How Does 3M Company Work?

3M historically operated through four main business segments: Safety & Industrial, Transportation & Electronics, Health Care, and Consumer. These divisions encompass a vast range of 3M products, from adhesives and abrasives to personal protective equipment and electronic materials.

The company's value proposition is deeply rooted in its commitment to innovation, consistently investing a significant portion of its revenue, typically around 5%-6% annually, into research and development.

Operational processes involve advanced manufacturing, strategic sourcing of specialized raw materials, and efficient logistics. As of 2024, the company identified approximately 17 critical suppliers for advanced chemical compounds, highlighting a focused approach to its supply chain.

A unique aspect of 3M's operations is its ability to apply over 40 distinct technology platforms, often in combination, to address diverse customer needs and create differentiated 3M products.

On April 1, 2024, 3M completed the spin-off of its Health Care business, now operating as Solventum Corporation. This strategic maneuver is designed to create two more focused entities, allowing 3M to concentrate its efforts on its remaining industrial, transportation, electronics, and consumer businesses.

3M has navigated significant operational and market challenges, including extensive litigation related to per- and polyfluoroalkyl substances (PFAS) and Combat Arms Earplugs. The company secured final court approval in April 2024 for a settlement with U.S. public water suppliers concerning PFAS contamination, committing up to $10.3 billion payable over 13 years, with initial payments expected in Q3 2024. Settlements for Combat Arms Earplugs have also been finalized.

As part of its strategic realignment, 3M is committed to exiting all PFAS manufacturing by the end of 2025. This decisive action underscores the company's adaptation to evolving environmental regulations and market expectations.

3M's competitive strengths are deeply rooted in its diversified product portfolio, robust R&D capabilities, and extensive global reach. The company's dedication to innovation is evident in its launch of 169 new products in 2024, a 32% increase from the previous year. For 2025, 3M plans to introduce 215 new products and achieve a 15% sales growth from products launched within the last five years, with over 1,000 new products slated for introduction between 2025 and 2027. This focus on 3M innovation ensures its position at the forefront of technological advancements across various industries.

3M Company operations span a wide array of industries, leveraging its global presence to serve diverse customer needs. The company's business model is built on innovation and a broad product portfolio.

Significant risks include ongoing litigation concerning PFAS and earplugs, resulting in substantial settlements and continued financial and reputational strain. Regulatory shifts and intense competition also pose ongoing challenges.

The company is implementing strategic actions to enhance revenue generation, including the spin-off of Solventum to focus on remaining businesses. A new operating model, '3M eXcellence,' aims to drive sustained organic growth across its operations.

3M is investing in new product innovation, targeting a doubling of its 5-year new product sales to $5 billion. The company forecasts adjusted EPS between $7.60 and $7.90 for full-year 2025, with adjusted total sales growth projected at 0.5% to 1.5%.