AMS Spring 2023

3D Printing Layoffs Continue with Xerox Elem Additive Division

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The additive manufacturing (AM) industry has seen a number of companies contract as the larger economy struggles. This has included firms like Desktop Metal, Fast Radius, Nexa3D, and others. The latest is photocopier pioneer Xerox (Nasdaq: XRX), which has sought to revitalize its business by venturing into AM with an ambitious acquisition that led to the deployment of a unique, new metal 3D printer dubbed Elem X.

Now, like its colleagues in the space, Xerox, too, is performing layoffs in its additive division. Employees on LinkedIn have posted about their need to find new work after being let go from the company’s nascent 3D printing business. Elem Additive General Manager Tali Rosman also left the company. A Xerox spokesperson provided 3DPrint.com with the following comment:

“On September 30, Xerox scaled back its Elem Additive 3D business and is now solely focused on supporting current installations. As outlined at our Investor Day event earlier this year, the innovation studio model we have established enables us to quickly determine which businesses we continue moving forward with and which we scale down. This was a difficult, but necessary, decision. We are working to minimize the impact to the affected individuals and will provide transition assistance for those impacted.”

Xerox’s Foray into 3D Printing

Xerox got into the 3D printing space in 2019 with the purchase of metal 3D printing startup Vader Systems. Vader’s process, which became the basis for the Elem X system, was capable of melting off-the-shelf metal wire in a ceramic crucible before using electromagnetic force to eject the molten metal onto a moving build plate.

Over the course of the next year, the company worked to commercialize the technology and build out a team that could successfully bring it to market. This included the hiring of Tali Rosman, who had previously worked at Stratasys for nearly four years as director of corporate development and head of product strategy and operations.

By February 2021, Xerox unveiled the Elem X and its first customer, the U.S. Navy. Other customers included Siemens, the U.S. Department of Energy’s Oak Ridge National Laboratory, and Vertex Manufacturing, led by GE Aerospace metal 3D printing veteran Greg Morris. These clients all sought the benefits of a technology capable of using low-cost materials to print solid parts in record time and with little post-processing.

An example part that was 3D printed on the Xerox ElemX machine, powered by the SINUMERIK 840D sl control system from Siemens.

Of course, selling metal 3D printers is a long game, with customers needing to validate the technology, justify the investment, and the orders for the equipment being fulfilled. However, in the case of Xerox, it seemed as though the business case for its additive division was a sound one. The Elem X was installed on a Naval vessel just this summer using a specialty ruggedized container, an event that surely garnered interest from potential customers looking for safe and rapid manufacturing of metal parts in possibly unstable environments. This means militaries of all types, particularly navies, as well as the marine and energy industries. Think 3D printing replace parts for offshore oil rigs, wind farms, or ships.

What Happened with Elem Additive at Xerox?

Xerox employees may be hesitant to speak on the record about the events that led to the layoffs, given the fact that it is a large, publicly traded company. Nevertheless, we don’t need comments from displaced workers to understand that the financial situation at the company has been dire for about a decade. Xerox generates revenues of $7 billion, a far cry from the $22 billion it was making circa 2011 and, still, its market cap is only $2 billion. The company has had four quarters of growth since 2012 and the stock itself has about halved since 2019.

Throughout this period, Xerox’s management has been tumultuous, with activist investor Carl Icahn thwarting a merger with Fujifilm in 2018. This was followed by an attempted hostile takeover of HP. After HP rejected two of Xerox’s unsolicited bids, Xerox announced a strategy to replace HP’s board. The most recent shakeup was the unexpected death of Xerox CEO John Visentin from an undisclosed illness in June 2022.

