As discussed in a recent 3DPrint.com PRO article, 3D Systems (NYSE: DDD) has changed CEOs and performed significant reorganization twice in the past four years. With an eagerness to understand the direction of the company under its latest leader, we reached out to the company to have an open discussion with the new CEO, Dr. Jeffrey Graves.
Graves has a substantial background for leading a 3D printing company that has refocused on healthcare and industrial applications. With a PhD in titanium metallurgy from the University of Wisconsin, Graves went on to work for Rockwell International, now a part of Boeing, where he worked on such illustrious projects as the Space Shuttle. The bulk of his career, however, was spent at GE (NYSE: GE) in various management positions under Jack Welch.
When Welch left, Graves did, too, taking up his first CEO position at KEMET Electronics, a publicly traded manufacturer of high-performance capacitor solutions, before becoming CEO of MTS Systems, another publicly traded firm, this time focused on high-performance test, simulation and measurement systems.
“My last company was an engineering company,” Graves relayed. “I was quite happy there and convinced I would probably retire from there some day, but this was a really compelling opportunity. Not only the company, which I found fantastic in terms of potential, but the industry. The industry is on the verge of a real renaissance again, just based on how fast design requirements are evolving in the world, how fast additive manufacturing is being accepted, and then things like the code environment today and how that’s changing supply chains.”
While this experience obviously reflects the engineering background that Graves has, it’s also worth noting that he sits on the board of Hexcel, a composites company with an increasing stake in 3D printing via its acquisition of PEKK printing firm Oxford Performance Materials. He also sits on the board of FARO, a manufacturer of high-end 3D scanners.
However, even at GE, Graves was already becoming acquainted with 3D printing, describing himself then as a user of powder metallurgy in general. At MTS, he oversaw the design and building of testing systems for additive products.
“I’ve been a user of additive manufacturing. I’ve been a tester of additive manufacturing products, and then, the move to 3D Systems now puts me on the providing end of things, if you will. I’ve really been around this industry for many, many years,” Graves said.
Graves described the transition of the company from that of his predecessor, Vyomesh Joshi (VJ), to his own management of 3D Systems as a logical evolution. Joshi had reached retirement age after laying substantial groundwork for rebuilding the company, according to Graves. Under its CEO prior to Joshi, Avi Reichental, who stepped down in 2015, the company acquired 50 businesses in about five years.
Joshi immediately began restructuring the firm with a focus on finding its strongest division, which he thought to be healthcare, and extrapolating its template across the business. Graves says that the charter he was given by the 3D Systems board of directors was to build on Joshi’s foundation and pick a fundamental direction in which to move. Since joining the company in May 2020, Graves has set about restructuring 3D Systems in a more cohesive fashion. This included a significant layoff of about 20 percent of its workforce, which Graves suggests was already needed by the company, but was accentuated by the COVID-19 pandemic.
“Many companies go through this when you’ve acquired a lot of businesses—and 3D Systems had acquired over 50 companies—when you’ve done that, you’ve undoubtedly got inefficiencies built into the structure. In addition to that, we were selling hardware, software and materials with completely separate sales forces and things like that. So, there was a lot of room to just focus and eliminate redundancy. This, in turn, makes it easier for our customers to understand us because we’ll have fewer people calling on them,” Graves said. “I would say that, by the time normalcy returns, we will be leaner and more focused and really ready to drive for top- and bottom-line growth.”
This move was a part of a larger refocusing strategy that saw a business previously divided into hardware, software and materials now increasingly structured based on applications.
“When I arrived, we were treating hardware, software, and materials as discreet elements of the business and trying to take those to market. And we were still involved in a number of areas of subtractive manufacturing,” Graves said. “About a month in, after meeting the folks and looking at our culture and experiences, I said we should focus on the customers and markets that use additive manufacturing effectively, like our healthcare and aerospace customers, and pick our investment areas based on that. And then, whatever’s outside that circle we’re going to divest.”
Right now, this means dividing operations into healthcare and industrial applications, with the former further broken down into such sub-segments as medical devices, dental and the latter into aerospace and defense, and transportation and motorsports, for instance. These applications are driven by wider industry adoption, with Graves saying, “Areas that embrace additive and are more on an industrial scale or a scale that can deliver meaningful volumes to a company like ours are all fair game.”
It also means eliminating more tangentially related portions of the business, such as subtractive manufacturing. By divesting from some operations and further reorganizing the company, Graves aims to remove $100 million in costs from the company over 18 months, with the $60 million mark to be achieved by the end of 2020.
“Assuming the world behaves itself, the pandemic at least partially controlled, we’ll be profitable,” Graves said. “We’ll be generating a fairly strong cashflow and we don’t consume much cash to grow. That allows us to really spend money on things like R&D and to invest in any other capital we need for our growth. And then I think you’ll see us having an ability to bring in special technologies or applications through acquisition, as well.”
Graves suggests that the company already has strong fundamentals in place. 3D Systems has the most diverse additive technology portfolio on the market, with processes ranging from stereolithography and its Figure 4 technology to metal and plastic powder bed fusion, material jetting and binder jetting. Once the reorganization is fully executed, it’s possible that the company will complete its transformation back into an industry stalwart.
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