3M to Cut 6,000 Positions as Manufacturing Demand Cools

2023-04-25

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3M said it would lay off nearly 6,000 staff around the world as it looks to focus on its high-growth businesses. The St Paul, MN-based company said the restructuring plan would save it up to $900 million a year before taxes after the layoff measure is complete.

The announced cuts follow the company’s elimination of 2,500 roles earlier this year.

"To strengthen 3M for the future, today we announced actions that will 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," said 3M Chairman and CEO Mike Roman. "We will continue to prioritize investments in high-growth end markets where 3M science gives us a clear competitive advantage."

The company had some significant headwinds that impacted sales. In a release, the company said adjusted sales of $7.7 billion, were down 9.7% year-on-year with adjusted organic sales decline of 5.6% year-on-year. This included a 3.4 percentage point headwind from the decline in disposable respirator demand, along with the 2022 exit of Russia.

3M is in the process of spinning off its healthcare unit into a publicly traded business, which is expected to be completed by the end of 2023. The new company will be a diversified healthcare technology company focused on wound care, healthcare IT, oral care, and biopharma filtration.

The firm’s Aearo Technologies subsidiary is also facing nearly 260,000 lawsuits over military-issue earplugs. The lawsuits prompted 3M to file for bankruptcy for the Aearo subsidiary. The lawsuits allege that both Aearo and 3M misrepresented the earplugs' effectiveness, which led to hearing damage.

The manufacturing segment has had some layoffs but not to the extent of other industries like big tech. The manufacturing sector saw job losses in February for the first time in 21 months, according to a report from CNN Business citing the Bureau of Labor Statistics.

The CNN Business report notes that manufacturers have now “worked through backlogged” orders which “accumulated because of supply chain disruptions” during the pandemic. The report from CNN Business notes that because the backlog has been cleared, layoffs in manufacturing could be “on the horizon.”

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