Xerox vs HP

While inopportune for the company, given its financial situation, the disruption in management and Xerox’s economic struggles could prove valuable to a potential competitor. On Xerox’s side, Icahn Associates Holding LLC is the largest shareholder with 22% of the company. Meanwhile, Warren Buffet’s Berkshire Hathaway, Inc. owns 10% of HP. Now could be the ideal time for HP to xerox Xerox’s own strategy and purchase its additive division. Here’s what 3DPrint.com Macro Analyst Matt Kremenetsky had to say:

“Given how crowded the space has become, Xerox may simply turn out to have been one legacy brand too many for the AM sector. At the same time, this doesn’t mean the company’s additive division is valueless—far from it! Rather, it suggests that the company’s AM portfolio could just hold much greater value as an acquisition for a company in better financial health than it ever has for Xerox itself. Considering Warren Buffett’s penchant for buying out Carl Icahn — Buffett acquired Icahn’s entire stake in Occidental Petroleum earlier this year — combined with Berkshire’s simultaneously increasing stake in HP, the latter could be a perfect fit to take on Xerox’s AM operations.”

Elem Additive isn’t the only promising division that Xerox seems to be shedding. In 2021, Xerox created a joint venture with the state government of Victoria in Australia. Called Eloque, the business was focused on installing sensors in bridges for remote monitoring with the goal of repairing them and maintaining their longevity. Consultancy firm McKinsey & Company reported that “the technology works … as proven by extensive piloting done on five bridges in Victoria in 2019.” A rushed commercialization process saw Eloque’s product brought to market before it was ready, ultimately leading to the venture’s collapse.

In both the case of Elem Additive and Eloque, the products and the teams developing them seemed to be capable. For Elem Additive, the road map was promising and it had earned very established customers. Now that the Xerox is abandoning them, they may be ripe for acquisitions by others.

Possible Buyers of Xerox’s 3D Printing Division

If we aren’t just watching two billionaires duke it out over turf at the end of the world, there are other contenders for purchasing Xerox’s promising AM division. Though it bought Xerox’s legacy printing business, Fujifilm has yet to make a real entrance into 3D printing, despite the fact that many other 2D printing companies are aiming to recover from losses made by the digital age.

Aside from HP, these legacy printing businesses include Mimaki, Ricoh, Sindoh, and Epson. Canon and Konica Minolta have long partnered with 3D Systems to sell its products. Canon in particular has explored the development of at least one 3D printer. More recently, Konica Minolta began selling 3D printing services with Markforged technology in Australia. One of these firms could firm up their commitment to the AM sector with the acquisition of Elem Additive.

The most obvious guess, given its current momentum, would be Mitsubishi via Nikon. Elem X technology would complement the variety of other metal 3D printing processes being developed at Mitsubishi, given its niche applications. Mitsubishi’s various businesses are ostensibly separate, so Xerox would have to work with whichever affiliated company that chose to buy it. For that reason, it could very well work within Nikon, which operates military and aerospace 3D printing bureau Morf3D.

The 3D Printing Workforce at Large

As 3DPrint.com has pointed out, the 3D printing market is experiencing a great deal of turmoil due to the larger recession. Many firms across the board have laid off employees, while the more financially stable ones are able to pick up the pieces. Alexander Daniels Global (ADG), a leader in 3D printing recruitment solutions, is in a keen position to understand the flow of the industry’s workforce. About the recent wave of layoffs, ADG Director Nick Pearce told 3DPrint.com:

“The additive manufacturing industry is currently in something of a ‘transitory’ period. On the one hand we see a lot of demand still from companies looking to hire (ADG has seen a 35% increase in jobs between Q2 and Q3). However, hiring processes are taking longer and companies are sitting on candidate submissions. We have also seen some companies pulling back from hiring even where they have selected a candidate to offer.

“There is a lot of economic uncertainty surrounding the market as a whole which is driving this behavior. What I think is very short-sighted of businesses is the layoffs we are seeing. Companies simply haven’t learnt from COVID. There were similarly layoffs then, which at the time might have seemed reasonable. What these companies don’t take into account is how difficult they might find it to replace the talent they lose, when market conditions improve. There is also a hidden cost of goodwill. Often companies that make such layoffs lose the talent they wanted to keep, because the company they are working for is seen as less stable and less attractive to work for.”

The good news for former Elem Additive employees, like many of those recently let go at other companies, is that many are extremely talented and capable individuals. Because the interest in AM remains and growth is projected to continue for the sector, they will certainly land in new positions, hopefully sooner rather than later.

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