Another 6,000 3M employees are set to be laid off, joining the 2,500 job cuts announced earlier this year.
3M announced the latest round of cuts in its first-quarter earnings report Tuesday. Altogether, the 8,500 layoffs will cost the company between $700 million and $900 million in pre-tax charges, about half of which will hit its bottom line this year. In the longer term, however, 3M said in the report that the restructuring will generate about the same amount—between $700 million and $900 million—in pre-tax savings every year once complete.
In total, the jobs now on the chopping block represent more than 9% of the conglomerate’s workforce, which tallied 92,000 workers as of the end of 2022, according to 3M’s annual report (PDF) for the year.
The first round of 2,500 layoffs focused on 3M’s global manufacturing workforce, as detailed in a full-year 2022 earnings report published in January, but the 6,000 additional cuts will hit “all functions, businesses and geographies,” according to this week’s release.
Despite the workforce reduction, 3M said it will continue to focus both on its existing product areas and on potentially high-growth new ones, including “climate technology, sustainable packaging, industrial automation, semiconductors and next-generation consumer electronics.”
CEO Mike Roman said in the release that the corporate slimdown will help to “reduce costs at the corporate center, further simplify and strengthen our supply chain structure and streamline our go-to-market business models, which will improve margins and cash flow.”
The cuts came as 3M reported steadily slipping sales for the fifth quarter in a row. Since the start of 2022, the company has seen its sales take progressively larger dips; accordingly, the first quarter of this year produced the biggest drop yet, with its $8 billion in sales representing a year-over-year decrease of 9%.
Those quarterly earnings led 3M to reaffirm the full-year forecasts it laid out at the start of 2023. It’s expecting to see sales fall between 2% and 6% year over year, down from the $34.2 billion total it raked in for all of 2022—which itself represented a drop of 3% compared to the year prior.
All four of 3M’s core business divisions saw their sales drop in the first quarter, with the transportation and electronics business taking the biggest hit: a 12.4% year-over-year decrease.
Interestingly, the best-performing of 3M’s businesses is the one it’s set to spin out into a standalone public company later this year. The healthcare division saw its sales fall by 5.6% for the quarter on an as-reported basis, and it was the only one of the four divisions to report sales growth—of 1.4%—on an organic basis.
3M announced last July that the healthcare business would be spun out by the end of this year. During an earnings call this week, Monish Patolawala, the company’s chief financial and transformation officer, slightly tweaked that timeline, noting that while 3M is aiming to wrap up the spinoff by the fourth quarter of this year or the first quarter of 2024, the timing will ultimately depend on the IRS and other government and board approvals, “because we want this to be a tax-free transaction.”
The resulting $8 billion company will continue to churn out 3M’s broad range of healthcare technologies, which span wound care, oral care, healthcare IT and biopharma filtration products.