In a previous article, we went into great detail about the size and elements of the market for horse trailers, determining that, any way you slice it, horses may represent a valuable niche for us in the 3D printing industry. In this story, I explore the applications of 3D printing in this small segment.
We’re used to looking at markets in a certain way. We look for inefficiencies, growth, fragmented or very concentrated markets. We look at markets that are ripe for disruption. But, we often believe in hope, growth, and the future. We are drawn to the shiny and new. More are interested in the metaverse than concrete mixing or waste management. People love medical applications, startups, or exciting newsworthy businesses. We love to be in on the hype and the future.
Horse trailers are not that. This is a stagnant market that looks like it will be opened to more overseas competition in components and final products. It is not huge and does not seem to be growing. In fact, it is probably contracting. No tailwinds here. So, if you had a fortune, would you drop it in this market? Well, perhaps, if you had a 3D printed fortune you might.
In an unloved sector, your investment could be a write off. Your investment in certification for road- or trailer-manufacturing specific guidelines may be written off. Your trailer brand and market entry will all be cost. However, imagine you invested in half-a-dozen Kuka robots and some extruders. If your play for world horse trailer domination doesn’t pay off, then just get them to print something else. Make boats, formwork, or military drones instead.
By being tool-less (or tool-poor, at least), we can reduce our costs of switching to new products and markets. What’s more, we could make boats in summer and switch to trailers in winter—balance our demand with industries that don’t correlate to make our finances more steady. To me 3D printing is now always used for high-growth markets, but it certainly has a place in investing in the unloved but also fantastically profitable. Ah yes, I should have perhaps started with fantastically profitable.
When we compare horse trailers to RV prices, as well as the prices of trailers for cargo and other specialty items, we can see that they are perhaps more expensive than they should be, meter to meter. Yes, they have extra windows, vents, and safety features, but there seems to be a premium at work here. Yes, horse trailers have ramps and seem to use some more expensive materials, but there seems to be more margin, too. People will pay for safety, of course, and this makes horse trailers more attractive than flatbeds. Furthermore, the market makes use of a considerable amount of manual labor assembling mostly aluminum parts and panels.
There is little innovation in the horse trailer sector as a whole with the exception of some players. Kingstar, for example, is doing some nifty user-centric innovation, while Double D is the firm introducing 3D printing to the industry. The regulatory burden is frighteningly low, with a lot of standards either led by the industry or by bodies one subscribes to. Safety standards seem to be governed by the regulated national minimum requirements. These are different in different regions, keeping competition fragmented, as well. The U.S. has a registration and trailer safety requirement regime and is trying to stop the illegal import and use of trailers not meeting U.S. standards. Compared to cars, compliance burdens and tort seem comparatively light.
Cars Versus Trailers
Think of the many billions that you would need to compete in the car industry. Tight margins, relentless competition, huge outlays in stock, manufacturing, marketing, and distribution. The car business is one that many would like to be in, except if they looked at it from a purely financial point of view. Meanwhile, a trailer is a much simpler item, with much lower market entry costs—much lower employee numbers, much less equipment required, and much lower value components, and materials overall. Safety standards, quality costs, and complexity are lower, as well.
Automobile companies have margins of around 5% or 7% for EBITA. I’m going to hazard a guess here and say that trailer margins are significantly higher than that. The ticket could actually be higher in some cases, as well. And compare the complexity and up-front cost of engineering a new $100,000 trailer or the new Ford Lightning. Estimates on new car development costs vary from over $200 million for an update to over $1 billion for a new, important model. Imagine spending $20 million in developing new trailers that have breakthrough economics, ergonomics, or mileage.
The 3D Printing Opportunity
One part of the 3D printing opportunity is that, by not working with molds and tooling, additive manufacturing (AM) firms can deploy their offerings far quicker at far lower cost. The technology’s market entry and time-to-market alone mean that AM businesses can produce goods that others would struggle to put on the market. However, 3D printing´s variability and ability to iterate also mean less fashion risk.
We don’t need to make a certain amount to recoup molds and other investments. We’re not stuck selling a bad design or something no one wants. We can be versatile and improve our offering according to emerging trends and market forces. An economic downturn? We can simply redesign our trailer to become a more low weight, fuel-efficient model for leaner times. Things looking up? Some last minute additional structures can let us add LED lights, extra water bottles and a TV for the horses.
We know that we can do these things, but we never really use them to expedite market entry. In this case, in a fragmented, small and, perhaps declining, market, these advantages mean that 3D printing can outcompete. We can bring innovation, market fit, new models, new features to bear in a market where no one else can and will invest. These are the reasons that the trailer market excites me generally.
Specific Market Opportunity
Now, Double D trailers has entered the market by making a partially 3D printed trailer using Loci robots. Large format robots for 3D printing means that the team has the versatility and speed-to-market. What’s more, the company hopes to reduce its emissions by using less material and cutting the mileage on the trailer, and, in so doing, associated costs through saving material.
Double D can also make it lighter overall by creating a monocoque chassis design relying on polymer 3D printed parts for structure, instead of steel or aluminum. When comparing one traditional model to a 3D printed counterpart, the team concluded that the traditional one weighed 5,100 pounds, whereas the 3D printed trailer came in at 3,800 lbs. This should add up to a significant savings on fuel. In cars, an extra 100 pounds leads to a reduction in mileage of 1% now that relationship may be completely different in trailer weight but there will be savings.
A 3D printing facility is also more environmentally friendly, the company claims. It also suggests that supply chain resilience is an advantage, with Double D no longer dealing with the same shortages it once confronted. Previously, “Double D Trailers was able to offer custom-built horse trailers to customers and have them completed within a couple months,” but now, “when a customer comes to us and figures out exactly what they want, it’s a gut-punch to have to tell them that we are close to a year out on production.” With delays of eight to 10 months, such an order book problem is a huge incentive to move to a new technology. The Double D team also says that it wants to bring innovation to bear on this market.
Print times are said to be 15-20 hours, which makes it fairly inexpensive, as well. The material is CF polycarbonate, available at low-volume in pellet form for around $20 per kilo retail to consumers. If we assume $80 per machine hour and $20 per kilo, then the print cost in and of itself will be around $36,000. But, if we can get the material price down to around $11, then we’d be looking at a price around $20,000. And if we could use a PC GF or buy at very high-volume we could pay more like $5 a kilo.
On the one hand there are axles and other steel components that distort the weight estimate. And we must also realize there will be a lot of post-processing and other assembly tasks still. There are also a variety of components to buy, from glass to other materials. The company is now estimating that its trailer will cost $79,300 to buy right now. We’d have to dig much deeper to price it all but to me this looks like a stellar business case. Margin, flexibility, revenue, it all looks lovely to me.
All in all, I really love this limited but potentially very profitable market. Only 10% of it may net you a $150 million business, at a far lower investment, at higher margin, and years faster than any kind of meaningful penetration of the automotive supply chain would get you. You could out innovate permanently by making custom models faster and by making niche models that used less gas better than anyone else as well. And production large polymer components could also be sold externally or you could enter other markets such as formwork or boat building. I really, honestly think that horse trailers could be the next big thing, do you?
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