In parallel to announcing its less than stellar second quarter 2020 financial results, AM giant 3D Systems has revealed it will be initiating a new strategic focus aimed at accelerating the adoption of additive manufacturing technologies. The company is also laying off 20% of its staff as part of a restructuring effort that will enable it to reduce annualized costs by approximately $100 million by the end of next year.
The refocusing part of its strategy will emphasize certain markets and applications where AM performance and reliability are paramount. While 3D Systems has, in the past, been active across many industries, its new strategy will see it focus on two key market verticals: Healthcare and Industrials. Each market will have a dedicated team at 3D Systems that will develop application-specific solutions.
“We will focus on markets and applications where a premium is placed upon performance and reliability; with engineering/technology cultures that seek product innovation as a means of delivering value to their customers; and with processes that tend to be highly controlled,” explained Dr. Jeffery Graves, 3D Systems President and CEO. “Thanks to our unique offering of hardware, software, materials and services, combined with our leadership in application knowledge, we believe we are best-positioned to provide additive manufacturing solutions for specific, high-value applications in growing markets like healthcare, aerospace and defense. We have a demonstrated capability to be successful in these markets, with our technologies and process knowledge today enabling up to half-million production parts to be made through additive manufacturing each day.”
Beyond this new focus strategy, the company will be cutting its workforce by nearly 20%. This decision, combined with other cost saving measures, will reportedly enable the company to save $100 million in annualized costs by the end of next year. These savings are expected to make the company profitable at current revenue levels and position it for future sales growth.
Dr. Graves commented on this decision, saying: “In connection with this organizational realignment we have an opportunity to maximize efficiencies with a need to align our operating costs with current revenue levels. As such, we will reduce our workforce by nearly 20%, with the majority being completed by year-end. This reduction in force is a difficult but essential step in our ongoing strategic process, designed to better position the company for sustainable and profitable growth. I would like to express my appreciation to each of the employees impacted by this decision for their dedicated service.”
Other measures 3D Systems is taking to reduce annualized costs are closing down facilities and taking a close look at the company’s manufacturing and operating costs. The company says it will incur a cash charge between $25 and $30 million for severance, facility closing and other costs, mostly in the second half of this year.
“We have a tremendous opportunity in this industry, and I’m excited by the passion, the breadth of technology and the exceptional capabilities within our company,” said Dr. Graves, who was appointed CEO in May 2020. “In the two months since I joined 3D Systems, I have held many reviews and discussions with our employees and key customers to understand the value we deliver, and the markets that we serve. This has enabled us to state a clear purpose for our company moving forward – one that builds upon on our unique history and core strengths, which will guide us to an exciting future ahead: We are the leaders in enabling additive manufacturing solutions for applications in growing markets that demand high reliability products.”
The company’s Q2 financial results saw a decrease of 28.7% compared to the same period last year. 3D Systems rightfully points to COVID-19 as a probably cause for at least some of this drop. The pandemic is also part of the reason the company is consolidating its focus on the healthcare sector.
Dr. Graves stated: “Our results in the second quarter reflect continued impact from the COVID-19 pandemic; however, the pandemic has also demonstrated a clear role for flexible supply chain enabled by additive manufacturing, particularly in the medical field, which speaks to our unique capabilities as a provider of hardware, software, materials and services to drive application-specific solutions.”