General Electric (GE) - Get Report nearly doubled its recent investment in 3D printing with the $1.4 billion purchase of two European companies that have led adaptation of the technology, commonly associated with plastic consumer products, for metals-based manufacturing.
CEO Jeffrey Immelt's agreement to buy Arcam AB and SLM Solutions widens GE's entry into digital manufacturing after its decade-long pivot away from a conglomerate model that included businesses as disparate as TV, amusement parks and consumer lending.
The businesses will both report to David Joyce, the head of GE Aviation, the Boston-based manufacturer's largest division. Together, they bring Immelt's spending on 3D-printing since 2010 to $2.9 billion, an investment that has led to 346 patents.
Three-dimensional printing, also called additive manufacturing, builds products based on schematics from computer-aided design software by layering cross-sections atop each other, creating an entire piece of equipment at once rather than manufacturing different parts and bolting or welding them together. Because such products are "grown" from the ground up, they enable more customization and generate less scrap metal, GE said.
"This is really about changing the frame around the canvas that the designers work on," Joyce explained on a conference call with analysts today. "This is a big digital industrial play for the company beyond just the aerospace segment."
In the three months through June, GE's digital orders, excluding a gas-turbine product, climbed 15% as total revenue in the business reached $1.3 billion. Immelt said in July he would invest more than a billion dollars in digital operations as GE works toward benchmarks like doubling the number of developers using its Predix operating system.
The platform, designed to do for factories what Apple's iOS did for smartphones, allows companies to write compatible programs that can optimize equipment in industries from oil production to railroads. Among its innovations is a "digital twin," a software model of a client's equipment or processes that lets manufacturers monitor performance as well as diagnose, and ultimately predict, problems.
By the end of June, 12,000 developers were working with the platform, a little more than half of the company's 20,000 goal. At GE Aviation alone, developers are writing programs that monitor 35,000 jet engines, helping reduce mechanical malfunctions for customers by 25%.
The business has already employed 3D printing in some of its newest products, Joyce said, including fuel nozzles for the more fuel-efficient Leap engine, currently in use on the single-aisle Airbus A320neo flown by Turkey's Pegasus Airlines.
GE has back orders for more than 11,000 of the engines from both Airbus (EADSF) and rival Boeing (BA) - Get Report , which uses them on its single-aisle 737 MAX, and expects to deliver 1,200 of the engines a year by 2020, according to a company spokesman. Each engine has as many as 20 fuel nozzles.
Both of the additive manufacturing deals announced today are structured as public tender offers for all of the targets' outstanding shares. Joyce said the deals will give GE two different yet complementary technologies for a new additive equipment business.
Arcam, based in Molndal, Sweden, invented the electron-beam melting machine for metal-based 3D printing. It garnered $68 million in sales last year from customers in the aerospace and healthcare industries.
SLM, based in Lubeck, Germany, produces laser machines for metals-based 3D printing users in the aerospace, energy, healthcare and automotive industries. It reported $74 million in revenue last year.