On May 6th, President Biden joined five leading U.S. manufacturers to celebrate the launch of Additive Manufacturing Forward (AM Forward). AM Forward is a voluntary compact among large manufacturers to help their smaller U.S.-based suppliers increase their use of additive manufacturing, otherwise known as 3D printing. The Biden Administration will support this effort with a variety of current and proposed Federal initiatives. These public and private efforts have potential benefits up and down supply chains in many industries: enhancing small firms’ ability to make and sell higher-performing parts, shortening lead firms’ wait times for needed parts, increasing workers’ wages, and expanding consumers’ access to better products.
Additive manufacturing: a definition
In additive manufacturing, producers transmit digital designs to 3D-printers. The computerized design guides the fabrication of products, building them up layer by layer rather than cutting away from a large block of existing material as in most traditional manufacturing.
Additive manufacturing can reduce the number of parts required for an application and enable cost-effective production of small numbers of parts. The technology allows the manufacturing of complex structures, such as internal channels that dissipate heat. The increased ability to customize production and the reduced need for specialized components together enable personalization of products and reduce the need to hold inventory. Because additive technologies build from the ground up rather than subtracting material that is then scrapped, these technologies can slash materials cost by 90 percent and cut energy use in half.
Examples of additive manufacturing include:
- Medical device firms manufacture personalized hip implants capable of stimulating bone growth, using porous internal structures impossible to make with conventional methods.
- The Air Force is 3D-printing metal replacement parts as they are needed, instead of relying on costly inventory or waiting years for parts made with hard-to-source components.
- General Electric’s additively-manufactured fuel nozzle for commercial airplane engines is made with one component versus 20 individual components, achieving a 30 percent cost savings; the new nozzle is 25 percent lighter and five times more durable.
Additive manufacturing increases the resiliency and competitiveness of America’s supply chains
Additive manufacturing increases the speed and flexibility of production. The technology allows firms to respond quickly to supply disruptions without holding costly inventory of parts that may not ultimately be needed. 3D-printing does not require forging or casting, two manufacturing processes used in production of metal parts that are costly and time-intensive. With 3D-printing, parts can be printed and delivered within hours or days after they are ordered. This reduced lead time benefits aerospace and other industries that have been stymied by bottlenecks in forging and casting supply chains; in some cases, parts have been delivered nearly a year after they were ordered. Furthermore, the ability of a U.S. manufacturer to 3D-print a technically-advanced component for one lead firm and then quickly pivot to make a totally different component for another lead firm could make U.S. supply chains far more resilient.
Additive manufacturing could also make the U.S. economy less dependent on inputs from abroad. First, additive manufacturing does not require import of labor-intensive components; parts can be printed as a single integrated whole. Second, firms do not need to wait for specific parts—such as a 10-inch diameter round part made of Inconel 718—that may be tied up in supply chain snarls. Instead, the firm can simply stock Inconel 718 powder and use the powder to make that part, or a wide variety of other parts. As a result, production is less susceptible to delays and less reliant on transportation infrastructure. This flexibility means that firms can both be more resilient to changes in demand, and hold less inventory. The lower inventory allows firms to reduce prices, free up firms’ working capital to make further investments in technology and worker training and/or increase worker pay. As a result of the shorter lead time to produce, firms could also respond more quickly to alter their product mix and increase or decrease production in response to demand changes.
Barriers to Adoption
While additive manufacturing has significant potential benefits, there are several reasons small U.S.-based manufacturers may not adopt such new technologies. First, they may lack a clear demand signal from their customers, who are not willing to make advance commitments to buy products from companies that invest in such equipment. This can make an investment in equipment like 3D-printers seem quite risky; developing the ability to print parts in metal is expensive and could amount to expenses much greater than suppliers’ normal annual investment budgets. Second, because of the lack of a clear demand signal, many of these manufacturers may find they cannot access affordable financing that would support these investments. Finally, firms may lack the knowledge needed to use new technologies, like 3D-printers, or to train their workers appropriately.
