Published October 03, 2012
3M Co said Wednesday it had restructured into five major business groups, down from six, and set up new roles for some of its senior executives.
The realignment follows reorganization plans announced at other companies including FedEx Corp and General Electric Co. to cut costs amid slow global economic growth.
3M, which said on Monday it was buying Ceradyne Inc in its biggest deal since naming a new chief executive officer in February, will now be comprised of consumer, industrial, health care, and new safety & graphics and electronics & energy groups.
The maker of Post-It notes, specialty films used in consumer electronics and safety products, said it eliminated its display and graphics group and put businesses within that group into the other best-matched groups.
"From a long-term perspective, we've liked some of the moves that 3M has made, especially in some (of) the potentially faster-growing emerging markets for them," said Jeff Windau, Edward Jones industrials analyst.
3M in July trimmed its sales outlook and said it planned tight spending controls to protect margins.
The new structure is effective immediately, with segments reporting under the new organization effective January 1, 2013.
"By building scale more broadly, we create critical mass in each business group to take full advantage of innovation and commercialization opportunities," Inge Thulin, 3M's chief executive, said in a statement on Wednesday.
Shares of 3M rose 0.4 percent at midday to $93.95 on the New York Stock Exchange, up about 15 percent so far this year.
"It wasn't long ago that GE did the same thing, and it's basically streamlining across the business to get more efficient for cost savings," said Dallas-based Hodges Capital Management portfolio manager Gary Bradshaw, who holds 3M shares.
The new safety and graphics division will be led by Executive Vice President Julie Bushman, former head of 3M's safety, security and protection services business.
Executive Vice President Mike Kelly, former head of 3M's display and graphics business, will lead the new electronics and energy group.
The industrial group will be headed by Executive Vice President Brad Sauer, former head of 3M's health care business.
Health care will be run by Executive Vice President Joaquin Delgado, who had led 3M's electro and communications business.
The consumer division will continue to be led by Executive Vice President Mike Vale.
Chris Holmes was named senior vice president of Corporate Supply Chain Operations, succeeding John Woodworth, who plans to retire. Holmes had led the industrial and transportation business.
3M has more than $30 billion in annual sales and employs 84,000 workers in more than 65 countries.
(Reporting by Lynn Adler; Editing by Bernadette Baum and Leslie Gevirtz)