3M Will Cut 1,500 Jobs, Posts Slumping Sales
3M will lay off 1,500 employees, it announced on Thursday, following a 5 percent slide in sales. The layoffs are part of a restructuring plan that could save the company $130 million in 2016.
The Maplewood-based manufacturer said its restructuring changes would be “primarily focused on structural overhead” and that most of the staff cuts would be U.S. positions with the rest from slower-growing markets in Europe and Latin America.
Approximately 89,800 people are currently employed with 3M across the globe, which means the cuts will reduce staffing by just under 2 percent.
3M’s third quarter was a mixed bag. Its most apparent shortfall was in sales where it reported $7.71 billion earned over the three-month period, a 5 percent drop from the $8.14 billion made in Q3 of 2014. A Wall Street analysts’ consensus by FactSet predicted the manufacturer’s sales would amount to $7.84 billion, a difference of $130 million.
The company’s profits were a bright spot on its report with a 3.5 percent bump from last year. The manufacturer posted a net income of $1.3 billion, or $2.05 per share. The FactSet analysis had predicted $2.02 per share, while its projection for profits earned was in line with 3M’s result.
In a statement, 3M CEO Inge Thulin pointed to the company’s “solid operational performance in a continued slow-growth environment, marked by strong earnings, [and] organic growth in all geographic areas.”
However, in terms of global sales, none of 3M’s divisions saw growth. The company’s industrial division, its largest cash cow at $2.6 billion, earned 7.1 percent less than last year. Its safety and graphics, health care, electronics and energy, and consumer divisions each saw sales drop by an average of 3.7 percent over the same year-to-year basis.
Along with its restructuring efforts, Thulin said the company would work to “increase our scientific edge through research and development, and transform our business processes through a new global [enterprise resource planning] system.”
3M’s shares have faired well so far on Thursday. Since the opening bell, company stock has leaped from $151.34 to 155.92 at mid-day, a rise of roughly 3 percent. Overall, 3M’s stock has been on an upward trend as it currently sits at its highest mark since July.