BASF to Invest 25 Million in Materialise What does that mean?

Materialise HQ

BASF is on a roll. After buying Inofil3D and two other startups recently it has invested in Materialise. BASF seems committed to 3D printing and willing to spend to get itself towards a leading role in the industry. BASF will now invest $25 million in Materialise. Through an “open business model” the companies will cooperate to “improve materials and software.”  They also said that “the agreement allows for systematic, wider scale testing and further optimization by BASF of its materials on the machines and within the infrastructure of Materialise.”

By focusing the agreement on machine testing plus the integration with software BASF seems to understand the challenges in Additive Manufacturing. There is a 3D printing pentagram of operator/procedure, material, settings, machine and environment. Polymer companies have traditionally focussed only on the material, shipping PA, PLA or ABS. Essentially they threw the polymer over the fence and hoped it ended up in good hands. This was silly. For one to manufacture using 3D printing, all points on the pentagram have to be under control. The operator has to be knowledgeable and follow procedure, the material has to be in spec and understood, the settings have to be optimized (firmware, software), the 3D printer has to work as advertised in a reliable and predictable way and the environment has to be under control (which is not only the build chamber but also the humidity, temperature and airflow around the printer and in part handling afterward). By understanding and investing in all of these elements BASF wishes to control all in order to actually manufacture.

Over the past two years, smart polymer companies have looked at applications. These companies have found clients, challenges, real-world scenarios and industrial needs. Usually, BASF is slow and steady but they were bolder than others in investing in 3D printing. Now they’ve one-upped them still further by tieing up with materialise. By working directly with the leading 3D printing software vendor and one of the largest service bureaus in the world, BASF will learn more and learn quicker. By having access to more data and more challenges BASF will make the materials the market needs. In a word: brilliant.

Volker Hammes, Managing Director of BASF 3D Printing Solutions said,

“Our two companies’ business areas complement each other very well and our cooperation will put us in an even better position to find and develop new business opportunities. With its 3D printer facilities in Leuven and innovative software solutions, Materialise has an outstanding infrastructure. Together, we can exploit our strengths even better to advance the 3D printing sector through the development of new products and technologies together with our partners and our customers,”

Industry pioneer and one of the smartest guys in 3D printing Materialise CEO Fried Vancraen said,

“To increase the adoption of 3D printing as a complementary manufacturing technology for final products, our industrial customers increasingly demand more control, more choice and ultimately lower cost.  We are confident that this collaboration with a leading manufacturer of materials will help to accelerate the adoption of 3D-printing in existing vertical markets and create significant business opportunities in new markets.“

Fried Vancraen

This in effect is an admission of a major strategic weakness that Materialise had. The Innovators Dilemma meant that increased capabilities of desktop 3D printers would erode the advantages of existing industrial systems. Meanwhile, successive waves of ever greater CAPEX due to optimized newer machines that reduce part cost through labour saving will erode the business. Worse still Materialise would continually be competing with leaner companies with less of an outlay but with newer machines. This scenario would have been a replay of what has happened globally in 2D printing with local printers being pushed out of business continually. Instead, Materialise now has access to the newest highest performing materials ahead of others. By being ahead in the best material for eyewear and by knowing more data and having more information they will be able to make better glasses. Perhaps there could be lower costs as well since for some materials you’re paying $130 or $800 per kilo or litre. They could potentially reap significant advantages there as well. However, transfer pricing and other rules would probably keep this within bounds. The key thing here is speed. If you know how to find new businesses in 3D printing, and know how to manufacture at scale what holds you back? The ability to optimally industrialize the new thing the fastest. Materialise has always been best in business development if they now have the best materials they’ll be the first to catch the next big wave or create it.

Essentially BASF has, quite inexpensively, bought itself a driving seat in the industrialization of 3D printing, getting access to a huge amount of data and making itself the natural polymer leader (Even though a probably not very happy at the moment Evonik and a head-scratching Arkema and SABIC all have more revenue in 3D printing than BASF) . It has now gone from a scenario where many polymer companies were circling the market interested in investing to a game of musical chairs. On the software front what remains? Autodesk is far too large so it only really leaves Makeprintable and Simplify3D. On the service side, one could look at FKM, FIT or CRP.  It has put itself way ahead of competitors. Meanwhile, 27-year-old Materialise has speeded up possible new industrializations for itself. This is an exciting development for 3D printing, especially for manufacturing using 3D printing.

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