospects of trade.
Solution: This business would 3D print and export goods that are ripe to be replaced by printers as compared to traditional methods of production. This business would use 3D printing to reduce the cost of production by printing (1) light products (that are relatively cheap to transport) and (2) products that are highly specialized for inputs and services, thus requiring large investments in technology and machinery. All of this could happen from simply 3D files.
Some argue that while 3D printing is great for customization, traditional manufacturing technologies still win out for bulk production of simple items. As described by the World Bank in one of their reports on 3D printing,
Even for the specialized products where it is most effective, it is not leading to decentralized production. One example comes from dentistry, where custom products are in high demand but are being manufactured and exported by high-tech firms. Consider Renishaw, a British engineering company, that makes dental crowns and bridges from digital scans of patients’ teeth. The printers run for 8-10 hours to make custom teeth from cobalt-chrome alloy powder, which are then exported. Dentists are not installing the machines to print teeth locally, rather the parts are shipped to dental labs in Europe, where a layer of porcelain is added before the teeth are shipped to dentists. With 3D printing, the production process changed but the supply chain remains intact.
Perhaps the best competitor to look at in this market are hearing aids. Almost 100% of all hearing aids in the world are produced using 3D printing. In less than 500 days in the mid-2000s, 3D printers transformed the industry and has become the archetype of analyzing the business impacts and economic effects of the 3D printing industry as a whole. As further analyzed by the world bank,
The advent of 3D printers has not fundamentally affected the industry’s market structure. The hearing aid industry has been dominated for the past 15 years by six companies who control about 99 percent of the global market (Sandström, 2016). In terms of location of production and consumption, trade data show that 3D printing led to a reduction in export concentration, especially among the top 3 exporters. The export share of the world’s largest top three exporters of hearing aids declined from 65 in the early 2000s to 52 today, reversing a trend of increasing consolidation from the mid-1990s to the early 2000s. Figure 3 shows the decrease in export concentration, especially between the periods 2002-2004 and 2014-2016, at the top of the distribution. In contrast, imports became slightly more concentrated, though the trend over time remained the same from 1990s to the 2000s and from the 2000s to the 2010s. Consumption of hearing aids is less concentrated than production. The import share of the top 10 largest importers was 69 percent in 1995-1997 and it increased to 73 percent in 2014-2016.
In this sense, the 3D printing business would directly compete with major trade leaders in the industries that these business choose to focus on. Just as McDonald’s is essentially just a real estate company, this 3D printing company would be masquerading trade firm.
So what products would this business print and export? This is described in section 5 of the world-bank report:
Sub-group SITC 6659, “articles made of glass, n.e.s.”, there are 144 products ranging from laboratory glassware to coral imitation of glass. Taken together, these results are suggestive of 3D printing leading to a reshuffling in comparative advantage from labor abundant / developing economies to capital abundant / advanced economies.
Products like hearing aids that are light and hence have lower transport costs, incentives to localize production closer to consumer should be lower than for heavier products
… and any of the products in the table below
List of 3D Printed Products
Globally, according to Grand View Research, the “3D printing market size was valued at USD 11.58 billion in 2019 and is expected to expand at a CAGR exceeding 14% from 2020 to 2027. Globally, 1.42 million units of 3D printers were shipped in 2018 and this number is expected to reach 8.04 million units by 2027.”
Monetization: Sales from these 3D printed products.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)