3M CEO: Team ‘Looking Very Carefully’ at Adding U.S. Production
Leaders of industrial conglomerate 3M Co. are “looking very carefully” at bringing more manufacturing to their U.S. factories, Chairman and CEO Bill Brown told analysts April 22.
Speaking on a conference call after St. Paul-based 3M reported better-than-expected first-quarter profits of more than $1.1 billion on sales of nearly $6 billion, Brown said the company can also play some offense along with defending its margins against the impact of tariffs by cutting costs, changing some of its supply spending and raising prices where it can.
“We’ve got a very, very large U.S. footprint. We can bring more things into the U.S.,” Brown said. “There are certain products that we compete against that come in from other regions around the world and perhaps there’s an offensive opportunity to take some share here.”
The 3M team hasn’t yet decided about whether and where to move more production to its domestic network. Brown, who took over last year and has focused both on reinvigorating 3M’s innovation work and improving the operating efficiency at its plants, said one upside to having relatively low utilization rates is that the company has “a lot of flexibility to move […] assets up and down and move things across our network.”
Brown made his comments on the same morning that Swiss pharmaceutical giant Roche said it will invest $50 billion by 2030 to add more than 12,000 jobs in Pennsylvania, Indiana, Massachusetts and California and executives with yogurt manufacturer Chobani said they will build a $1.2 billion plant in Rome, New York. (Fellow Endeavor Business Media brands Pharma Manufacturing and Food Processing have the details of those announcements.)
Brown and CFO Anurag Maheshwari estimate that 3M’s total exposure to newly instituted tariffs is $850 million on an annualized basis and before any actions the company is taking. But, Maheshwari added, because the tariffs only became effective recently and 3M typically carries 90 days of inventory, the 2025 gross impact to the company’s profits will be about $400 million. Cost cuts, sourcing changes, price increases and possible U.S. production additions, he said, are expected to cut that figure roughly in half.
“The team has responded quickly and is working on a number of mitigation plans,” Maheshwari said. “We will keep you updated as the situation evolves. In the meantime, we are controlling what we can and focused on growth acceleration, strong margin expansion and delivering strong shareholder returns.”
Helping 3M so far this year on that front is a macroeconomic environment that Brown said has softened somewhat but remains “fairly normalized” despite the turmoil of tariffs. Most customers, he said, aren’t excessively building up inventories but a decent number are extending their order cycles as they adjust to a weaker environment.
“We saw in February orders that were just pushing out into Q2,” Brown said. “We still see a bit of that activity, but the […] macro indicators that we’re seeing still look okay for the industrial business.”
Shares of 3M (Ticker: MMM) rose on the back of the Q1 report and executives’ commentary and closed up more than 8% on the day at $136 and change. Over the past six months, they’re up about 3% and 3M’s market capitalization now stands at about $76 billion.
