In June former 3M Co. CEO W. James McNerney Jr. traded in his Post-it Notes for a chance to pilot Boeing Co. Since then the company, which has been running under interim CEO Robert Morrison, has posted favorable numbers.
Indeed, third-quarter worldwide sales rose 8.3% to $5.4 billion with a net income of $853 million. The company -- one of IndustryWeek's IW 50 Best Manufacturing Companies in 2005 -- also posted a per-share increase of 13.4%.
"Looking ahead to the fourth quarter, we expect broad-based sales growth throughout our diverse portfolio and another double-digit earnings-per-share increase," said Patrick D. Campbell, 3M senior vice president and CFO in an Oct. 18, 2005, press release. "We expect global demand for our products to remain strong, and our productivity and pricing initiatives to help offset raw material and energy cost pressure."
At A Glance
St. Paul, Minn.
Primary Industry: Chemicals
Number of employees: 67,000
2004 In Review
Revenue: $20 billion
Profit Margin: 14.9%
Sales Turnover: 1.0
Inventory Turnover: 5.4
Revenue Growth: 18.9%
Return On Assets: 17.0%
Return On Equity: 37.9%
In terms of leadership, 3M decided to place Morrison, retired vice chairman, PepsiCo Inc. (also an IW 50 Best Manufacturing Company) and former chairman and CEO of Quaker Oats Co., in the interim CEO position. "While the company has developed strong internal candidates in recent years, the Board believes that it is important to consider all the possibilities in making this decision," noted Morrison in a June 30 press release.
In September 2005 3M had to deal with another executive loss. Former 3M CEO Harry Heltzer, who joined 3M in 1933 and worked his way through the ranks to become president in 1966, passed away.
According to the Minneapolis-St. Paul Star Tribune, "His compassionate leadership brought financial rewards to the company: Earnings rose 76%, to $244.4 million from 1966 to 1972, and more than 30% of that growth came after he became chairman and CEO in October 1970."
The Star Tribune also noted that the company expanded into 150 countries during Heltzer's tenure, setting up business there instead of merely selling products.
As for products, 3M -- one of the 30 companies that make up the Dow Jones Industrial Average -- is most widely recognized for its Scotch Tape brands (Scotch Transparent Tape is celebrating its 75th anniversary), as well as Post-it Notes and O-Cel-O Sponges. The 103-year-old company also manufactures for the electronics, health, safety, security and transportation industries -- earning it a position as a bellwether for the U.S. economy due to its diverse portfolio.
To be sure, in August 2005, 3M completed its acquisition of CUNO Inc., a subsidiary of 3M that designs and manufactures filtration products for the separation, clarification and purification of fluids and gases. According to 3M, the CUNO acquisition contributed 1.4% to total company third-quarter local currency sales growth.
While sales are strong, 3M is dealing with issues related to chemicals formerly used to make nonstick cookware and stain-resistant fabrics.
According to the St. Paul Pioneer Press, a lawsuit claims that 3M Co. chemicals contaminated water in a nearby county that houses a 3M plant. The chemicals in question are perfluorochemicals which were made at 3M's Chemolite plant in Cottage Grove, Minn. (3M no longer makes chemicals.) 3M insists the chemicals are not harmful to humans.
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