Loath to be stuck on one thing, 3M makes everything from tape to high-tech security gear. The diversified company makes products through five operating segments: Industrial; Safety and Graphics; Electronics and Energy; Health Care; and Consumer. 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. Industrial, its largest segment, accounted for about 34% of 3M's total revenues in 2013.
The company has 89 manufacturing plants in 30 US states and operates 127 manufacturing and converting facilities in about 40 other countries in Asia Pacific; Europe; Middle East and Africa; Latin America; and elsewhere in North America. Overall, 3M has operations in more than 70 countries.
In 2013 3M generated about 36% of its revenue from the US; 23% from Europe, Middle East and Africa; 12% from Latin America and Canada; and 29% from the Asia/Pacific region.
In 2013 the company realigned its business segments to better serve its customers and now operates five business segments: Industrial; Safety and Graphics; Electronics and Energy; Health Care; and Consumer.
The Industrial segment serves a broad range of markets, such as automotive OEM and aftermarket, electronics, appliance, paper and printing, packaging, food and beverage, and construction. Products include vinyl, polyester, foil and specialty industrial tapes and adhesives.
The Safety and Graphics segment includes architectural, building and commercial services, commercial graphics, industrial minerals, personal safety, and traffic safety and security. Major products offerings include architectural surface and lighting solutions; personal protection products; traffic safety and security products; commercial graphics sheeting and systems.
The Electronics and Energy segment includes communication, electrical, electronics materials, electronics, infrastructure protection, optical systems, renewable energy, and 3M Touch Systems. Its products include electrical, telecommunications, renewable energy, and infrastructure protection goods and services.
The Health Care segment serves medical clinics and hospitals, pharmaceuticals, dental and orthodontic practitioners, health information systems, and others. Its products and services include medical and surgical supplies, skin health and infection prevention products, inhalation and transdermal drug delivery systems, and oral care products.
The Consumer segment includes consumer retail, office retail, home improvement, building maintenance and other markets. Major consumer products include Scotch® brand products; construction and home improvement products, include surface-preparation and wood-finishing materials, and filters for furnaces and air conditioners; home care products include Scotch-Brite pads and sponges.
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's revenues increased by 3% in 2013, thanks to higher sales from all segments (driven by stronger local-currency sales, higher prices, and acquisitions) with the exception of Electronics and Energy (which reported a sales decrease due to foreign currency translation). Organic local-currency sales were flat in 3M’s electronics-related and energy-related businesses, where sales gains in electrical markets were offset by sales declines in infrastructure protection, telecommunication markets, and renewable energy.
Industrial segment revenues increased in 2013, led by aerospace, automotive OEM, filtration products, and industrial adhesives and tapes (and the 2012 acquisition of Ceradyne, Inc).
Safety and Graphics sales increased, led by personal safety, commercial graphics, industrial minerals, and building and commercial services, partially offset by the sales decline in traffic safety and security systems (and the acquisition of the Federal Signals Technologies Group).
Health Care sales grew, led by health information systems, food safety, critical and chronic care, infection prevention, and oral care; however Organic local-currency sales declined in drug delivery (and the 2012 acquisition of CodeRyte, Inc).
Consumer revenues grew, led by consumer health care, home care, and construction and home improvement.
3M's net income grew by 5% in 2013, thanks to the higher revenues; higher prices combined with lower raw material costs; and a decline in interest expenses as the result of lower international debt balances and a drop in interest rates on US debt.
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. In 2013 the company invested $2 billion in R&D activities worldwide.
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 2014 3M formed partnership with U.S.-China Clean Energy Research Center Building Energy Efficiency Consortium, under which 3M participates in research on building efficiency strategies, tools, and practices in areas such as building envelope technologies and integration of new construction materials for increasing energy efficiency.
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).
That year, in order to expand its manufacturing assets in Asia, 3M Company invested in plants in China and Singapore to support the growing window film business.
It also signed a patent license agreement with Korea-based ECOPRO to further expand the use of nickel-manganese-cobalt (NMC) cathode materials in lithium ion batteries.
Mergers and Acquisitions
3M also grows through acquisitions. In 2014 it acquired Treo Solutions, a leading provider of data analytics and business intelligence to healthcare payers and providers. This deal makes it possible to extend real-time data analytics and payment redesign worldwide, jumpstarting the many provider organizations that have adopted the 3M 360 Encompass System for computer-assisted coding in their transition to population health management.
In a related deal, in 2012 3M acquired 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.
In an effort to broaden its global presence in office, education and consumer products, in 2012, 3M acquired the Office and Consumer Products business of Avery Dennison Corp. for $550 million.
Continuing a quest for technology buys, on 2012 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.