The additive manufacturing (AM) industry is in the midst of an enormous upheaval in too many ways to count. Just one of those ways, however, is the consolidation that is occurring. Another is the increase in publicly listed companies. Yet one more is the industrialization of 3D printing. One firm that symbolizes all of these trends is FATHOM (NYSE: FATH).
The service provider, whose largest shareholder is CORE Industrial Partners, recently released its first quarterly report after its IPO, with promising numbers for the high-growth firm. To learn more about its transformation from a series of fragmented 3D printing services to a single business under the umbrella of CORE, we spoke to Ryan Martin, FATHOM CEO.
The original FATHOM business started 35 years ago as Midwest Composite Technologies (MCT) was founded in 1984 In Hartland, Wisconsin. MCT was one of the earliest adopters of additive technology. In 2019, CORE acquired ICOMold and Fathom, Oakland and moved future acquisitions under the Fathom brand.. Moreover, it wasn’t until the acquisition that it grew to become one of the largest digital manufacturing bureaus in North America.
Martin himself comes from a major industrial and finance background, working almost 14 years at GE. The majority of this time was spent at GE Capital, where he served as a senior vice president and became managing director of Industrial Finance. Martin then became managing director and general manager of GE Additive.
“[At GE], I had an opportunity to travel the country and really what I saw was a very fragmented industry: a lot of very strong regional players, but these regional players would have expertise in only a single manufacturing process. Even in 3D printing, you’d have a lot of service bureaus that were just focused on metal or just focused on plastic. And then they’d go to somebody else for CNC or sheet metal or injection molding. It was a lot of these smaller, regional entrepreneur family-run businesses that were really serving these large enterprise customers,” Martin said.
This fragmentation meant that enterprise customers lacked a single source for their third-party manufacturing services. For that reason, Martin left GE and partnered with the team at CORE, who had a similar vision for a consolidated service bureau. Such an entity could enable the industry 4.0 transition currently taking place in manufacturing.
“Our goal has never been to be everything to everybody. It has always been to provide that unique, differentiated manufacturing technology and process to the largest, most innovative enterprise customers in the world.”
To achieve this vision, we’ve seen a number of firms rolled up by CORE, some of which are being consolidated into the FATHOM business. FATHOM has integrated metal 3D printing, injection molding, and precision sheet metal service bureaus.
AS CORE becomes a powerhouse across the emerging digital manufacturing space, FATHOM serves as a growing force to be reckoned with, as well. By purchasing smaller regional firms, it extends its own reach, while also bringing more commercial and digital strategies to their businesses. Our goal is to buy great businesses and then help take them to the next level through our commercial, digital, operational, financial, and people processes. We get these businesses ready to compete in an industry 4.0 world as part of Fathom, according to Martin.
“Typically, the smaller, regional acquisitions that we have acquired aren’t making the investments into the digital side of things,” Martin said. “We built our highly scalable Smart Quote(Registered Trademark) tool to help create that digital experience for all our customers. We also have an injection molding business, which is a world-leader in providing 30-second plastic injection molding quotes. And, so, we can pull that all the gather and then with our ERP system be able to really look at the businesses as a whole and make better decisions faster.”
At the moment, there is a minor revolution taking place in the world of manufacturing execution systems (MES). Just a handful of startups are developing MES software to integrate 3D printing and other digital fabrication tools into larger production environments. This has led to almost half of these businesses being acquired. Martin explained that the company uses a “hybridized” approach that combines FATHOM’s own software with packages from other firms. The challenge seems to be in the fact that most MES platforms are directed to additive manufacturing.
“To get an MES system that works good for additive but doesn’t work good for other manufacturing processes isn’t going to be effective for what we’re offering our customers. We have 25 different manufacturing processes that we offer around four core tenants: additive manufacturing (both plastic and metal), CNC machining, injection molding, and precision sheet metal fabrication,” Martin said. “Our key is to be technology-agnostic and then offer our customers the best solution for what they’re looking to achieve. In many cases, that’s going to be 3D printing. In other cases, it may be CNC, machining or maybe injection molding, or maybe a combination of all those, but that’s what we see as our value to our customers. As it relates to MES systems, we need to create a system that can work across multiple different manufacturing processes. We use some out-of-the box software and then we use some of our own internally developed. So, it’s really a hybridized internal software.”
Fortunately, what we’ve heard from MES developers is that they are ready to begin moving beyond additive. Perhaps in a couple of years’ time, this could mean another acquisition for CORE to create a manufacturing-wide MES product.
So far, what FATHOM has built up so far has been more than enough to tackle the right applications for some massive customers. This includes stop-gap measures to overcome supply chain challenges brought about by COVID-19. Martin relayed the story of a large agricultural manufacturer that was unable to access a $1 injection molded mounting mechanism for a tractor that was being built.
“They called us up at, on noon on a Tuesday and said, ‘We know that, on Wednesday at 4:00 AM, in the morning, we’re going to have a line down situation because we literally can’t source a one-dollar injection molded part.’ We’ve been a long-time partner with them. We help them a lot with different development projects. And, they said, ‘Could we redesign this part for 3D printing?’ We looked at it. We worked with their engineers, and, in about 60 minutes, we’d re-designed this part. Over the next 10 hours, we printed 500 of these parts. They actually flew one of their corporate planes up to Wisconsin, had a courier meet our second shift supervisor. We quickly printed 500 of those parts. During that day, they flew those down at 4:00 AM. Those went onto the manufacturing line and kept their manufacturing line up and running.”
Over the next several weeks, FATHOM 3D printed about 2,500 more of these parts to keep the business up and running. This led to further collaboration, in which the service bureau began identifying parts that would be suitable for 3D printing. And, as AM technology progresses, so will FATHOM’s capabilities. The company will be the first user of Evolve Additive’s unique technology, capable of 3D printing batches of thousands of plastic parts at once.
Just as the 3D printing industry is only at the beginning of its upward trajectory, so too is FATHOM. In just over a decade, it went from a husband-and-wife 3D printing service to a consolidated digital manufacturing corporation. With the backing of CORE, we can expect it to continue to grow quickly.
As it does, will it continue to operate as an independent business? There are plenty of corporate giants now operating in the service bureau space. Both Siemens and BASF offer 3D printing services. Given Martin’s own background with GE, one wonders if he will meet up with the legendary U.S. conglomerate once again in the future, perhaps resulting in the sale of FATHOM to GE. For now, however, the future is wide open for the company.
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