Like tech at large, the 3D printing industry has been plagued with job cuts as companies attempt to weather a possible recession. In additive manufacturing (AM), the trend hasn’t been isolated to more traditional companies, but has extended to niche segments like additive construction, where ICON laid off 20 percent of its staff.
One original equipment manufacturer (OEM) guilty of the practice has been Desktop Metal (NYSE: DM), which eliminated 12 percent of its staff in 2022 and plans to reduce its workforce by a further 15 percent in 2023, while also closing four facilities across the United States and Canada in order to consolidate those operations into four centralized hubs in Massachusetts, Pennsylvania, Texas, and the Midwest.
According to Desktop Metal, 2022’s cost savings measures resulted in $50 million in annualized savings. By cutting further jobs and closing facilities, the company aims to save another $50 million in order to double its target outlined in 2022, generating $100 million in aggregate savings. This strategy will be elaborated on as the year progresses.
“These cost reductions will help us improve margins and reduce costs to accelerate our path to profitability. The Additive Manufacturing industry continues to mature and expand even in a challenging macroeconomic environment,” said Ric Fulop, Founder and CEO of Desktop Metal. “Our talent is the critical success factor that helps us drive the industry forward. These actions reinforce our highest priorities and create a flatter, more agile organization. I value the contributions of everyone who has served and continues to serve Desktop Metal. We are committed to managing this transition with care and respect.”
Upon news of the cost reduction strategy, Desktop Metal stock jumped nearly 17 percent as of this writing. Like many AM stocks, particularly those that began trading as a part of SPAC deals, Desktop’s share price fell significantly in Q4 2022, about 25 percent over the past three months. These same stocks are slowly started to increase momentum once more, however, indicating a possible recovery.
Whether or not we are entering a recession (or if the 2008 recession ever ended), depends on who you ask. The Institute for Supply Management’s manufacturing survey fell to 47.4 percent, the third consecutive month of contraction. Numbers below 50 percent are said to represent that the economy is contracting. In this case, the survey is at its lowest level since early in the pandemic.
Meanwhile, inflation has slowed and gross domestic product increased in Q4 2022. Despite the fact that the Fed increased interest rates by 25 basis points on Wednesday, the eighth rate hike in less than a year, Fed Chair Jerome Powell suggested that we are beginning a deflationary period and that the economy will actually grow in 2024.
With that in mind, we may be avoiding a recession. That may or may not matter to displaced employees, but if the cost-saving measures do assist a company like Desktop Metal in streamlining its operations, it may lead to a successful 2023.
To learn more from Ric Fulop about Desktop Metal and the technology it produces, you can register for Additive Manufacturing Strategies, taking place in New York, February 7-9. There, Fulop will be participating in Session 1, Panel 2: The Future of Binder Jetting on February 7.
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