As the global economy shifts in the wake of the COVID-19 pandemic, 3M announced it is advancing its operating model, streamlining its business, and focusing on global trends where the company will apply science to life in new ways to drive sustainable growth.
“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,” said Mike Roman, 3M chairman and CEO. “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.”
In January 2020, 3M launched a new global operating model – a significant step in the company’s transformation – which has evolved the way 3M works, enabling the company to be more customer focused and responsive, helping 3M to lead during the pandemic.
With the actions 3M is announcing today, the company will further enhance its operations and marketing capabilities. In operations, 3M says it will eliminate redundancies and better use analytics to drive additional efficiencies. In marketing, 3M will build on its success in utilizing data insights, accelerating global marketing programs, and activating digital engagements with customers.
3M believes it will be better positioned 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.
Restructuring and Expected Annual Savings
3M is planning to initiate restructuring actions that will impact all business groups, functions and geographies. As a result, the company expects to take a total pre-tax charge of $250 million to $300 million, with $120 million to $150 million in the fourth quarter of 2020. The remainder of the pre-tax charge is currently anticipated to be incurred primarily in the second half of 2021. 3M anticipates annual pre-tax savings of $200 to $250 million from these actions, with $75 to $100 million of pre-tax savings in 2021.
The restructuring is expected to impact approximately 2,900 positions globally.
