Leveraging 3D Printing Technology for Strategic Cost-Cutting Amid Corporate Budget Cuts

Charles R. Goulding and Preeti Sulibhavi discuss how 3D printing can be integrated into cost reduction strategies and increase revenue.

Many large companies are currently engaged in major cost reduction programs. This scenario might pose a challenge to selling 3D printing technology to companies looking to cut costs, but it doesn’t necessarily have to be the case.

The 3D printing industry needs to understand the market dynamics and position 3D printed products as opportunities for cost reduction rather than mere additional expenses. With the technological advancements in 3D printing over the past few years, corporate purchasing departments may be unaware of how beneficial, or suited the technology could be for their operations. They could potentially miss the opportunity to utilise 3D printing for automation and cost reduction purposes.

UPS

Following an agreement between the union and UPS, the latter is set to experience a surge in labor costs. The company is instituting cost cuts to balance the impact of roughly US$200 million in missed sales. Labor hours at UPS have been reduced by a rough estimate of 10 percent, and they have terminated the employment of 2,500 management staffers.

Unmanned Aerial Vehicles (AEVs) showcase a viable avenue for maintaining business operations with a reduced human workforce. It has been previously reported that UPS has been incorporating the use of drones into some of their delivery processes. A fleet of electric vertical takeoff and landing (eVTOL) drones designed specifically for UPS is being manufactured by Wingcopter, a drone company based out of Germany.

The Federal Aviation Administration (FAA) has granted approval to UPS and Wingcopter for the commencement of the fleet’s construction. Flight Forward, a subsidiary company of UPS that specializes in drone-based deliveries, will be responsible for the drones’ manufacture.

Wingcopter eVTOL drone designed for UPS [Source: Wingcopter]

Wingcopter has previously collaborated with Merck to establish a drone delivery system for inter-office use in the pharmaceutical giant. Wingcopter’s expertise in drone technology has presented UPS with substantial advantages, enabling them to deliver significantly more packages at higher speeds with fewer errors.

Several parts of a drone can be created through 3D printing for either replacement or repair. Whether it’s the motor, transmitter, or the CubePilot carrier board, 3D printers can produce high-quality parts at a fraction of the cost and time conventional manufacturing methods require.

Rolls Royce

Rolls-Royce, the renowned aircraft engine-maker, has announced plans to cut about 2,500 jobs globally in 2023.

The company has recently shown signs of recovery, due in major part to the steps taken by new CEO, Tufan Erginbilgic. The pronounced improvement in profitability is largely attributed to strategic pricing adjustments for maintaining engines used in aircrafts such as Airbus A350 and Boeing 787. Erginbilgic expressed that the impressive five times increase in cash flow is a direct result of increased productivity, efficiency, and overall better commercial outcomes.

According to recent statements from Rolls-Royce, the company aims to quadruple its profits in the upcoming four years and plans to implement additional cost reductions amounting to 500 million euros during this same time period.

Given the robust MRO business atmosphere, Rolls-Royce is poised to benefit from lucrative income opportunities, provided the right market systems are put in place. 3D printing may play a significant role in this strategy, as the company has previous experience with such technology.

Rolls-Royce has expanded their jet engine lineup by launching UltraFan – a model that boasts a staggering 25% higher fuel-efficiency than its predecessor, the Trent engines. This step in innovation contributes to more sustainable aviation. A part of the UltraFan’s intermediate compressor case (ICC) was successfully constructed using cutting-edge metal 3D printing technology.

Stellantis

Following a successful resolution of a protracted labor dispute through a mutual agreement with their workforce union, Stellantis now grapples with increased labor costs. While buying new equipment may not seem a prudent move on the surface, this is precisely the moment to channel resources into automation and 3D printing.

The Mopar 3D Lab, a formidable 3D printing lab of Stellantis, encapsulates an emerging trend in the automobile sector. Car manufacturers are increasingly incorporating 3D printing technology and enabling their clients to add a personal touch to their vehicles. Stellantis has set the stage for truck owners wanting to customize their rides, by giving them a chance to 3D print their own accessories. But this is just the tip of the iceberg when it comes to practical applications of 3D printing in the car industry.

Auto assembly plants have utilized robots for minor production elements such as spot welding and painting, but there are multiple other uses for robots and automation during the production process.

