AMS Spring 2023

Desktop Metal Continues Restructuring: What Does it Mean for 3D Printing?

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The additive manufacturing (AM) industry is continuing to experience upheaval, as firms such as Fast Radius, Nexa3D, and Carbon let go of staff. In the case of Xerox, the photocopying legend essentially eliminated its 3D printing division, maintaining only what was needed to support current customers. After announcing a reduction in workforce of 12 percent in June 2022, Desktop Metal (NYSE: DM) has continued to execute layoffs, according to several former employees on LinkedIn. 

Restructuring and Redundancies at Desktop Metal

In a previous interview with 3DPrint.com, Desktop Metal CEO Ric Fulop explained that the main purpose of the cost-saving initiative announced in June was eliminating redundancies in the company created by the acquisitions it had made, which included metal binder jetting pioneer ExOne and digital light processing (DLP) inventor EnvisionTEC. In the company’s Q2 earnings call, it was said that Desktop Metal would remove about $100 million in costs from its business, $20 million of which was to take place in the second half of 2022, according to its press release. As those cuts continue, we reached out to Fulop again to better understand the changes.

“The ongoing adjustments are a continuation of what we announced in June. When you run a business, you sometimes need to adjust your spending. If somebody is not generating revenue in the next year, or if there are projects that may be really far out, we need to modulate the spending or move people around between projects and you try to be efficient. We’re really focused on getting profitable as fast as we can,” Fulop told 3DPrint.com. “And then we’re hiring at the same time. So, we have both going on.”

Among the team members let go recently were a technical sales leader, a senior product manager with a history at the company, and a regional sales manager. One former salesperson with about a decade of experience in the AM industry was surprised to be let go.

“I didn’t expect to see anything happening going into the strongest quarter of the year. Typically, in Q4 of last year, I think we did about 40% of our business,” they told 3DPrint.com. “So, to cut the sales team early in Q4 this year was a bit of a surprise. I was anticipating that, if anything happened, it’d be in January of next year or so.”

Fulop explained that, while it’s a harsh reality, cutting sales team members who do not meet targets is not uncommon in business.

“Sales is up-or-out in our company. It is 100 percent performance based,” Fulop told 3DPrint.com. “When we took on ExOne, we had two sales leaders, and we moved one to run the whole thing. He gets to decide who he wants in his team and he looks at the numbers.”

Is Metal Binder Jetting Ready for Mass Production?

Another employee who chose to remain anonymous was also taken by surprise. “If anything, we were short on resources and had a list of job openings we were hiring for,” the former worker told 3DPrint.com.

The Production System P-50 metal 3D printer from Desktop Metal. Image courtesy of Desktop Metal.

They suggested that, in attempting to pre-empt financial downturn, Desktop may have been compensating for the fact that metal binder jetting is not being adopted at the expected pace in the current market. This is, in turn, due to buzz around the potential of the technology leading to overinflated expectations on the part of users and customers. Going from design to mass production of metal parts isn’t as straightforward as clients might think, thus leading to further delaying adoption.

“If companies are not willing to journey down a path with us to take their part from redesign for additive, benchmark it, and do a pilot run production as part of the qualification process, then it will be challenging to convince manufacturers that AM 2.0 is a better route compared to how the part is currently made,” the former staff member said. “In this industry, if someone sees something new and shiny, they throw a lot of money at it. We have quite a few extremely bright people leading AM companies with little to no heavy manufacturing background. Is it another means of manufacturing components with less design constraints? Yes, but let’s not forget that traditional manufacturing principles need implementation. AM companies that want to push manufacturing need to start speaking the language and partnering with those resources to achieve this vision.”

This employee didn’t see a flaw with Desktop’s executive management per se, but instead believes the industry is misrepresenting the current state of metal binder jetting. This includes the complete workflow needed to mass produce a part (from design to mainstream production), as well as the necessary accuracy of the technology. They said that, as far as they knew, none of the metal binder jetting systems from any manufacturer are able to achieve the accuracy level needed for mass production to meet consumer needs without the need for post-machining.

3D printed component for Ford by Desktop Metal. Image courtesy of Desktop Metal.

“A lot of manufacturers still demand high accuracy CNC machining which binder jet and other metal technologies have yet to achieve. But, with [metal binder jet machines as a whole], you’re really going to be anywhere from 0.3 to 0.5 millimeter for accuracy,” the former staffer said. “And that’s not consistent throughout the whole part without the help of a sintering simulation software that can detect and apply negative offsets for warp compensation during the sintering cycle. We’ve seen metal injection molded parts that are within plus-minus .001 inch because of the way the process is set up. So, really, binder jet has a struggle of really trying to reach the accuracy that manufacturers and companies need to be able to meet consumer standards for the product to function in the application that it’s intended to without the need for post CNC or surface finishing processes.

Desktop Metal noted that it has hundreds of customers today using binder jet for real production for extremely tight tolerances, including several, such as Kennametal, who have multiple machines printing commercial metal products. Fulop said that this was why it routinely brings hundreds of metal binder parts to trade shows to demonstrate what’s possible, with many of those items coming from actual customers. Some are finish-machined and some are not, as every industry has different accuracy requirements. Fulop explained that, regardless of the AM process, post-processing is required to bring parts to tolerance. This is true of binder jetting, as it is of powder bed fusion, though binder jet produces components at a much reduced price point.