Overcoming the barriers to technology adoption by small and medium firms would have a significant effect: small firms account for 99 percent of U.S. manufacturing enterprises and provide more than five million U.S. jobs. However, U.S. small manufacturers have often fallen behind larger firms in their technology investments, in part because of the demand, financing, and knowledge challenges described above. The result is that the largest manufacturers’ labor productivity is 58 percent higher than their middle-sized counterparts; a significant part of this gap is explained by small firms’ lack of technology adoption.
These barriers to small firms’ technology adoption affect large firms as well. U.S. industrial supply chains are made up of tens of thousands of small and medium-sized manufacturers, who sell to larger customers, also known as Original Equipment Manufacturers (OEMs). When small suppliers do not adopt new technology, their large customers suffer as well.
Large manufacturers have a vested interest in promoting additive manufacturing in smaller firms in their supply chains. The more reliable, efficient, and productive is the supply chain, the better for the lead firms. Because a supplier may sell to several lead firms, coordination among lead firms is more effective than individual action would be. By working together, they share the benefits that are not captured entirely by the investing firm, but rather “spill over” to benefit others as well.
These benefits may be particularly large for a new technology in which the market for its dissemination has not been well-developed. For example, one lead firm may invest in helping a supplier develop a system to ensure that different additive materials do not cross-contaminate each other; another could reap the benefit of this investment without paying for it. Knowing this, the first firm may not invest.
To address these issues, five large U.S. manufacturers have come together to announce “AM Forward,” a public, voluntary agreement to help their suppliers adopt additive manufacturing. The initial original equipment manufacturer (OEM) participants are General Electric Aviation, Honeywell, Siemens Energy, Raytheon Technologies, and Lockheed Martin. Through AM Forward, OEMs will work directly with their U.S.-based suppliers to demonstrate clear demand for additively-produced parts. These companies have also committed to providing technical assistance and worker training to suppliers, and to work together to develop standards for additive manufacturing.
Government support for AM Forward
Many of the benefits of adopting additive technology potentially go beyond the firms directly involved, including to workers at the firms, communities in which they live, and consumers who are able to purchase innovative products. Because profit-maximizing firms may well under-invest in these benefits, it makes sense for the Federal Government to complement AM Forward by matching small- and medium-sized manufacturers with U.S. government programs that overcome such common market failures. Many of these programs are designed to solve problems that arise in markets for individual inputs, such as too little investment in capital, labor, and research.
Often, coordinating access to and timing of these programs is difficult, especially for small firms. For example, to develop additive capabilities, firms need both to finance equipment and train workers, areas where the Small Business Administration and Department of Labor respectively could provide assistance. The National Institute of Standards and Technology and America Makes, a Manufacturing USA institute, can help to develop standards that reduce duplication of effort in testing and supplier qualification. The Manufacturing Extension Partnership provides technical assistance to individual small firms. By working with AM Forward, the Federal Government could more efficiently coordinate these services.
As the recently released 2022 Economic Report of the President explains, U.S. supply chains have become fragile and thus a drag on the economy. As awareness of the costs of supply chain disruptions has increased, firms are acting to increase their resilience. AM Forward represents a useful new model of resilience, because it promotes both OEM/supplier collaboration and additive manufacturing techniques that dramatically cut lead time. By coordinating within and across supply chains, this partnership will also increase the effectiveness of government programs that aim to promote investment in these cutting-edge technologies.
 Iconel 718 is a high-strength superalloy with a nickel-chrome base.
 In addition, many of these expenses are for material, training, and the cost of downtime during the transition—expenses that (unlike equipment) could not be recouped by a bank if the company were unable to repay a loan.
 This is an example of the “free rider problem” often discussed in economics.
 Membership in AM Forward is open to participation by any OEM that is willing to make public commitments to demand additively-produced parts and to otherwise support their U.S. suppliers’ adoption of additive capabilities.