Prototyping service bureaus are at cross roads

Traditionally 3D printing equipment is owned and operated by prototyping service bureaus. Their specialization is in the manufacturing of prototypes. But the last couple of years prices for 3D printing have dropped significantly. This price drop had two causes. The first is the economy down turn. R&D budgets are slashed and idle machines still cost money. Second is the rise of 3D printing only outlets who focus only on 3D printing.

Service bureau deliver more services than 3D printing alone. For them 3D printing is one of the tools to make beautiful prototypes for their customers. They have in-house machines like CNC routers, lathes and molding equipment like injectors. They mold, paint and plate parts upon customer request. In the end service bureaus deliver unique one-off production completely customized to the customer’s wishes.

3D printing as a manufacturing process is making inroads and the developments over the coming years will make it a common production process. Prices will keep on dropping and smaller 3D printing outlets will need to consolidate to keep prices low and stay competitive.

A lot of service bureaus are struggling with their 3D printing equipment. They are expensive to own and run. They see part of their existing customer base move to specialized 3D printing outlets while their other customers demand lower prices since 3D printing has become so cheap. With their own setup it is hard to compete with 24/7 3D printing shops. Service bureaus reacted by lowering their prices as well and run their 3D printing business in some cases at a loss. This is not a long-term sustainable situation.
Other service bureaus seize the opportunity to invest more in 3D printing equipment and start producing parts in higher numbers with lower margins. 3D printing like any manufacturing process is very capital-intensive and they need to keep up with new players in the market. If they can grow quick enough and can reach a significant part of the 3D printing market in their region they have a great opportunity to grow and become a sustainable business. If they do not they are eaten in the consolidation wave coming to this industry in the coming years.

Service bureaus are at cross roads and they have to decide which strategy they want to follow. Either they keep on focusing on producing prototypes for their customers or they refocus their efforts and become one of the 3D printing factories in the world.

I am waiting for the first service bureau to outsource all their 3D printing and phase out all their 3D printing equipment. Their added value to their customers does not change. Maybe they can even better service their customers if they have a wider range of 3D printing options available to produce their prototypes. Their print-only customer base is going away anyway. Currently they still win on support and lead time but those advantages will soon go away. That leaves only the relationship but in the end company budgets will win.