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A circular component part being printed by an industrial 3D printer
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With the 4th Industrial Revolution (“Industry 4.0”) upon us, the technologies that have transformed other segments of the economy — the Internet of Things, big data and artificial intelligence, to name a few — are reshaping the industrial space, driving improvements in productivity and automation. But, as drastic as these changes have been, one thing has more or less remained the same: the manufacturing process itself.

That may be changing with the dawn of “Industry 4.5,” as priorities shift to sustainability, speed-to-market, and supply chain resiliency. Additive Manufacturing (AM), synonymous with 3D printing, creates objects layer by layer and has the potential to transform manufacturing as we know it, expanding design freedom, reducing time to market, bringing production closer to demand and improving industrial sustainability.

Our Research analysts outline three key points for understanding how Additive Manufacturing could transform segments of the $14 trillion global manufacturing industry.

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Traditional manufacturing impedes innovation, sustainability and supply chain resiliency

Technology has paved the way for smarter factories and supply chains, but what has not changed is the need to mold, mill, bend and stamp raw materials. These manufacturing processes not only involve expensive multi-part assembly and specialised tooling, they also limit design freedom and generate excessive waste.

At the same time, a growing emphasis on sustainability and innovation is requiring a revamp of manufacturing and product design, with the COVID-19 pandemic laying bare the shortcomings of traditional manufacturing’s heavy reliance on complex and often far-flung supply chains.

In an April 2020 survey of 700 US manufacturing professionals by the Society of Manufacturing Engineers, 25% said they had had to change their supply chain in response to the pandemic, and seven industries ranked AM in the top three technologies taking priority for investment post-COVID.

US engineers across industries ranked AM as a top technology priority for investment post-COVID
Graphic depicting engineers from various industries' ranking of Additive Manufacturing as an investment priority post-COVID

Source: Society of Manufacturing Engineers, Barclays Research.
Note: Survey options included: 5G network & infrastructure; AI & machine learning; AR/VR; Digital security; Robotics; Industrial IoT solutions; Video & cloud services; Wireless connectivity; Blockchain; Distributed manufacturing; Additive manufacturing/3D printing; Other

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AM represents a paradigm shift in design, manufacturing and distribution

By creating objects layer by layer, AM allows for greater design freedom with little or no added cost for greater complexity, and results in less waste overall. It can create lighter, better performing, greener and potentially cheaper industrial products, all with enhanced operational flexibility, speed-to-market, plant productivity and supply chain resiliency.

Comparing Additive and Traditional Manufacturing
Graphic comparing additive manufacturing and traditional manufacturing in the areas of design, sustainability and distribution

Source: Barclays Research.

The COVID-19 pandemic offered a preview of AM’s potential. Various industries were able to leverage their distributed AM networks to quickly jump start production of medical equipment amid supply chain disruptions.

AM opens the door to highly advanced designs and decentralised manufacturing. Among other benefits, it can facilitate light-weight vehicle designs to boost efficiency and extend range, replace spare part inventories with digitised part libraries, and enable on-location production in remote locations, including for the military, energy and space exploration.

Although AM is not new, using it to produce durable end-use products is. The global AM market has grown at about 25% CAGR since 2015 but remains below $15 billion by most estimates. This represents about 0.10% of the global manufacturing industry, signaling tremendous upside potential.

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Industrialised AM isn’t hype, but adoption for mass production could take decades, not years

AM has not been immune to the emerging tech hype cycle. High hopes that 3D printers would become household appliances in the early 2010s fizzled on account of AM’s limitations at the time, leaving a scar for some investors.

But the technology has made considerable progress since then, proving competitive for low-volume production and mass customisation of industrial-grade parts. Manufacturers are using it to develop custom tooling and assembly aids at factories, while the medical industry is turning to AM to print implants, prosthetics and other devices tailored to patient needs.

Still, AM faces major hurdles to broader adoption for mass production. Manufacturers can achieve greater economies of scale using traditional manufacturing methods, and AM poses unique reliability challenges because it often entails creating new parts and new materials at the same time. As a result, where mass production is concerned, AM has been largely relegated to printing complex, high-value parts in select industries, such as aerospace.

In the most likely scenario going forward, AM will serve as a complement to traditional manufacturing, rather than replace it.

What may be overlooked is the role that artificial intelligence can play in increasing AM adoption as it matures. Much of AM’s progress today is based on trial and error, but machine learning could eventually give 3D printers “eyes” (machine vision) and “brains” (closed-looped feedback) to help advance the AM process and improve cost, speed and reliability faster than anticipated.

AI: The key to closing the economic advantage gap between Traditional and Additive Manufacturing
Line graph depicting traditional manufacturing versus additive manufacturing on the basis of unit costs versus production costs

Source: Barclays Research.

Over time, Additive Manufacturing will likely continue to close the gap with traditional manufacturing and expand its influence on a $14 trillion global manufacturing industry.

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About the analyst

William Thompson joined Barclays in 2011 and is a Vice President and Senior Research Analyst for U.S. Thematic Research across the Industrials & Energy sectors. William previously was a Senior Analyst covering Small and Medium Cap Oil & Gas Exploration & Production (E&P) companies. Prior to covering SMid Cap E&Ps, William was part of the Barclays' Oilfield Services & Equipment research team and ranked as an Institutional Investor Rising Start in 2017. Prior to Barclays, William was a Vice President at J.P. Morgan covering Oilfield Services & Equipment and an Associate at Citi covering Airfreight, Surface, and Marine Transportation. William was a Senior Research Associate at Cambridge Associates, where he was responsible for vetting and monitoring private equity managers focused on hard assets. William has a Bachelors of Engineering from Dartmouth College and Bachelor of Arts in Chemistry from Colby College.

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