Today, I was contacted by an anonymous person calling themselves an employee of 3D Systems, one of the two biggest, pure-play companies in the 3D printing industry. Though I am still waiting for confirmation from the company itself, this person tells me that the HR and management of the facility went to offices and the production line to say that they would close down the Andover, Massachusetts facility as a cost savings measure. The source says that the planned shut down would occur by June 30, 2016, but personally believes that much of the operation would be closed by January 1, 2016.
If it is true that they’re shutting down the facility in 2016, the source says that, at the facility, there are about 80 to 120 employees, detailing the operations of the facility to include: those manufacturing the Projet line; those engineering the Projet and CubeJet lines, which the source says consists of members of the ZCorp team; the Geomagics software team; their customer service, other software services, ceramics, and print services divisions, among others.
In the case that it does shut down, there would be the possibility that employees are let go, as occurs when any location of a business is closed for a “cost savings measure”. The source says that some white collar employees were given some incentives to stay with the company, at least through the shut down of the facility, explaining that they will receive a project incentive of 20% of their bi-weekly salary to stay until the facility closes. Afterwards, however, the source says that those workers would be let go.
But, for some other employees that would be difficult to replace, the source says that they might potentially be transferred to another location, telling me that they would be given a $20,000 relocation allowance that would be repayable if the employee leaves before two years is up. Additionally, they would receive a 15% bi-weekly salary bonus from now until their relocation. The source also suggests that there are members from ZCorp and Geomagics that could be getting better incentives.
When I asked about those that might be classified as entry-level or blue collar employees, who I thought would be hardest hit by a sudden change, the source said that they did not know, but believed, based on their status as less technically skilled labor, that they would be let go. The source, however, says that they could not confirm this.
This news comes after hard times for many of the larger 3D printer manufacturers, including huge drops in stock prices for most of the publicly shared pure-play 3D printing companies. As the two largest of those companies, Stratasys and 3D Systems have experienced the lion’s share of the bad news, with class action lawsuits being taken against both after stocks dropped. Both suits claim that the businesses failed to make investors aware of issues within the companies and that they falsely inflated their potential profits. In the case of Stratasys, much of the blame is being placed on the misperceived value of the MakerBot acquisition, while 3D Systems promised many new systems that were to be launched last year and never made it to market. Meanwhile, 3D Systems will be fighting an $11 million arbitration decision in a suit regarding a former employee, who joined the company after his startup was acquired in 2011.
As Stratasys laid off close to 200 employees from its MakerBot division, despite its stockholders being offered a vote to increase the CEO’s bonus, it looks as though 3D Systems, if the source is correct, could be heading in a similar direction. Unlike Stratasys however, at least according to Morningstar, most executives at 3D Systems took large pay cuts in 2014, except for the company’s Chief Legal Officer and Chief Operating Officer of Healthcare Services.
While, in 2013, 3DS CEO Avi Reichental took home $10,898,483, including more than $9 million in restricted stock awards, and EVP of Mergers & Acquisitions Damon Gregoire took home $5,243,276, more than $4 million in restricted stock awards, both dropped their total compensation in 2014. During that year, the CEO earned $6.6 million, about $5 million in restricted stock awards, and the EVP earned only a tenth of the previous amount with $557,004, none of which was from restricted stock awards. This latter information is retrieved from the company’s March, 2015 Proxy Statement. I mention this because the amount of stock sold by both the CEO and EVP are being considered in the class action lawsuit, which states that the two of them “sold approximately $4.5 million in 3D stock during the Class Period”, between October 29, 2013 and October 22, 2014.
I’m still waiting to hear from 3DS to confirm if the source is accurate, but, if it’s true, the source says that the facility employees are stunned and upset.
Correction: This article previously described Damon Gregoire as the CFO, when, in actuality, he is the EVP of Mergers & Acquisitions.