The Maplewood, Minn.-based manufacturing conglomerate said the cuts would span across its businesses and geographies, resulting in a total pre-tax charge of $250 million to $300 million — including $120 million to $150 million in the fourth quarter of 2020.
3M said it expects to take the remainder of the pre-tax charge primarily in the second half of 2021. The move could yield annual pre-tax savings of $200 million to $250 million, including $75 million to $100 million in 2021.
The company said in a statement that the cuts will put it in a better position to “take advantage of global market trends in e-commerce, personal safety, health care, automotive electrification, and home improvement. At the same time, the company plans to de-prioritize investments in end markets where growth is slower.”
3M did not identify those markets. Total sales for the month of October were down -4% in transportation and electronics; that segment’s revenues dropped by -7.4% for the third quarter, which ended Sept. 30, 2020, and by -11.2% for the first nine months of 2020, according to the company’s Q3 results.
The company has been a major producer of personal protective equipment during the COVID-19 pandemic, especially the highly sought-after N95 respirator mask. But 3M makes far more than just PPE, which means the overall business has faced pandemic-related challenges. Q3 total sales increased 8.1% in healthcare, 6.9% in safety and industrial, and 5.5% in consumer products, the company reported.
3M laid off 1,700 workers during its second-quarter — with many of the jobs related to the company’s divested drug delivery business. It then cut another 400 jobs to rein in expenses amid the COVID-19 pandemic.
CEO Mike Roman cited global economic shifts due to the pandemic as the reason for cuts announced today.
“The COVID-19 pandemic has advanced the pace of change and disrupted end markets around the world, increasing the need for companies to adapt faster,” Roman said in a news release. “At the same time, we are seeing significant opportunities from our new operating model which we launched at the start of the year. As a result, we are taking further actions to streamline our operations, positioning us to deliver greater growth and productivity as global markets emerge from the pandemic.”
3M launched the new global operating model in January. Today’s actions will eliminate redundancies and better use analytics to drive additional efficiencies, according to the company. In marketing, 3M said it will build on its success in using data insights, accelerating global marketing programs and starting digital engagements with customers.
3M had 96,000 employees globally at the end of 2019, according to its most recent annual report.
Shares in MMM shares opened at $171.04 and peaked around midday at $173.39, up 1.4%.
Assistant editor Sean Whooley contributed to this report.