3M Co. will pursue a sweeping restructuring plan that will affect 6,000 positions globally.
The Minnesota-based maker of Scotch tape and Post-it Notes said the move will affect all parts of the business as it reduces the size of its corporate operations, simplifies its supply chain and streamlines management layers.
The workforce reductions are in addition to the 2,500 manufacturing jobs the company said it would eliminate in January. 3M had 92,000 employees at the end of 2022.
The 3M logo is pictured on products at an Orchard Supply Hardware store in Pasadena, California, on Jan. 24, 2017. (REUTERS/Mario Anzuoni / Reuters Photos)
The company expects all job reductions to save between $700 million and $900 million pretax upon completion, with between $175 million and $250 million projected to be saved in the second quarter and half of the savings by the end of 2023.
As it slashes costs, 3M said it would give priority to emerging growth areas such as climate technology, sustainable packaging, industrial automation, semiconductors and next-generation consumer electronics. Its high-growth markets, including home improvement and personal safety, will continue to be in focus, the company said.
3M announced the restructuring plan as it released its first-quarter earnings. The company reported income of $976 million, or $1.76 a share, for the quarter ended March 31, compared with $1.3 billion, or $2.26 a share, in the same period a year earlier.
Analysts had expected earnings of $1.57 a share, according to FactSet.
The company reported $8.03 billion in sales, down from $8.83 billion a year earlier. Analysts had expected $7.49 billion.
Scotch tape manufactured by 3M is offered for sale at a big box retailer on Jan. 28, 2020 in Chicago, Illinois. ((Photo by Scott Olson/Getty Images) / Getty Images)
All four of the company’s business segments—Safety and Industrial, Transportation and Electronics, Health Care, and Consumer—saw net sales decline year over year for the first quarter.
The changes at 3M come months after investors expressed concern over the company’s executive leadership, citing continued declines in revenue and earnings under Chief Executive Mike Roman.
Analysts say the company’s stock price has been weighed down by litigation. About 230,000 veterans have filed complaints in federal court alleging earplugs made by 3M subsidiary Aearo Technologies LLC failed to protect them from service-related hearing loss.
The logo of 3M is seen at the 3M Tilloy plant in Tilloy-Lez-Cambrai, France, Aug. 18, 2019. (REUTERS/Pascal Rossignol/File Photo / Reuters)
The company is also defending against allegations that PFAS, so-called forever chemicals, have contaminated soil and drinking water. 3M’s liability from PFAS litigation could reach nearly $30 billion by the end of the decade, according to Capstone LLC, a Washington-based firm that advises investors and companies on regulatory issues.
3M is phasing out production of PFAS, though executives have said they believe the products are safe to make and use. They have also said the company did nothing wrong with its earplug business.
Shares of 3M rose 1.5% to $106.70 in morning trading. They are down around 30% over the past 12 months.