3M, the prominent manufacturing company responsible for consumer brands such as Post-It Notes and Scotch Tape, revealed a major restructuring plan on Tuesday that includes significant layoffs. This move is in response to the potential recession and a decrease in demand for goods in the manufacturing sector.
Approximately 6,000 employees across the globe will be affected by these layoffs, which come on top of the 2,500 manufacturing jobs 3M eliminated earlier in the year. The company has had a fluctuating headcount in recent years, with several mass layoffs occurring in 2019 and 2020 as well.
The restructuring plan is expected to save the company up to $900 million annually before taxes. By simplifying its supply chain and cutting down on management layers, 3M aims to become more streamlined, focused, and robust. The company believes that these measures will result in significant cost reductions, improvements in margins and cash flow, and a more effective structure for driving long-term growth.
Alongside the restructuring announcement, 3M also revealed changes in management and reported decreased earnings and sales compared to the previous year. Quarterly sales dropped 9% to $8 billion, while net income attributable to the company fell 25% to just under $1 billion.
The company plans to concentrate on products experiencing growing demand, such as climate tech, sustainable packaging, and automated industrial products, as well as other emerging technologies. Despite the current challenges, 3M maintained its outlook for 2023, expecting sales to decline by up to 6% this year.
3M noted that the supply chain issues that plagued the sector following the pandemic have mostly been resolved. Consequently, backlogged orders have been fulfilled, and companies like 3M no longer require as many employees to manage their workloads. This comes as demand for manufactured goods has seen a downturn in recent months, with consumers focusing more on experiences than possessions and businesses preparing for a possible recession. 3M's competitor, Dow, also announced thousands of layoffs earlier this year. 3M's shares (MMM) experienced a slight increase in premarket trading following the announcement.
Q&A Section
Question: How many employees will be affected by 3M's layoffs?
Answer: Approximately 6,000 employees worldwide will be affected by the layoffs.
Question: What is the estimated annual savings for 3M after the layoffs?
Answer: The company expects to save up to $900 million annually before taxes.
Question: What products will 3M prioritize moving forward?
Answer: 3M plans to focus on products with growing demand, such as climate tech, sustainable packaging, and automated industrial products, as well as other emerging technologies.
