IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE - PowerPoint PPT Presentation

IDENTIFY THE VALUE IN AN ENTERPRISE-WIDE DEPLOYMENT OF ADDITIVE MANUFACTURING TRANSPORTATION & INDUSTRIAL MACHINERY Chris Krampitz, P.E. Stratasys Consulting Principal Consultant - Americas 1

OBJECTIVES Identify industry challenges addressed by Additive Manufacturing (AM) Define the potential benefits from enterprise-wide AM deployment Explain approaches to identify and define enterprise-wide AM value 2 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 2

Section One OUR EXPERTISE 3

STRATASYS AT THE FOREFRONT OF DIGITAL MANUFACTURING FOR OVER 25 YEARS Industrial Machines Global AM Leadership Industrial AM Contract Manufacturer Innovation Deployment Deep Vertical Market  Over 1,200 granted  $696 MILLION in Expertise or pending AM revenue (2015) patents globally Technical & Commercial AM Solution  Over 150,000 Consulting Services Ecosystem  Over 30 technology systems sold and leadership Materials Development awards  Comprehensive ecosystem to facilitate the adoption AM Software and integration Prototyping Machines 4 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 4

DEPTH & EXPERTISE TO ADDRESS KEY OBSTACLES IN AM ADOPTION & INTEGRATION …to apply their expertise to capture Team of technical and commercial people ready for deployment … the maximum value from AM Advanced 3D Printing 3D Printing Design & Materials Technologies Simulation Post Testing & Regulations Inspection & Standards Processing Quality Supply Chain Strategic Management Management Management 5 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 5

Section Two AM-ENABLED MANUFACTURING TRANSFORMATION 6

TRANSFORMATION IN PRODUCT COMMERCIALIZATION Current State: Mass Production and Centralized Manufacturing Economies Product Design for Mass Distribution Manufacturing of Scale Production Emerging State: Mass Complexity and Distributed Manufacturing Mass Distributed Design for Economies Manufacturing of Scope Customization Use 7 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 7

RISE OF MASS COMPLEXITY AND DISTRIBUTED MANUFACTURING …fueled by the growth in manufacturing Global AM installations are growing rapidly… $80,000 # of installed machines Expected 30% CAGR 450,000 25,000 2015 Distribution of Capacity (USD million) 400,000 $60,000 U.S. 38% N.A. 40% 20,000 350,000 $30B Germany 9% Europe 28% 300,000 Japan 9% APAC 27% 15,000 $40,000 250,000 China 9% $ 9B 200,000 10,000 $ 8B $20,000 150,000 $ 10B 100,000 5,000 $ 11B 50,000 Industrial Systems $- 0 0 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2008 2010 2012 2014 2016F 2018F 2020F 2022F SOURCES: Wohler's Report 2016, MorganStanley, UL SOURCES: Wohler's Report 2016, MorganStanley, UL AM technology is fueling the creation of distributed Manufacturing networks are allowing mass manufacturing networks complexity and better designs Elements of the Manufacturing Network Independent 20K (2006) to 220K (2016) Designers (US) Innovation Platforms AM contract manufacturer on average uploads & prints 120K new Development time for new Microfactories $425M (2008) to $3,574M (2015) designs per month designs is over 90% faster SOURCES: Wohler’s Report 2016, BLS, UL SOURCES: Shapeways , Wohler’s Report 2015, PDMA, UL 8 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 8

AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (1 OF 2) 1  Increases likelihood of product launch success Product  Increase customer loyalty Co-Development  AM prototypes to validate user requirements 2  Rapid identification of worthy product concepts Real-Time  Decreases market research costs Market Testing  AM pre- production prototypes to conduct “split testing” across markets 3  Selective specialization across target markets Optimal Market  Identify modularization across market segments Selection  AM used for small scale production in specialized markets 9 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 9

AM IS CATALYZING CHANGES IN THE CONCEPTUALIZATION, DESIGN, AND PRODUCTION PROCESSES (2 OF 2) 4  Rapidly identify product variants warranting large scale Production production across market segments Scale Up  AM used for production of complex parts and for manufacturing tooling 5 Maintenance &  AM used to producing low turnover spare parts and to Sustainment produce tooling for moderate turnover spare parts Potential Benefits from AM Technology Increase speed to market by over 50%  Increase part consolidating by over 20%  Decrease tooling costs by over 50%   Decrease unit total landed cost by over 15% 10 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 10

