Loath to be stuck on one thing, 3M makes everything from tape to high-tech security gear. The diversified company makes products through six operating segments: Consumer and Office; Display and Graphics; Electro and Communications; Health Care (through 3M Health Care); Industrial and Transportation; and Safety, Security, and Protection Services. Well-known brands include Post-it notes, Scotch tapes, Scotchgard fabric protectors, Scotch-Brite scouring pads, and Filtrete home air filters. 3M sells products directly to users and through numerous wholesalers, retailers, distributors, and dealers worldwide.
The company has 93 manufacturing plants in 30 US states and operates 133 manufacturing and converting facilities in 40 other countries in Asia Pacific; Europe; Middle East and Africa; Latin America; and elsewhere in North America. In 2012 3M generated about 35% of its revenue from the US and 30% from the Asia/Pacific region.
Sales and Marketing
3M sells its products globally though a wide range of distribution channels, including directly to users and through numerous wholesalers, retailers, jobbers, distributors, and dealers.
The company reported a less than 1% growth revenues in 2012. Higher Industrial and Transportation, Health Care, and Consumer and Office revenues were offset by lower Safety, Security and Protection Services, Display and Graphics, and Electro and Communications revenues.
Sales in Industrial and Transportation were up by 3% (organic local-currency sales increased 5%, acquisitions added 1%, but foreign currency translation reduced sales by 3%).
Health Care sales grew by 2% (organic local-currency sales increased 5%, led by food safety, health information systems, and skin/wound care, but drug delivery system sales declined).
Consumer and Office revenues grew by 4% (organic local-currency sales, led by the consumer health care and construction and home improvement businesses, grew by 4%; acquisitions, led by the 2011 purchase of the acquisition of the do-it-yourself and professional business of GPI Group, added 2%; and foreign currency translation lowered sales by 2%).
3M's higher overall revenues were offset by a decrease in Safety, Security and Protection Services sales (organic local-currency sales grew 2% and foreign currency translation reduced sales by 3%).
Display and Graphics sales were down 3% (organic local-currency sales decreased 2%, as optical systems sales declined 10%, driven by lower optical film volumes for LCD TVs; acquisitions added 1% to sales growth; and foreign currency translation reduced sales by 2%).
Electro and Communications sales were down by 2% (organic local-currency sales in the consumer electronics-related businesses and telecommunications markets business declined less than 1% and foreign currency translation reduced sales by 2%).
3 M reported a 4% rise in net income in 2012 thanks to slighty higher revenues and the decrease in the cost of sales as well as selling, general, and administrative expenses, and interest expense.
As a technology-driven company, 3M continues to make research and development a top priority, investing heftily in new product development efforts. Through significant investments in R&D, sales, and manufacturing, the company ranks among the most innovative companies in the world. It also competes on a global scale and likes to develop, manufacture, hire, and purchase locally in whatever region it is in to get close to its customers. Although 3M tries to keep costs down in response to the uncertainty of global economic conditions, it remains flexible enough to act quickly if opportunities arise.
It also continues to see emerging markets like China and other developing countries as promising avenues for growth. Although China has made recent moves to curb inflation, 3M believes that China holds great potential for the company's growth in the long term.
In 2013, the company and China-based Hunan Reshine New Material Company signed a patent license agreement to expand the use of nickel, manganese and cobalt in lithium ion batteries (in growing demand in consumer electronics, automotive, and other markets).
Mergers and Acquisitions
3M completed nine acquisitions in 2011 that totaled $649 million, including the do-it-yourself unit and professional division of France's GPI Group, a manufacturer and marketer of home improvement products such as tapes, hooks, insulation, and floor protection products. The deal boosts 3M's presence in Western Europe. It also added to its growing Industrial and Transportation segment by acquiring a majority stake in Switzerland-based Winterthur Technology Group, an international supplier of precision grinding technologies that makes grinding tools used in the aircraft, automotive, industrial, and steel industries.
Back in the US, it acquired Florida-based Nida-Core, a manufacturer of structural honeycomb core and fiber-reinforced foam core materials, and Nida-Core's French affiliate, Structiso SARL. The acquisition allows 3M's Engineered Products and Solutions department to build on its composite and engineered materials product portfolio.
3M continued its buying spree in 2012, acquiring Maryland-based CodeRyte, which provides clinical natural language processing (NLP) technology and computer-assisted coding for healthcare outpatient providers. Terms of the sale were not disclosed. 3M will apply CodeRyte's NLP technology to its new 3M 360 Encompass system, used by its 3M Health Information Systems division for clinical documentation and coding workflows. More than 5,000 hospitals worldwide use 3M's coding for patient data for measurement and reimbursement purposes. The 3M system also addresses data problems resulting from health care reform requirements.
Continuing a quest for technology buys, 3M acquired the Federal Signal Technologies Group (FSTech) from Federal Signal Corp. for $110 million in cash. FSTech focuses on hardware and software services for the $3 billion electronic tolling industry. The business also complements offerings from 3M's Traffic Safety Systems Division.
Growing its ceramics portfolio, in 2012 it also bought advanced technical ceramics producer Ceradyne for $860 million. The deal adds Ceradyne's advanced ceramics technologies portfolio to its own diversified product line.