Revitalizing Additive Manufacturing: Desktop Metal Hopes to Step Away from the Chaos

Rapid upheaval in the additive manufacturing world in recent years dropped Desktop Metal at Bryan Wisk’s feet last week. His strategy for success going forward is to keep that chaos at bay.

“There’s only one word at DM right now internally; it’s focus,” Wisk says. “We’re not a distressed debt investor or private equity. We’re really deep-growth investors, and we’re looking to focus on the core technologies that we bought.”

Wisk is CEO of Arc Public Benefit Corp., a New York investor that last week bought Desktop Metal out of bankruptcy. It was an opportunity born from turmoil. The company that pioneered several metal additive manufacturing applications went public in 2021 through a special-purpose acquisition corporation (the same sorts of deals that funded dozens of now-defunct electric vehicle companies around the same time).

A spate of additive mergers had competitor Stratasys bidding $1.8 billion for Desktop in 2023. But, those deals all fell through, and another competitor, Nano Dimension, bought Desktop Metal early this year for $183 million (only after a successful lawsuit from Desktop forced it to complete the deal). Nano Dimension almost immediately sent its new subsidiary into bankruptcy court and sold off some European divisions. That’s where the company stood until Wisk’s purchase last week.

He says that chaotic five-year period sapped Desktop Metal of the ability to focus on technology, customers and applications. After buying the company, he named longtime Desktop Metal Chief Operating Officer Tom Noguiera the new CEO.

“We really felt that the binder jetting and DM in particular really suffered from being in this acquisition uncertainty for a very long period of time,” Wisk says. Rather than moving from IPO to operations, it moved from IPO to merger-and-acquisitions talk. “Tom Noguiera, the CEO, has been with the company and has just tremendous support inside the company. [For the past few years, he’s] not been able to sit down in a normal job without a due diligence call, an M&A call, bankers, lawyers.”

Wisk’s partner and Arc co-founder Paul Adams has joined Desktop Metal as CFO, and Wisk says the new team will focus the company on operations, service and growth.

Profits Lie Outside of Machine Sales

It won’t be easy says Scott Sevcik, director of Advisory Services and Strategic Solutions, at additive manufacturing research company Wohlers Associates, powered by ASTM International. Formerly with Lockheed Martin and United Technologies Corp., Sevcik was most recently vice president of aerospace at additive equipment maker Stratasys.

“We’ve now seen two consecutive years of decline in the number of machines delivered. In the same period, though, materials, software and services continued to grow at double-digit rates,” Sevcik says. He adds that profitability for additive technology companies will have to come from a balance of services and materials, not just machines.

“Consider Materialise and Stratasys, the two publicly traded companies with positive earnings. Materialise does not produce hardware at all but instead focuses on software and services. Stratasys has recently acquired multiple producers of materials, on top of its earlier software and services acquisitions,” Sevcik says. “Unless you are a startup with something quite different, a pure-play hardware company will struggle in the current environment.”

Living (Comfortably) in Manufacturing Niches

It’s a strategy that leans heavily on serving existing and developing niche markets where additive has already shown proven value, rather than going after big, high-volume businesses where the technology is still slower and more expensive than metal cutting or plastic injection molding.

“Specifically in areas like heavy, rare, free permanent magnets, ferromagnets for transformers, companies that are really focused on developing next-generation energy storage, there are things that can be done with this technology that are really exciting,” Wisk says. He adds that Desktop Metal will also continue working closely with aerospace, automotive and defense companies that have long used additive in prototyping, jigs and fixtures and in production.

Sevcik says it’s the right call. He points to other groundbreaking technologies that markets overestimated, such as microwave ovens in the 1970s.

“Old cookbooks tell you how to make everything from steak to strawberry jam in a microwave,” Sevcik says. “Realistically though, microwaves are good for certain applications, such as softening butter, popping popcorn and reheating leftovers. AM is maturing along similar lines in manufacturing. Certain applications, such as rocket engines, dental aligners and spare parts in rail and aviation are a good fit for AM.”

While that may relegate AM to niche applications, he adds that in a more than $16 trillion global manufacturing economy, a niche can represent tens of billions in market opportunity.

“We have seen cycles of overly hyped AM processes and machines promoted to solve problems when they are not an economic or technical fit. Desktop Metal is not innocent in this regard, but we also see success stories where real problems are solved because AM was available,” Sevcik says. “It is unfortunate that instances of excess hype have received more attention than down-to-earth success stories. Users in aerospace, healthcare and some other segments with 20 years or more of experience with AM view the technology as a critical tool.”

For Wisk, it all comes back to focus. Desktop Metal’s technology and market approach weren’t the problems that sent it into bankruptcy. Market chaos and unrealistic expectations were far greater issues.

“If we can sort of bring that back under one consolidated roof, we feel like the DM team, the [intellectual property] and the 10 years of hard-fought learning and all the R&D money that went into this… deserve to stay intact and be given the opportunity to really extend the technology.”