Thread regarding 3M layoffs

Floor care and home care need to go

3M is classic old school materials science company. Our managers in charge do not reward risk taking and have not done so in a long time. Hence this rut.

@20v varys, thanks as always for the detailed explanation and insight. If there's one good thing about BB, he's not so interested in the latest fad business. He's only interested in breaking up what's left of the Roman Empire.

While having the same fanatical obsession with cutting costs to meet Wall Street next quarterly estimates as Mcnerney, at least BB isn't throwing away hundreds of millions on wart ointment. (George wisely sold the pharma business for a decent price). Also, who can forget Highjump software for 3Ms convoluted SC. and buying a lot of track and trace technologies to partner with prisons on paroled ex-cons to make sure they weren't slipping out the window with an ankle bracelet to go get some dr-gs. Jimbo thought that was the next cash cow.

@dt

Fall Protection - Don't know this one very well, can't comment much on it.

Thinsulate - Two markets, both mismanaged by 3M. Thermal is really an industrial spec-in trying to manage itself as a consumer business. Acoustic is really on trend, as weight reduction and the change in sound profiles for electric cars should help this one. Both have been historically under-invested in as executives couldn't look past 'fluffy white stuff' in looking at the portfolio. This will never be a giant, huge-growth business but could be easily managed to be a steady-growth high-ish margin business.

Architectural markets - 3M should drop this one, doing custom printed film for fake wood/stone/metal is not really 3M's long-term strong suit. The Asian market likes this stuff a lot more than the West, but still not enough to keep it around. I'd sell this one off. Housewrap (or say office-building wrap) is not a long-term fit for 3M, just not enough profit margin there to be interesting.

Reflective (Traffic) - In a tough spot, the market acceptance of something higher technology than DG3 really isn't there. Historically it has been a really good product line to enter developing countries with, but 3M appears to be withdrawing from geographies rather than expanding into them.

Scotchlite - Let it go, sell the brand off, it is fully commoditized, I don't see a way for 3M to grow it and the margins have been falling steadily for years.

Commercial Solutions - Two markets here I know decently.

The floor-care and cleaning products are still quite good and have tech overlap with other divisions. GDP-plus growth possible, but will be a bit noisy with business cycles. The danger is more full-service providers that can be one-stop shop for customers. I might consider both keeping it or selling it off, I think this one is a close call long term.

The branding business is a bit of a weird one, but ultimately it is a distributor sold product line with good 3M tech support. I have not seen the financials in quite a while so I'm not sure how those look. Classically this does fit the make it by the mile, sell by the inch (or foot) business model. Unlike the architectural markets business, this one seems to be much more global, not just Asia for growth.

Are Some of 3M’s Businesses LEADERS Becoming Outdated?

@Varys - what is your opinion on:

• PSD Fall Protection
• Thinsulate (both acoustic and thermal)
• Architectural Markets
• General reflective materials platforms (traffic safety, Scotchlite, commercial solutions)

Alway appreciate your perspective.

CEOS and their strategic teams should be clearly measured on innovation, products and markets developed, and penalized if they dont achieve those targets along with their short term goals..

@OP

The trick here is to understand the businesses and the ongoing market needs for any product portfolio. Not just judging them by how 'se-y' they are at any moment. Chasing 'se-y' trendy markets every year or two is a dangerous game, over-investing in consumer electronics and pharmaceuticals was quite damaging to 3M.

Going with your examples:

Office Supplies - Probably the only market on your list that is really fading away. Actual 'paper' part of paperwork is becoming extinct, along with Magic Tape and file folders. There will still be a market for Post-Its for a long time, but it isn't going to grow significantly unless 'paper' starts coming back, which I doubt. They have tried to adapt, but one can only make a Post-It app so many times before giving up. One random idea is to draw this down into an Crafts and Maker division, between arts and craft supplies and the hobby "maker" market there could be some growth sitting there.

Automotive Aftermarket - Cars aren't going anywhere soon, car crashes aren't going anywhere soon. Automated driving is much further away than certain CEOs are claiming. This is a business where 3M can hold very, very, very high margins by offering a pretty complete portfolio to body shops. Maybe not a growth rockstar, but a very healthy high-margin business that can be run well for the next at least 20 years. This business also nicely balances Auto OEM - when people don't buy new cars, they spend money repairing older ones.

Personal Safety - This is going to be another above GDP growth business, safety rules are only getting more strict not less. Workers are demanding comfort as well as safety. Parts of PSD are low margin, some is still very high margin. Call it mid-range of the group you listed and obviously prone to demand swings.

DIY - This is a market not a single portfolio. 3M has historically been pretty bad at consumer in general, but it mostly makes good use of excess industrial capacity with the notable exception of Filtrete witch is its own thing (and a successful acquisition I might add). Probably second weakest of your list behind office supplies. Spinning off consumer as a whole, including DIY could be a BB play.

Industrial abrasives - This is another area where 3M can and has historically grown safely above GDP. A little-known dirty secret is that ASD makes some shockingly high profit margins in this area, more than double the next closest competitor. This is also the root technology development area for all the other abrasive portfolios. (Auto Aftermarket, DIY, Electronics, Home/Commercial Cleaning)

3M is dead meat