3M To Update Operating Model, Streamline Business To Follow Global Trends
3M has announced that, as the global economy shifts in the wake of the COVID-19 pandemic, the St. Paul, Minnesota-based company is advancing its operating model, streamlining its business and focusing on global trends where it says it will apply science to life in new ways to drive sustainable growth. 3M operates in the promotional products market through its 3M Promotional Markets Dept. (PPAI 113638, S11).
"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," says 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 it says has evolved the way it works, enabling the company to be more customer-focused and responsive. With the actions 3M has announced, the company expects to further enhance its operations and marketing capabilities. In operations, 3M 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 anticipates these changes will leave it better positioned to take advantage of global market trends in ecommerce, 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.
The company 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 to $300 million, with $120 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 expects annual pre-tax savings of $200 to $250 million from these actions, with $75 to $100 million of pre-tax savings in 2021.