“All 3D printing has less accuracy than machining but you can do geometries that can’t be made any other way. The key is to design for the process and you can achieve very high tolerance, high accuracy parts and you can use light machining to dial in tolerances you need in critical areas. This approach is used successfully by most of our customers – at a lower cost than machining the entire part. This is not dissimilar to casting and other processes where the part formation gets light machining in critical locations,” Fulop said. “No 3D printing technology is easy to sell compared to, let’s say, casting or machining, which are older processes that have been around for hundreds and thousands of years. But in printing, you’re teaching people. You have to be didactic and show the benefits of what you can do with the technology. And I think this goes across the board.”

The Bound Metal 3D Printing Market

Regardless of what former Desktop Metal employees suggest, there is significant investment being poured into the metal binder jetting segment. Companies much larger than Desktop, like GE and HP, have bet a great deal of resources on the technology, with each announcing the commercial availability of their respective metal binder jetting systems just this year. Meanwhile, Desktop competitor Markforged has just acquired Digital Metal in an attempt to keep pace with Desktop Metal. There’s more to come. Ricoh is developing a metal binder jet system and we can expect more entrants from China.

Despite new entrants, Fulop noted that Desktop Metal remains the market leader in metal binder jet with a dominant share and the broadest and most advanced portfolio, marked by several binder jet approaches and build volumes, as well as a broad material portfolio. Fulop is still highly confident in the technology and its benefits, which includes the highest throughput process to make metal and other types of parts with powdered material.

For its part, SmarTech Analysis projects the bound metal segment, which includes both bound metal extrusion and metal binder jetting, will generate $54 billion in 3D printed parts through 2030, as outlined in SmarTech’s recent “Bound Metal & Metal Binder Jetting AM 2022” report. Scott Dunham, executive vice president of Research for the market analysis firm, provided 3DPrint.com with his thoughts on the subject. Specifically, Dunham spoke to the discrepancy between expectations and the reality of technologies like metal binder jet.

Data from the recent “Bound Metal & Metal Binder Jetting AM 2022” report from SmarTech Analysis.

“Metal additive has progressed slowly but surely over the last decade. All along the way, a lot of the expectations have been that there is a ‘tipping point’ where the flood gates open and the technologies start capturing significant portions of the manufacturing pie in short periods of time. We’ve known for some time that, while AM technologies will begin to have meaningful impact on manufacturing markets over time, it’s a slower road due to how radically different the processes are. With those differences come challenges in the form of costs, resources, expertise, and so on,” Dunham said.

As for industry layoffs, Dunham said that they can impact the mindset of those investing in the technology, but that it will still be essential for manufacturers to begin adopting the technology to avoid inevitable supply chain issues.

“The world is in agreement that there is essentially no ‘digital manufacturing revolution’ without additive technologies, and growth is certainly happening. When downturns hit, however, there are going to be issues because we aren’t at a point where AM is the core of making manufacturing work. Some industries and some applications will be at that level in the next few years. Some won’t,” Dunham explained. “However, those companies that don’t get their AM operations to suitable scale now will be right back to being pinched by supply chain disruption the next time disaster or geopolitical turmoil rears. This is why investment into building AM contract manufacturers and service businesses right now is critical.”

Management at Desktop Metal

The former Desktop worker commented that CEO Ric Fulop was always receptive and open to feedback and listened on ways to improve and or get better. “Ric is very forward thinking,” they said. Generally speaking, Desktop staff had positive things to say about their coworkers and environment. 

Desktop Metal CEO Ric Fulop. Desktop Metal CEO Ric Fulop. Image courtesy of Desktop Metal.

However, not all were entirely confident about how every acquisition Desktop fit into the larger strategy. Whereas it seemed logical that Stratasys would purchase Origin and RPS to fit into its broader polymer 3D printing portfolio, Desktop Metal’s acquisition of EnvisionTEC didn’t seem to necessarily fit into the company’s purview as a metal 3D printing firm. 

Fulop said the company’s “Team DM” brands and materials share a common vision of Additive Manufacturing 2.0 or mass-production 3D printing, and that the company is passionate about delivering that to an additive industry that has been stagnant at lower volumes.

Though the company began with “desktop” and “metal” as its masthead, it has grown significantly beyond that point. The release of a wood binder jet machine, based on what former employees described as the “proven” Shop System architecture, is a case in point. Just as the product was released, one of the developers of the technology, Andrew Jeffery, left the company. However, if Desktop can consolidate adequately, the value of its acquisitions could be proven. After all, the company provided guidance that it was on track to more than double its revenues from 2021 by the end of the year. 

It’s worth noting that, unlike Carbon and Nexa3D, Desktop Metal, Xerox, and Fast Radius are all publicly traded companies, meaning that they have financial concerns, obligations, and regulations that are not at all the same as those faced by smaller, privately-held businesses.

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