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3m Company Analysis

Essay by   •  March 13, 2011  •  Case Study  •  4,386 Words (18 Pages)  •  1,417 Views

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3M is established as one of Minnesota's most well known and respected companies. This paper gives insight on how 3M's views and policies relate to our global community. Our focus is on current issues, such as, how 3M has survived global recession, investment in China, and company policies. We will also discover how 3M company values are not always followed. Finally, we explain how lack of regulation, lax enforcement by foreign governments, and consumer ignorance all contribute to worldwide health and pollution problems.

About 3M

3M was incorporated as Minnesota Mining and Manufacturing Co. in 1902. The company's first product was sandpaper, but now has an extremely diversified product line. 3M makes over 50,000 products through six operating segments: consumer and office; display and graphics; electro and communications; health care; industrial and transportation; and safety, security, and protection services. Well-known brands include Post-it Notes, Scotch tapes, Scotchgard fabric protectors, Nexcare, and Scotch-Brite scouring pads. 3M has operations in more than 65 countries. 3M sells products directly to users and through various wholesalers, retailers, and distributors worldwide. It is noteworthy among diversified U.S. corporations because it's growth has been through its internal innovation rather than by large-scale acquisitions.

3M's response to the Global Recession

During a four hour interview in December 2009 with Minneapolis Star Tribune and 3M CEO George Buckley, Editor Patrick Kennedy shares 3M's view of the global recession and a forecast for 2010 and beyond. Buckley explains, "3M began to preserve cash and protect profits at the start of 2008 in response to the economic downturn. We've reduced acquisitions, suspended stock repurchases, sought employee buyouts and layoffs and eliminated pay increases for 2009, among other moves". (Kennedy, 2009). Buffeted by the worst economic downturn since the Great Depression, 3M has cut 6,400 jobs during the recession, including 3,000 in the United States. Kennedy (2009) further adds that, "Although 3M was still heavily impacted by the global recession, it is emerging from the economic downturn with 107 manufacturing plants and 35 research and development labs around the world.

Buckley was encouraged by a strong fourth quarter in 2009 across all business segments, indicating the money-pinching moves begun in 2008 helped, and gave 3M confidence that success would continued in 2010 and beyond. Kennedy (2009) posited that "the market recognized the preservation moves and 3M's total returned to shareholders in 2009 was 48.5%, which outperformed the S&P by 26.5%."

Global Operations: A strong China helps 3M ride the profit wave

About two-thirds of 3M's revenue is generated outside the U.S. within the 65 countries that 3M operates. As reported in the August 2010 edition of China Daily, CEO George Buckley characterizes India and China as the "two greatest industrial growth opportunities of our generation." 3M has been doing business in China for 25 years, but its chief financial officer Patrick Campbell said "we still think China has enormous potential."

According to Ying (2010), 3M has invested $750 million in China to date, and has approved another manufacturing plant in Shanghai for 2011, with another estimated $20 million. Campbell projects sales for China 2010 to be $3 billion and 3M plans to grow this to $5 billion by 2015. 3M operates eight manufacturing facilities and 26 business locations in China, with six of them in the Shanghai area. "China is still building big-time," said Kenneth Yu, managing director of the China region. "3M makes reflective products for road signs, and those goods are in high demand now in China. China is doing what the U.S. did after the war when it comes to freeway construction," Yu said. (Ying, 2010).

Patrick Campbell, chief financial officer, told analysts at a New York investor conference in 2009 that 3M will pursue a "China for China strategy," which includes "developing local capability around technical capability." 3M wants to make products close to its customers and has made a priority of developing local leadership to head its operations in foreign countries. (Fedor, 2009).

According to Fedor (2009), 3M's China for China strategy means they don't directly export things from China, but manufacture products in China, and employ mostly Chinese people. "3M is basically a Chinese company," Buckley explained. Besides expanding its existing businesses in China, Campbell said 3M will look at acquisitions that "could help kick-start us in a few selected businesses that will give us either distribution or give us product capability that we don't currently have." (Fedor, 2009).

Attracting 3M's New Innovators

3M, which got 2,850 patents issued in 2008, is known for developing new processes and products. Attracting international talent is a critical business process. The Los Angeles Times (2006) brought to light the issue that, "business and science leaders insist immigration reform is critical to maintaining U.S. competitiveness in a global economy." Iritani (2006) proclaims, "tighter screening measures imposed after 9/11 and bottlenecks in the immigration system have made it harder to attract and retain foreign talent." In a February 2006 speech at the Minnesota headquarters of 3M, President Bush said it was a "mistake not to encourage more really bright folks who can fill the jobs that are having trouble being filled here in America." He called on Congress to be "realistic" and "reasonable" and expand the quota of H-1B visas, which are used to bring in skilled workers on a temporary basis. "Frustration with the U.S. immigration system has forced more companies to move work to countries where they face fewer restrictions on movement of personnel", said Lynn Shotwell, government relations expert for the American Council on International Personnel. "In recent years, companies such as Microsoft, Intel and Motorola Inc. have pumped billions of dollars into research centers in China and India." (Iritani, 2006)

Fifteen Percent Rule: USA and abroad

One of the most well known employment policies in the history of 3M is what the industry calls the "15 percent rule", which dates back to the 1920s. The rule encourages and permits employees to devote a percentage of their time to their own

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