Industrial 3D printer manufacturer based in Massachusetts, Desktop Metal (DM), has publicized a cost-reduction strategy valued at $50 million. This plan results in the company reducing its workers by twenty percent.
DM is optimistic that these measures will align its cost structure with the current market dynamics. The vast majority of the $50 million annual cost savings are projected to come into effect by the end of the month.
This step is taken after the termination of Stratasys’ agreement to purchase Desktop Metal in September 2023. It led to 78.6% of Stratasys’ shareholders voting against the suggested merger. After the fall of the deal, Desktop Metal’s CEO Ric Fulop expressed that the company’s strategies to “cut operating costs” and “produce revenue” were underway.
The $50 million cost-cutting scheme is a part of a wider strategic business evaluation, along with different cost-saving actions. These involve continual consolidation of facilities and product rationalization, all aiming to pave the company’s way to profitability amid what the company terms as “a downturn in the additive manufacturing industry.” DM recorded $100 million savings in 2023 after implementing cost cuts.
“The cost-reduction plans announced today, in addition to the $100 million in cost reductions realized in 2023, will help us generate positive cash flow in light of a softer demand environment,” commented Fulop. “We are committed to getting profitable during this challenging period. The vast majority of the cuts will be completed this quarter, resulting in sequential cost reductions across the first half of 2024.”
Further details on Desktop Metal’s cost reduction plan will be disclosed in the company’s regulatory filings and end-of-year earnings release and conference call, expected to be available by the end of March.
Desktop Metal cutting costs
Desktop Metal has already notified the US-based employees impacted by the cuts. The company is continuing to review changes to its international workforce, with the timing of these announcements set to vary according to local regulatory requirements.
DM expects its $50 million cost reduction plan to incur restructuring charges of $24.3 million to $31.5 million. Most of these charges are non-cash. An estimated $5.3 million to $7.5 million of the restructuring charges will come from cash reserves.
This decision reflects DM’s latest efforts to streamline operations and cut costs. Following the collapse of the Stratasys merger, the company announced the sale of its Aerosint SA subsidiary to high-precision components and systems manufacturer Schaeffler Group.
Founded in 2016, Aerosint’s patented Selective Powder Deposition (SDP) technology enables simultaneous, multi-material 3D printing. Acquired in 2021, it was initially hoped that this partnership would advance DM’s acquisition-based ‘AM 2.0’ strategy. The financial details of Aerosint’s sale have not been disclosed.
Despite recent cost-cutting activity, Desktop Metal has stated that it is still pursuing its AM 2.0 approach. The company will continue to invest in products and operations to enable near-term revenue generation, and achieve its long-term financial goal of sustainable profitability.
“While our industry is working through a challenging period, Desktop Metal’s commitment to its Additive Manufacturing 2.0 vision has not changed. We continue to have a positive long- term outlook for this industry as it transitions to mass production,” added Fulop.
Restructuring to improve profitability
Desktop metal is not alone in announcing strategic restructuring initiatives to reduce expenses and enhance profitability.
The French 3D printer producer and service provider Prodways Group stated recently that it has ceased selling jewelry 3D printers. The decision was made following the disappointing sales performance of its wax and resin 3D printers in 2023. These printers were sold under the Solidscape brand, and they brought in limited revenue and caused a “significant operating loss”.
“Why did the 3D printer go to therapy? Because it had too many layers of unresolved issues!”
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