3D Printing & the Proposed Siemens and Alstom Rail Merger

Further consolidation of the rail industry is proposed to occur with the potential merger of Siemens‘ and Alstom’s railway products businesses. Their proposed merger follows the sale of GE’s rail business to Wabtec. Siemens, headquartered in Germany, is the largest industrial manufacturing company in Europe. Alstom is a French multinational company that is operating worldwide in rail transportation industries. The merger would create a European powerhouse in the railway industry. Both of these companies utilize additive manufacturing along with their regular manufacturing methods to improve on the way components are produced.

The Research & Development Tax Credit

Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

• New or improved products, processes, or software
• Technological in nature
• Elimination of uncertainty
• Process of experimentation

Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.

Alstom

In 2015, Alstom had a conference that introduced additive manufacturing to its R&D department to help with rapid prototyping. Alstom has integrated 3D printing with prototyping various parts of a train such as the bogie; a bogie is a crucial part of a train that determines how much weight a carriage can bear. Additive manufacturing allows for the production of a single part that can replace several other parts. An example of such a part is an air vent that Alstom created by using polyamide, a flame retardant material. Alstom also likes the versatility of 3D printing; anything that can be made into a CAD model can be 3D printed from materials that range from flame retardant plastics to strong metals. Switching the materials used not only adds customization, but also serves the purpose of weight optimization. Christophe Eschenbrenner, Digital Supply Chain Manager at Alstom, introduced the idea of 3D printing spare parts to optimize time and money on a day to day basis. 3D printing spare parts solves two main challenges in the supply chain: the missing part situation; an essential piece of equipment would be missing which would lead to a train being stored in a depot, and the overstock situation, which would lead to cash being tied up as inventory builds rather than is consumed. Alstom believes that 3D printing is a rapidly advancing technology which is why they will continue to explore the integration of 3D printing into their business model.

Siemens

3D printing opens up countless new opportunities for a manufacturing giant like Siemens. Siemens already has a full facility dedicated to producing 3D printed parts located in Erlangen, Germany. Siemens realize that 3D printing allows for a quick and cost-effective way to print components that are rarely replaced. Maximilian Kunkel, head of research and development at the facility, says, “We can produce complex parts without having to worry about minimum volumes or the cost of tools.” With additive manufacturing, components can be made within days instead of waiting weeks for the delivery of the same part. Siemens had a predicament where 3D printing was quite useful; streetcar (trolley) drivers wanted switches on the driver’s seat armrest for turn signals and switching rails but it simply was not cost-effective to manufacture these new armrests due to the volume that was required. 3D printing technology solved this problem by redesigning the current armrest to accommodate the new switches and printing the requested number of armrests in a timely fashion. Siemens is working on perfecting their 3D print process by creating CAD models, improving design and materials then conducting tests on the new products. Siemens believes that 3D printing allows them to stay several steps ahead of the competition.

Conclusion

The proposed Siemens and Alstom rail merger produces new opportunities, not only in the European industry but in the 3D printing industry as well. Siemens and Alstom are both experimenting with 3D printing and its various benefits to their respective business models. 3D printing allows for the rapid prototyping of various parts and leaves room for the improvement of products already in circulation. To date, Siemens and Alstom are only using additive manufacturing on small scale components but they believe the technology will evolve to a point where 3D printing will be viable at all points in their manufacturing process.

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Charles Goulding and John Chin of R&D Tax Savers discuss the Siemens-Alstom merger.