Once thought of as a method to make trinkets, 3D printing is increasingly being used in mass manufacturing to make production cheaper, better, stronger and faster. In his new book, The Pan-Industrial Revolution: How New Manufacturing Titans Will Transform the World, Dartmouth professor Richard D’Aveni explains how 3D printing could have a ripple effect across the global economy, even weakening China’s position as a rising superpower. D’Aveni joined the Knowledge@Wharton Radio Show on Sirius XM to talk about the future of additive manufacturing.

An edited transcript of the conversation follows.

Knowledge@Wharton: In the last decade, we’ve seen manufacturing jobs, which were the backbone of this country for many years, going away. Is 3D printing mitigating some of that loss?

Richard D’Aveni: Yes, in some ways. But nobody knows for sure exactly how much it’s going to take back. It is essentially a method from which powder is converted into a kind of gooey substance that’s then put down by layers. In the second-biggest type of 3D printing, it’s a resin. The resin builds up as layers on the bottom of an item that’s being manufactured, and the resin hardens using light. So, it’s not going to create a lot of jobs for people working in the factories. It’s going to create some higher-level jobs in the factories, more engineering types than blue-collar workers. Of course, there will be a lot of programming jobs and design jobs for people doing new product innovation and things like that.

That’s probably going to result in a lower number of people working in the factories. Having said that, we should be cognizant of the fact that the United States has so few people actually making stuff in the factory. Lots of people work for manufacturing firms, but they’re doing marketing and distribution and accounting. The people in the U.S. aren’t really going to be affected. The people who are going to be affected are in places like Asia, where they have lots of employees and lots of assembly going on. That’s going to disappear. We’ll be able to make an awful lot more here and save the transportation costs. This is going to mean that the balance of trade and the balance of funds isn’t going to flow to Asia like it used to.

Knowledge@Wharton: Where does the term pan-industrial come from?

D’Aveni: Pan-industrial comes from the following attribute — additive manufacturing and 3D printing. A company can make many different products and switch over between products relatively quickly. There’s no retooling. You don’t have to make dyes that take three months or molds that cost $150,000. You simply download a different file, and it prints out a new product. What do you call a company that one day makes parts for cars, the next day makes parts for airplanes, the day after that makes parts for any other metal product that you want? At that point, they’re not in any industry anymore. That company is what I would call a pan-industrial. In other words, it stretches across multiple industries.

Knowledge@Wharton: What does the continued growth of 3D printing mean for established companies? Will they try to incorporate 3D printing into their operations, or will they be looking for a third party to do it for them?

D’Aveni: That’s a really good question. I spent a lot of time looking at that issue and talking to people in advanced manufacturing. There are two mindsets. One is that you can outsource all of that, but you don’t have to do it to Asia. You can go to a printer farm in the U.S. But then there’s a whole group of other advanced manufacturers who say, “No, we’ll never do that because we have to worry about quality control.” You don’t really know what you’re getting. From day to day, the same printer with the same materials can turn out a slightly different product because of differences in humidity or temperature in one place or another. So, you can’t really go to a whole bunch of small places to do it.

“We would produce more at home. We would buy any minerals or powders that we needed.”

The other big question is intellectual property. As soon as you give somebody your design, your first concern has to be how fast somebody will just hit forward and email it to someone else. There’s a number of reasons why people wouldn’t want to go on the outside. I believe that’s going to turn out to be important because there’s going to be what I call big economies of scope in these pan-industrial firms, where the more products they make, the more they fill up their printing factories. As a consequence, they’re going to want to hold onto more products.

Knowledge@Wharton: In the book, you talk about General Electric, which has been a multinational, multiproduct company for such a long period of time. They’ve been divesting parts of their company over the last few years. How is GE being affected by something like 3D printing?

D’Aveni: At one point in time, GE was an industry leader, especially in high-end metals that you’d use in extreme environments such as airport and military-type applications or medical implants. But they got waylaid by a whole bunch of different decisions that siphoned off money into other businesses that took away from their ability to lead. They were losing money in other divisions, and the money went to trying to fix up those divisions.

They could have easily rolled up and controlled the entire high-end metal business in the world without anybody ever stopping them. But they didn’t, and this is where they went awry. Had they done that, they could have established themselves with a central manufacturing system that would make parts and eventually eliminate assembly by combining parts together for most of its businesses. But right now, it’s too late because they’re fighting the cash battle. This is one of those things where you get into a downward spiral, and it sucks you down the drain.

Knowledge@Wharton: You also mention the implications for the military. Could you talk about that?

D’Aveni: Yeah, the military is going full-bore on trying to use additive manufacturing methods. I’ve seen submarine hulls produced out of very special high-end plastics done by 3D printing. I’m not talking about miniature submarines. I’m talking about ones where you’d have a crew of 30 people in it.

Similarly, I’ve been informed that there’s a big effort to 3D print the F-35 jet. It’s pretty amazing because they start with a basketball court, and it’s got cables stretched across it. Multiple 3D printers move around on the cables and lay down first the feet, then the legs, then the body. Other 3D printers come in and drop inside of the walls of the F-35 what they call conductive traces. It carries electricity along it, so it’s already pre-wired.

