Gareth Kiernan says the emergence of 3D printing technology highlights the necessary shift for our businesses away from manufacturing to design

By Gareth Kiernan*

Recently I listened to a brief but intriguing item on National Radio about the burgeoning technology of 3D printing.

The item was centred around Maurice Williamson’s border control concerns when it came to preventing the production of illegal firearms and illicit drugs.

In particular, he said that “if people could print off … sheets of ecstasy tablets at the party they’re at at that time, that just completely takes away our border protection role in its known sense”.

Within a few minutes of hearing this statement, one of my colleagues had printed off a colour document and was inexplicably licking the paper, until I informed him that a) our office printer was just a run-of-the-mill 2D printer, and b) to print off ecstasy required the drugs or their components to be in the printer as a “toner” in the first place.

One needs both the design file and the material inputs to print a 3D object – a fact that seems to have been left out by Mr Williamson when talking about his drug-related border control concerns.

Nevertheless, it is true that 3D printers are becoming able to create more and more things. The item on National Radio mentioned a broad range of objects that have been successfully printed, ranging from plastic sculptures to buildings to human ears to cupcakes.

I don’t pretend to fully understand how any of the last three objects are printed, but it is clear that technological advances in this field have the potential for significant repercussions on wide areas of the economy.

Take building for example. A lot of work has been done over the last couple of years exploring the poor labour productivity performance of the construction sector, with a wide range of suggested reasons for the lacklustre outcomes.

If greater use of labour-saving technology such as 3D printers can be made, it would improve labour productivity in this sector and could potentially increase the affordability of housing.

Even more pertinent for the New Zealand economy is the effect on manufacturing.  Large declines in the cost of 3D-printing technology mean that these machines are now on the cusp of becoming affordable for domestic use.

We know that New Zealand’s manufacturing sector has already been in a long-term trend of contraction over the last 30 years, with reduced trade protection, increasing globalisation, and the rise of China all heavily affecting our non-food manufacturers.

Generally speaking, the firms that remain have been the ones established in niche markets, making high-value and low-volume products.

These firms are able to survive because their products command a premium price and can therefore cover higher costs for inputs such as labour.  Low-volume manufacturers also fill a hole not serviced by massive Chinese manufacturers, for whom a New Zealand firm’s annual output might be less than a day’s production.  For Chinese manufacturers, a small customised job is simply not worth them turning on their machines.

The emerging implications of 3D printing for the manufacturing sector are wide-ranging.  If every household or small business ultimately has their own 3D printer, then manufacturing activity as we currently measure it will be significantly squeezed as people become more self-sufficient in constructing their own goods. 

In this regard, the situation is similar to, but probably much more profound than, the changes in demand for printing and publishing services over the last few decades.

Along with the rise of electronic media, the accessibility and affordability of high-quality printers and photocopiers has been a factor leading to reduced demand for professional printing services, heavily affecting the viability of firms in this industry.  But the accessibility and affordability of photocopiers and printers mean that there is probably more production of printed material taking place than ever before.

The development of 3D printing capabilities also raises the possibility of less trade in manufactured goods taking place.  With the right inputs, New Zealanders in the future would potentially have a greater ability to create products that are currently imported from China, for example.  Of course, overseas consumers would also enjoy the same expansion in their capabilities, potentially affecting our manufacturing exports.

It is clear that the manufacturing sector in its current form faces a source of unavoidable new pressure, which strongly reiterates the question of why people think the government should provide protection for manufacturers.

Already, we can’t compete with China in terms of volume or input costs, while distance to market also leaves us at a considerable disadvantage.

Trying to protect the remaining niche operators will be a costly and ultimately futile exercise – the developing technological forces are simply too great to resist.

If anything, the emergence of 3D printing technology highlights the necessary shift for our businesses away from manufacturing to design.

This shift has already been taking place in terms of some traditional manufacturers such as Fisher & Paykel.

If the future is one where individuals are able to produce almost whatever they want, then the potential for innovative and cleverly designed products to succeed in the marketplace looks likely to be that much greater.

In much the same way that photos, videos, and apps can “go viral” thanks to the internet and social networking, products that capture the public’s imagination could soon be experiencing the same phenomenon.

Ultimately, the rise of 3D printing is likely to have a significant positive effect on consumers’ wellbeing, expanding the range of available goods and reducing the costs of obtaining them.

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Gareth Kiernan is the managing director at Infometrics, an economic consultancy and forecasting service, and he manages the forecasting team. You can contact him here »