One such use is the loading and unloading of parts from equipment to other machinery. This use of robots on the production floor is particularly beneficial for the transfer of heavy or unsafe parts between production points. This is another great example of the use of robots and automation in the automobile industry.

Ford

The recently agreed labor deal between Ford and their workers’ union is expected to cost the company US$8.8 billion over the four-year contract. Alongside this, Ford is also undergoing a costly transition to electric vehicle (EV) production. These financial pressures are pushing Ford to find ways to cut costs, among which is investing in automation. The cost of production for each vehicle is set to increase by US$900 under the new contract emphasizing the need for cost-saving measures such as this.

While Ford faces an uphill battle, it’s choosing to adopt a strategic approach, focusing on innovative solutions rather than merely cutting costs based on financial considerations. Recently, Ford has been increasingly leveraging 3D printing technologies. Going forward, the 3D printing industry could play a vital role in Ford’s cost reduction strategy – the technology could be used for customizing accessories and even producing replacement parts for certain models.

Alstom

Alstom, largely recognized as the manufacturer of France’s high-speed TGV trains, has declared it will be cutting 1,500 jobs. The company is aiming to dispose of approximately 1 billion euros worth of assets to enhance its cash flow, a measure necessary for maintaining its investment-grade credit rating.

Additionally, this presents an chance for Alstom to incorporate more robotic automation into its production operations.

Alstom’s 3D printed replacement part using LOCTITE resin [Source: LOCTITE]

It would be an opportune time to purchase more innovative and efficient machinery and equipment (that could reduce other costs such as labor expense) at a time when older assets are being purged. No stranger to 3D printing, Alston has utilized 3D printing technology for its Italian AGV ETR575 high-speed, electric passenger train. To replace 200 parts for the train, Alstom decided to change its construction method, as their usual process was becoming too expensive to produce replacement parts. So, in 2022, Alstom turned to 3D printing technology.

Nokia

The electronics giant, Nokia, will be laying off 14,000 employees to address market concerns. The Finnish telecom giant, a major provider of 5G equipment, employs 86,000 people. Nokia can look for ways to supplement its labor force with more automation and 3D printing. There are many electronic applications of 3D printing as we have covered on Fabbaloo before in terms of the electronic products, such as semiconductors and circuit boards.

AGCO

AGCO is a good example of implementing cost-cutting (it announced in October that it would furlough and/or lay off 900 workers at one of its Kansas facilities alone) while making a major investment in Precision Farming with the Trimble acquisition. We would argue that they should also consider making further investments in 3D printing that can both reduce costs and improve sales.

Jabil

Jabil has indicated that it will embark on significant headcount reductions and restructuring that will cost the company approximately US$200 million to implement. In its Fremont, CA plant alone it has decided to cut 140 workers. Jabil is looking for ways to continue operations with lower costs. A global leader in “print” manufacturing, Jabil takes complex designs through manufacturing and validation by using 3D printing technology. Jabil has a comprehensive understanding of 3D printing’s value potential. The results of a Jabil survey on the issue are illustrated above. A little over 80% of respondents expect their 3D printing use for production parts to at least double within the next five years.

[Source: Jabil]

Jabil has world-class knowledge of 3D printing and expertise in applications for electronics manufacturing. We believe that Jabil can greatly benefit from the ongoing development of embedded electronics components as those being created by Nano Dimension.

The Research & Development Tax Credit

The now permanent Research and Development (R&D) Tax Credit is available for companies developing new or improved products, processes and/or software.

3D printing can significantly enhance a firm’s R&D Tax Credits. It’s valid to include the salaries of technical staff members who are creating, testing, and revising 3D printed prototypes as a proportion of eligible time for the R&D Tax Credit. Likewise, time given to the integration of 3D printing equipment and software as a method of process improvement is deemed an eligible activity. Finally, if used for modelling and preliminary production, costs of filaments used in the development phase might be recovered.

Whether utilized in prototype development and testing or in the final production process, 3D printing serves as a significant marker that eligible activities for R&D Credit are being carried out. Companies that implement this technology at any stage should consider exploiting R&D Tax Credits.

Conclusion

Companies undertaking cost-reduction techniques must be strategic; they should decrease costs appropriately while investing simultaneously for future growth. The 3D printing industry needs to acclimate to this scenario and shift its sales strategies to underscore how 3D printing can better minimize costs and augment revenue.

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