POLL QUESTION #1 In which areas in the product realization process is your organization MOST interested in applying additive manufacturing technologies? (Select One) A. Product Co-Development B. Real Market Testing C. Optimal Market Selection / Small Production Runs D. Production Scale Up / Bridge Tooling E. Maintenance & Sustainment F. Other 11 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 11

Section Three MARKET FOR TRANSPORTATION AND INDUSTRIAL MACHINERY 12

TRANSPORTATION AND INDUSTRIAL MACHINERY Motor Vehicles, Railroad Rolling Agriculture, Industrial Machinery Body, & Parts Stock Construction, & Mining Aerospace Engine, Turbine, & Metalworking Ship & Boat Product & Parts Power Transmission Machinery Equipment  High complexity, high value assemblies (e.g., electrical) Rapid tooling (e.g., cast patterns, die/molds, jigs, & fixtures)  Fluid Flow Equipment 13 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 13

CURRENT STATE OF THE TRANSPORTATION SEGMENT …despite increasing spending to Motor Vehicle industry has struggled with earning its cost of capital… maintain & improve capital assets... Capital spending, R&D, & M&A for top 10 OEMs (USD billions) $250 15% Total Shareholder Return Top 100 Suppliers Estimated Cost of Capital 10% $200 5% $150 Top 10 OEMs 0% $100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -5% $50 -10% $0 -15% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -20% …despite US vehicles sales …and despite profit margins reaching record levels… being at 10 year highs. 8% 20 SAAR Million Units Average EBIT Margin Top 10 OEMs Top 100 Suppliers (light vehicles) 15 6% 10 4% 5 2% 0 0% 2000 2009 2016 2020 2006 2009 2016 -2% SOURCES: Capital iQ, Company Reports, Motor Intelligence, AutoPacific 14 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 14

KEY FACTORS AND TRENDS IN THE TRANSPORTATION SEGMENTS Causal Factors Emerging Effects  Supply chain consolidation  Sharing of platforms  Flexible manufacturing Connected, Intelligent &  Offloading more product New Competition & Autonomous Vehicles Cooperation development  Focus on features that matter to end users  Focus on new product Stricter Fuel Economy development & Safety Standards Trends that additive Divergent Demand manufacturing technologies are Shifts in Mobility Growth Behaviors well suited to address SOURCES: NHTSA, PwC, McKinsey, Industry Week 15 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 15

KEY FACTORS AND TRENDS IN THE INDUSTRIAL MACHINERY SEGMENT Industrial Machinery segment has also Emerging Trends struggled to earn its cost of capital 60% MSCI ACWI Machinery Total Shareholder Return  Supply chain consolidation 40% Estimated Cost of Capital 20%  Platform consolidation 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 -20%  Flexible manufacturing -40% -60%  Offloading more product development  Focus on innovation to reduce cost and improve product performance Electrical Systems/ Regulatory Diverging Market Electronics Compliance Demands SOURCES: YCharts, Association of Equipment Manufcturers 16 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 16

AM CAN BE A STRATEGIC ELEMENT IN ADDRESSING INDUSTRY CHALLENGES Potential Decrease in Time to Market from Using AM Potential Decrease in Total Landed Cost from Using AM 40% 100% Traditional Cost 80% Estimated 20% Return 15% On Investment 60% 15% 7% 40% 1% 6% 1% 17% 20% 0% 4-5 years w/o AM 1-2 years w/ AM Near-Term Benefits: Quick Wins: Medium-Term Benefits: More complex designs driving weight Accelerating new product development   Customization and improved market  reductions and incorporation of  Enhancing quality through rapid prototyping responsiveness electronics Smaller supply chains with greater  Customized fabrication tooling   Reducing assembly and production contributions from members  Reducing tooling costs in product design costs through simplification SOURCES: U.S. Census Bureau, Department of Commerce, US FDA, Stratasys Consulting 17 STRATASYS / A GLOBAL LEADER IN APPLIED ADDITIVE TECHNOLOGY SOLUTIONS 17