Then they leave a couple of empty spaces for the heavy-duty electronics like communications and weapons systems and countermeasures. You slide it in there. It hits the contacts and is activated throughout the entire system. You put in the weapons control, and it touches the wires that run all the way to the weapons systems on the wings. You can update your aircraft very quickly. Instead of having to fly the whole fleet back to the United States to be retrofitted, you pull out the box. Somebody’s FedExed you the next box, you just stick it in, and you’ve got a whole new defensive system or a whole new missile launching system.

Knowledge@Wharton: How will 3D printing change some of the trade issues that we have been seeing recently?

D’Aveni: Those issues and implications are going to be a ripple effect that has the potential to change the balance of power in the world. We would produce more at home. We would buy any minerals or powders that we needed. So, we’d be buying the raw materials and then print it at home, rather than buy components in China and assemble it somewhere.

“I see it as a possibility to strengthen our sphere of influence by snatching people out of the control of the Chinese.”

This is going to have a big impact on countries like China because, as I mentioned earlier, there are very few Americans who actually make stuff anymore. But in China, that’s a whole different story. There’s about probably 60% of their population engaged in manufacturing that’s going to essentially be obsolete. We are not going to trade as much with them, which means then there’s less need for trade wars. People won’t have the need to go overseas because they can do just-in-time manufacturing with no or low transportation costs because you don’t have to ship things over. You can do just-in-time production because the distance between your factories and the retail stores or the users is very short.

There’s a potential that China’s going to get caught in a bind. The bind will be, either we adopt or don’t adopt. If they don’t, they go obsolete. If they do adopt 3D printing, they put half of their population out of work, which creates unrest. Then the legitimacy of the Communist party starts to fade because they don’t have the legitimacy of democracy or human rights or even good services like a health care system or Social Security system. They don’t have that in China.

That means that the balance of power starts to change in two ways. We’re keeping more of our own money and investing it in ourselves. Secondly, we’re now buying all the materials. All of those countries that are selling raw materials to China have now switched to locations like the U.S., and that changes the amount of power that China or the U.S. has over those supplier nations.

I see it as a possibility to strengthen our sphere of influence by snatching people out of the control of the Chinese. I see this ripple effect being really big. We can’t really know how it’s going to play out yet, but that’s my best guess from talking to a lot of experts.

“If I were the almighty being in control of the world, I would declare a Manhattan Project on additive manufacturing.”

Knowledge@Wharton: You talk about the German company Siemens. Not only is this a business story, but this is also a policy story of how governments and maybe even joint organizations like the European Union are going to consider 3D printing, correct?

D’Aveni: Yes, that’s a really good point. In the United States, we’ve got a half-hearted effort to invest in 3D printing. Whereas in Germany, there are multiple companies all working together, all focused on Siemens and all their car companies, all their metalworking companies. They’re all participating in a joint system. There’s lots of government training and investment going on. They’re reaching out to other places in Europe to get pieces that they don’t have, to continue forward in the progress of making 3D printing for mass manufacturing.

In the United States, we don’t really do that. We have this crazy idea that everything happens because of the market, which is a fantasy of economists who’ve developed models based on faulty assumptions. If you step back and look at what industries we do lead in, we lead in agriculture. We’ve invested an awful lot from the government in agriculture and agricultural development. We lead in pharmaceuticals. All of that research that funds it comes from the government. We lead in software. The reason that we lead in software is because the first large software systems came from the need of the IRS and the Social Security Administration for large processing. They hired and built up the companies that could produce that.

The facts show that a big government project pushes things forward. If I were the almighty being in control of the world, or especially the United States, I would declare a Manhattan Project on additive manufacturing. The goal would be replacing traditional manufacturing methods. China’s mercantile system basically operates like the British Empire did in the 1800s. I would just obsolete that. No need for trade wars, no need for military ships and so forth. You just undermine the core of their economy, the thing that they are strongest at.

Knowledge@Wharton: Even though 3D printing is becoming more common, should there be a certain level of security around some of this technology?

D’Aveni: Yes, especially with materials. There are a lot of high-end materials that cost a lot to develop, and you don’t want people reverse-engineering that. Remember, we were talking about the F-35 jet. When they produce this, they’ve been working with very high-end, proprietary plastic that they’ve developed at Lockheed Martin. This plastic allows you to do all kinds of things, like put honeycomb into the walls of the jet. This lightens the plane and gives you greater range and speed.

Compared to metal exteriors, it strengthens the ability to handle kinetic weapons. A missile hits you, if you’re in a metal plane, the metal cracks. The guy or woman who’s flying the plane ejects, the plane crashes somewhere and everything goes down the drain — all those millions of dollars that they spent making it.

With a plastic exterior, with this very high-end material, the missile hits the side of the plane, the plane’s body bends, doesn’t break, and then the computer system adjusts the aerodynamics so it stabilizes the flight of the plane. You can stay in the battle or go home, and you don’t have to throw away the whole plane and ditch it. That’s a competitive advantage on the military side. The same thing will happen with making all kinds of things, like electronic devices. I do think that there’s some need to try to protect this, and we have not done a very good job of that.