Desktop Metal is going to cut the workforce once more. This time in the US, nearly 1 in 7 employees will be said goodbye. Four factories will close and activities will be concentrated in four hubs. This should generate $50 million in additional savings this year. Together with the savings plan announced last year, this should reduce costs by $100 million per year.
The cuts are announced as a decision that prioritizes investments and activities in line with short-term revenue generation so that the company can achieve its long-term financial goals. Last year, CEO Ric Fulop also implemented a reorganization in which 12% of employees lost their jobs. In the new round of layoffs, this concerns 15% or 180 employees.
Draw on the wall for the entire sector or does DM do what you should do following acquisitions: reorganize?
Improve margins
“These cost savings 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. The reorganization is in line with the streamlining of the organization following making the necessary acquisitions in recent years. There will be four hubs where Desktop Metal will concentrate all activities: Massachusetts, Pennsylvania, Texas and Midwest. The activities in Canada are apparently being phased out completely. The planned staff reduction is 15%. The results for Q4 2022 will be presented shortly.
Rest of the market?
The listed AM companies have yet to publish their results for the last quarter. Can this Desktop Metal announcement be taken as a weak signal for the entire market? Or does Desktop Metal do what other companies in the industry have failed to do in the past: streamline operations following acquisitions and eliminate duplications? Chances are that the latter predominates. More expensive systems are being sold: the sales value is rising faster than the number of 3D printers sold, according to market researcher IDTechEX.
After an initial rally in the share price, Desktop Metal closed at $2.13 on Friday. In January 2021, the stock reached a high of $22.97.
