in Additive manufacturing

#Arcam: CEO optimistic in recent interview

ArcamLogoThe Motely Fool contributor Steve Heller recently interviewed Magnus René, CEO of Swedish additive manufacutring company Arcam.

The interview was made at EuroMold 2014, the world’s largest 3D printing conference held in Frankfurt, Germany, in November 2014. Here is what Mr René had to say:

Steve Heller: …I’m joined today with Magnus René, CEO of Arcam. It is a Swedish-based electron beam melting 3D printing company. Very interesting company, very high-growth industry with their technology — basically a metal 3D printing company. Magnus, I wanted to just get right into it. This year’s EuroMold, what are your thoughts, what are your takeaways? How is Arcam doing in the competitive landscape?

Magnus René: We are doing very fine. This year’s EuroMold, one change is that we would have, I would say at least 50% more visitors, 50% more interesting prospects than we had last year and the year before, so it’s a big step forward for us here this year.

Heller: Very good. Can you explain in a little bit more detail, I know electron beam melting is a proprietary technology. What makes it so unique? In the competitive landscape, direct metal laser sintering seems to be pretty popular at this show. You have the stronghold on EBM; let’s talk about it some more.

René: Yes. What we do in EBM is that we have a lot of power and we control that power in a very refined way, and we operate under vacuum. That means that we build in a hot environment. It’s more like a casting process than anything else. That gives us high productivity, a very fast process, of course low cost of the components. It gives us components with very good material properties with regards to fatigue, density, but also with regards to stress and such. Our parts don’t have to be stress relieved. They are ready to go, directly out of the process so efficient process with good materials, parts ready to go.

Heller: I see. There was a recent discovery, I guess is how you put it. Oak Ridge National Labs made some discovery around electron beam melting and controlling material properties at a very finite level. I was wondering if you could elaborate on that, and what that actually means for the long-term implications. Obviously, we’re far away from the commercial adoption of such a technology, but what does this actually mean? I was wondering if you could just explain that a little bit more.

René: It’s a very exciting discovery, but it’s very early on. What we have done at Oak Ridge is that — again, I said just recently, this is like casting. You can even call it “microcasting.” It means that we can control the properties of the material in different parts of the component, so we can make a component and we have one type of microstructure in one end and another type of microstructure in another end, which means that we can have different material properties in different sections of a (3D printed) component. This is a discovery, so it’s far from industrialized. It’s something that people have been interested in doing for a long time, but it’s just not possible to do that in any other way. Long term, it could be a very important opportunity for us.

Heller: In terms of the regulations, obviously electron beam melting seems very well-suited for the healthcare industry. What are some of the challenges associated with the regulatory authorities, getting new technologies up to speed from previous generations or previous manufacturing technologies? I was wondering if you could comment on the healthcare landscape and the aerospace landscape, and what that means for adoption rates.

René: On the medical side, we’ve been on the market since 2007, so we are well aware of and familiar with the regulatory landscape. We have – or rather, our customers have – a lot of products on the market already. We think that the regulatory challenges are mainly with regards to the design of the products. Different designed products have to be approved in different ways. We see less regulatory challenges with the manufacturing method itself, since we know how it can be proven.

On the aerospace side, it’s similar. It’s a lengthy process for our customers to make sure that all their regulatory needs are met every time, every day. But once we are through that process, we are good to go.

Heller: At The Motley Fool, we are long-term, business-focused investors. We’re not (as) concerned with the quarterly results. We’re more concerned with the long-term trajectory, so we don’t pay as much attention to whether or not you’re meeting Wall Street expectations. That’s not important to us. What’s important to us is where this company’s going over the next five to 10 years, so I was wondering if you could share with us that long-term vision of where this company is going, and how investors should think about this company, going forward.

René: We run this company with a long-term strategic vision where our vision is to replace manufacturing, first in advanced materials but later on also in other materials, so the vision is very long-term. The execution is much more short term, because we are in a very dynamic environment, so we have to operate the company in a very agile way. Operatively, we run with not longer than 24-month plans, typically.

Heller: I see. My final question for you, I wonder if you could just provide an overall general outlook of where you think the 3D printing industry as a whole is going over the long term. Where is this industry taking us?

René: I think you will see more and more production applications. You will see us replace, on the metal side, typically castings and forgings. Again, our goal is to replace all castings and forgings; maybe not the largest, but normal-sized castings and forgings. On the plastic side, which obviously I don’t know that much about, but I would envision that plastic additive will replace injection molding, for example, over time. You will see additive manufacturing gradually replacing, step by step, conventional manufacturing, casting and molding type of businesses.

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