MakerBot, a Brooklyn-based 3D printing company that specializes in desktop 3D printers, announced on Monday that it is outsourcing its manufacturing jobs to China and laying off the majority of its factory workers from its Sunset Park Industry City headquarters. The struggling startup, which last year saw its valuation dip by $100 million, has partnered with the international manufacturer Jabil and will transition to overseas production and assembly over the next six months.
The announcement comes less than a year after MakerBot hosted a ribbon cutting at its newly-expanded 170,000-square-foot Industry City factory space, boasting that its production capacity had been doubled (the company has rented space at the complex since 2013). "The singlemost thing that we are very proud of is that it's happening in Brooklyn," CEO Jonathan Jaglom said. "The launch of factory here today... is just evidence that we expect and are committed to remaining here."
Brooklyn Borough President Eric Adams praised the expansion. "People in this community... they are going to have the opportunity to build the future using modern day technology," he said.
On Monday, the message had changed. "We will have to part with some of our talented and hard working colleagues at our factory," Jaglom stated. "I value the commitment and contributions of every single one of them and we will support them as much as possible to find new employment." According to MakerBot, some "key personnel" will be retained.
MakerBot would not disclose how many current employees will be laid off, but spokesman Johan Broer said "a significant number of factory workers" will leave in the coming months. A former inventory manager who worked for the startup from September 2012 through July 2015 said that he estimated the layoffs could number between 100 and 150 workers, the majority of whom live in Sunset Park.
"The blue collar staff are primarily from Brooklyn," former manager Quinn Formel, 27, told us on Tuesday. "I would say the largest single majority were from Sunset Park, and the company was pretty racially stratified between engineers, designers and management who are white, versus manufacturing workers, who are mostly black and Latino." According to the company, the starting wage for manufacturing workers is $10.75 per hour.
Jaglom said on Monday that the overseas partnership will allow the company to reduce manufacturing costs in order to "compete more effectively in a global marketplace." Without a fully operational factory in Brooklyn, MakerBot will be able to "quickly scale production up or down based on market demands."
This week does not mark MakerBot's first round of layoffs. Last April, a few months before the ribbon cutting on MakerBot's new factory, the company laid off 20% of its workforce and closed its three retail locations, in Manhattan, Greenwich, Connecticut, and Boston. The company laid off another 20% of its employees last October. At the time, Jaglom told Fortune that the decision "has to do with the dynamics of the market and fact that we're not hitting our numbers." MakerBot had about 500 employees as of October 2014, suggesting that the first two rounds of layoffs hit about 200 workers.
MakerBot was purchased by Stratasys, an international 3D-printing company based in Minnesota, for $403 million in 2013. Since then, two consecutive CEOs have moved over to the parent company, and revenue has declined steadily. Earlier this month, Crain's reported that the startup had reduced its 170,000-square-foot Industry City space by 40%, dropping 65,000 square feet entirely and vacating another 25,000 to lease out.
"In 2014, the entire industry expected the market [for 3D printers] to take off," Broer told us on Tuesday. "In 2015 everybody realized that the consumer market will take much longer."
Formel said on Tuesday that manufacturing workers at MakerBot tried to unionize twice while he was at the company—once in the spring of 2014, and again in the spring of 2015. "One of the main arguments used by the company was that unionization could cause the cost of doing business to go up, and they might have to outsource production," Formel recalled. "They said if the [workers] didn't unionize, they would find ways to make sure they were more satisfied, and stay in Brooklyn. After this announcement, it means they're leaving Brooklyn anyway."
MakerBot said on Tuesday that the warehouse staff submitted a petition to unionize two years in a row, and that employees twice voted it down. The company also emphasized that there are no planned layoffs at its MetroTech Center headquarters in Downtown Brooklyn. Broer said that MakerBot will provide career counseling to workers losing their jobs this spring, and is organizing a career fair with Industry City. "A handful" of workers will be retained, and moved into open positions in sales and tech support. Laid off employees will receive three months of severance.
In his 2016 State of the City address, Mayor de Blasio announced plans to install a $2.5 billion light rail connecting Astoria, Queens to Sunset Park, Brooklyn. He's since argued that the rail would help connect Brooklyn and Queens residents to job opportunities in the boroughs' new tech and startup hubs, Industry City among them.
Residents along the line would have access to a "new economy," he told NY1 recently. "An economy that's not just Wall Street and some of the traditional industries, but much more about new manufacturing options, about fashion, about all the different pieces that we see now blossoming."
Speaking with The Verge on Monday, Jaglom painted a different picture of manufacturing prospects in Brooklyn. "We are really following a global trend, which has been around for many years now, whereby we’re stepping away from manufacturing in Brooklyn," he said.
In January, 320 manufacturing and packaging workers at the Sweet'N Low factory at the Brooklyn Navy Yard—another stop on the proposed light rail route—learned that their jobs are being outsourced overseas.