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Diary of a Dumb Investor: profiting from the next industrial revolution
I spy not one industrial revolution but two. And I think I know the right man to open the factory doors.
The American press is describing it as a failure. After firing six rounds, the AR-15 rifle simply snapped.
But this dud merely represented an early trial of a weapon that was in part printed. Yes, printed. It’s a step towards creating a design for a weapon that can be downloaded off the internet, and the whole weapon printed in its full 3d, fully-working, death-wielding inglory.
This is merely one episode in the 3D printing (AKA additive manufacturing) revolution.
Here’s a quick run-down on how it all works nabbed from Global Industry Analysts, a market intelligence company that has just published a report projecting that the global market for 3D printing will reach US$2.99 billion by the year 2018.
Hailed as a transformative manufacturing technology, 3D printing involves fabrication of physical objects by depositing a material using a nozzle, print head, or any another printer technology. Though initially used for prototyping of products, 3D printing has evolved and is currently capable of customised short-run manufacturing of industrial products, dental implants, and medical devices. 3D printing is finding use in a diverse range of applications across varied markets. Though used initially for rapid prototyping purposes, technological advancements are increasingly facilitating the use of 3D printers for manufacturing final products.
The technology has now reached a stage where digital models can be replicated to produce physical components or prototypes, which would be similar to those of mass produced products. The declining cost of printers has led a wide range of industries ranging from aerospace and automotive to footwear and jewelry to adopt 3D printing technology for manufacturing desired objects. 3D printing technology is thus offering individuals as well as companies with the ability to design as well as manufacture objects at relatively lower costs.
In the coming years, 3D printing technology could evolve to enable printing of metals including precious metals such as silver and gold. Further, low-cost techniques are expected to be developed for enabling 3D printing of widely available materials such as paper and plastic. Another area of growth is the medical sector wherein 3D printing technology could be used for developing replacement parts. Potential also exists for companies to penetrate into educational and medical device sectors.
Journalists and tech experts are describing 3D manufacturing as revolutionary, hailing the next stage in industrial production. But it remains hard to get a grasp on just how true this is, how quickly it will happen, not to mention which companies will be at the forefront. And of course, which will be investable.
It is already being described as the ‘next technology gold rush’. Problem is, the companies doing this stuff mostly seem to be non-listed start-up firms right now, and the only way to invest is this highly-speculative but exciting technology seems to be via online funding platforms.
So I look elsewhere. Amid all of the cacophony on internet discussion boards about the promise – or otherwise – of such technology there does seem to be a smidgeon of interest from high-ranking investors.
Nigel Thomas, who is AAA-rated for his investing moxie by Citywire, wrote this in a recent report:
‘Our investment mantra, “Things will not get better or worse, they will become different” aligns us with identifying change and how to benefit from it. Sometimes the change is the development and adoption of new technologies such as 3D printing or nanophotonics, or simply the change in management at companies.’
He’s not giving much away. Who knows whether he has invested in anything relating to the development and use of this tech. After all, investment companies only like to reveal the top 10 holdings in any one fund and a look at Thomas’s Axa Framlington UK Select Opportunities fund doesn’t help.
Thomas though, has a keen eye for big trends. In the same report he says this:
‘All the backward looking economists, who have been predicting doom and gloom, tend to aggregate data, whereby they lose intelligence and analysis. They also miss important secular trends where businesses, because they are dynamic, adapt.’
He makes this comment in relation to another development changing the face of industry, a more concrete one: a US industrial renaissance. Or at least a return of industry to the States, bringing production closer to the customer.
This ‘near-shoring’ back from China comes as the country shifts towards energy independence, and as wages in emerging markets inevitably rise, diminishing their competitive advantage.
So if I invest in Thomas’s fund, I get a Citywire Selection Star Pick run by one of very few AAA rated fund managers who not only recognises the resurgence of US manufacturing, but also takes an interest in 3D printing to boot. Plus I tick the US exposure box, something I want as I feel we must be on the cusp of fixing this crushingly dull fiscal cliff nonsense.
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by Gavin Lumsden on Dec 10, 2013 at 16:51