The world of Proto Labs Inc.—a Minnesota product maker that sells entirely online and describes itself as among the world’s most digitally advanced manufacturing companies—changed mightily when the global COVID-19 pandemic began hitting home in March.
In the seven months since the coronavirus began shutting down significant parts of the U.S. and global economy, Protolabs has had to lay off some production staff and cope with a drop in revenue of 3.4% from about $229.4 million for the first two quarters of 2019 to about $221.7 million for the first six months of 2020.
A drop in net income to $26.6 million for the period ended June 30, from $31.7 million in the same period in the first half of 2019, also led to further belt-tightening, including salary hits for executives and others.
Expecting a stronger Q3
But Protolabs is coming back and expects revenue in the third quarter to range from $98 million to $110 million as the U.S. and European manufacturing markets slowly recover, CEO Vicki Holt tells Digital Commerce 360 B2B. Protolabs also has learned a few things about itself, Holt says. For example, the company’s digital-first approach to product configuration, manufacturing and order processing suits the times ideally. “B2B ecommerce has not been a big priority for many manufacturers, but that is changing,” Holt says. “The coronavirus is teaching many manufacturers they need to change because going digital and using digital data can replace a lot of inefficient processes.”
Protolabs, with manufacturing facilities in the United States, Europe and Japan, sells to customers worldwide several types of custom manufacturing that customers can order online Protolabs.com: 3D printing, which uses digital blueprints to construct items by adding or removing materials layer by layer; additive manufacturing, a form of 3D printing used to add materials to build products; injection molding, a process by which material is forced into a mold to form a product; and CNC, or computer numerical control, a process by which machining or milling tools operate via computer programming.
During the pandemic, the company’s digital manufacturing and ecommerce business and production model helped Protolabs pivot quickly to help medical equipment makers and others design and manufacture a wide variety of devices to deal with multiple aspects of the coronavirus. “We were able to pivot pretty quickly,” Holt says.
Turning snorkel materials into ventilator parts
Over the past six months, Protolabs has worked with 250 companies to design and manufacture nine million parts that, in turn, have generated about $12 million in pandemic-related revenue in the second quarter, the company says. For example, Protolabs worked with Harvard Medical School researchers and the Wyss Institute for Biologically Inspired Engineering at Harvard University to design a fully injection-molded nasopharyngeal swab manufactured quickly and inexpensively at high volume to help address the nationwide and international shortage of swabs for COVID-19 testing and research.
In Europe, Protolabs also worked with Italian engineers to turn snorkel materials into ventilator masks and with a molecular diagnostics developer to produce plastic cassettes used in COVID-19 testing. When the pandemic hit, a priority for Protolabs was setting up an internal task force “that worked nights and weekends to make sure orders were designed, manufactured and shipped on an expedited and priority basis,” Holt says.
Getting through the pandemic has been “difficult,” Holt says. The company had to furlough some production staff, primarily in Europe where revenue for the first six months of the year declined year over year by 21.9% to $42.4 million from $54.3 million.
The company’s revenue related to designing and just-in-time manufacturing of coronavirus products is slowing. But Protolabs, a public company, most likely won’t update its financial numbers until it posts its financial results for the third quarter.
Heading toward Protolabs 2.0
Going forward, Protolabs will focus on its Protolabs 2.0 initiative, the company’s moniker for its strategic plan to relaunch its ecommerce and back-end business-management software systems in the second half of this year.
The new technology platforms, Holt said, will address customers’ demands for an easier ecommerce purchasing experience, with fewer clicks needed to place an order and with the ability to order multiple manufacturing services for complicated production jobs.
“We are focused on bringing more digital technology for quality control,” Holt says. “Protolabs has been moving beyond prototyping into more and more production applications and as we do this we are expanding our offer to provide customers with the quality assurance documentation they need for their production applications.”
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