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News release


Manufacturing is set to change with the revolutionary potential of 3D printing

3D printing coupled with rising wages in countries such as China could further redefine manufacturing and factories, and change the dynamics affecting location decisions globally: Jones Lang LaSalle

AUSTRALIA, 17 July, 2013 – The impact of three-dimensional (3D) printing could redefine manufacturing and change the dynamics affecting both real estate and location decisions made around the world, according to Global Real Estate firm Jones Lang LaSalle.

Jones Lang LaSalle’s National Director, Industrial Corporate Solutions Andrew Maher said, “The development generating most discussion in the context of the ‘new industrial revolution’ is three dimensional printing. This is an additive manufacturing technique that builds solid objects from a digital file by depositing (printing) material layer upon layer.
“With the types of operational efficiencies 3D printing can bring, products are more likely to be made near to the point of delivery and final consumption. This will reduce the travel times involved, resulting in transport cost savings, improved supply chain visibility and lower carbon emissions with less reliance on shipping and air freight.”
Mr Maher said that at present, 3D printing is mostly used to produce models and prototypes, and its overall contribution to manufacturing production is miniscule.
“Industries such as aerospace and automotive currently use 3D printing to produce components, while healthcare industries use 3D printing to print prosthetics. The retail sector has also invested in the concept with footwear giants Nike and Adidas using the technology to print prototype shoes that reduce the time taken to evaluate a shoe from four to six weeks, down to two to three days.
“There are significant barriers to the wider adoption of 3D printing, including capital and operational costs, a restricted number of materials that it can use, and the speed of printing.”
“Despite this, there is a high expectation globally that 3D printing will play a prominent role in supply chains within the next decade,” said Mr Maher.
A recent poll by DHL Supply Chain  highlighted a fairly wide expectation that 3D printing would become prominent in the next ten years, with several companies considering introducing it into their operations in the next 3 to 5 years.
“Over this sort of timescale it could start to transform certain parts of manufacturing and the nature of factories. In particular, relatively homogeneous products could be mass customised, as the cost of setting up – or changing the software – would vary little from product to product.”
Mr Maher said 3D printing would also have an impact on supply-side and demand-side location factors. “The supply of produce would require highly technical skills, while for demand; customers would have more choice of product and variety via product customisation, given the ability to respond rapidly to changes in customer demand. As a result, 3D printing could encourage more manufacturing in developed economies closer to market demand.”
“3D printing has the potential to drastically change the nature of factories in certain industries. Instead of large bespoke factories, it will create demand for more generic small and medium sized buildings, which companies would more likely lease than own. As a result this will open up further opportunities for investors and developers in the manufacturing sector”.
An additional factor in the likelihood of Australian manufacturing being brought back “on-shore” in the future is the rising cost of labour in countries such as China, where the manufacturing process has typically been outsourced.
“From 2002 to 2006, total manufacturing wages in China rose nearly 70%, and are still rising an average of 15-20% per year due to a demand-and-supply imbalance for skilled labour.
“Although China is still the number one country of choice for outsourcing, their once-formidable edge in manufacturing is eroding,” said Mr Maher.
Citing a US example, the consulting firm AlixPartners reported that in 2005, Chinese-produced parts arrived at U.S. destination ports an average of 22% cheaper than comparable products domestically. By the end of 2008, the average price gap had dropped to 5.5%. Furthermore, global consulting firm Boston Consulting estimate that by 2015 the wage disparity and net labour costs between the two nations will converge by 2015.
“With the price gap reducing dramatically between offshore and onshore labour, and transport costs the highest in the supply chain at approximately 50% of all costs, companies are likely to rethink the advantages of local manufacturing,” said Mr Maher.
Despite this, there is little evidence in Australia of companies relocating their manufacturing facilities back onshore as yet. “It may take a decade, but given the factors involved, the onshoring, or reshoring, of manufacturing coupled with the evolution of 3D printing is certainly a consideration for the future of the Industrial and logistics real estate sector,” concluded Mr Maher.​