3M plans to cut 1,000 more jobs

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Posted 8:03AM on Saturday, January 19, 2002

MINNEAPOLIS - 3M, which announced a 13 percent drop in fourth-quarter earnings, said Friday it will cut 1,000 more jobs this year than had been previously announced as it continues to cut costs in a tough global economy. The diversified manufacturer of products like Scotch tape and Post-it Notes said that the new cuts would be accomplished by leaving jobs vacant as employees retire. The company also intends to eliminate another 1,500 jobs this year that were part of a restructuring cutback announced last May. Minnesota Mining & Manufacturing Co. eliminated 6,000 positions in 2001. ``These are tough and unusual times and I don't see the negative global economic situation abating anytime soon,'' chairman and CEO W. James McNerney Jr. said as he discussed the company's results with securities analysts. In trading Friday on the New York Stock Exchange, 3M shares closed up $2.28 at $106.80 on the New York Stock Exchange. 3M's fourth-quarter earnings fell to $387 million, or 98 cents a share, from $447 million, or $1.12 a share, a year earlier. The results included a $103 million pretax charge related to job cuts and accelerated depreciation and a $73 million pretax gain related to the Scotch tape maker's successful appeal in an antitrust case brought by LePage's, another tape-maker. Excluding nonrecurring items, the Maplewood, Minn.-based company earned $381 million, or 96 cents a share, up 17 percent from $326 million, or 82 cents a share, in the fourth quarter of 2000. The results beat the consensus estimate of analysts surveyed by Thomson Financial/First Call by a penny. 3M shares rose $2.48 to $107.00 on the New York Stock Exchange. ``Broad-based economic weakness continued to impact demand for 3M products in the fourth quarter,'' McNerney said. However, McNerney said the company's actions to cut costs, reduce employment and improve productivity minimized the effects of the economic slowdown, trimming fourth-quarter expenses by $75 million, or about 7.5 percent, year-over-year. Sales for the quarter totaled $3.86 billion, down from $4.14 billion a year earlier. McNerney also announced that Patrick Campbell, 49, will join 3M as senior vice president and chief financial officer on Feb. 1. Most recently, Campbell has been vice president-finance for General Motors Europe. Campbell will replace Robert Burgstahler, 57, who will become senior vice president in charge of business development and corporate services, overseeing strategic planning, merger and acquisition efforts and information technology. For the full year, 3M earned $1.43 billion, or $3.58 per share, compared with $1.78 billion, or $4.45 per share, in 2000. Excluding one-time items, the company earned $1.74 billion, or $4.36 per share, down about 7 percent from the prior year. Annual sales totaled $16.08 billion, down about 4 percent from 2000. 3M, which had been scheduled to release its earnings next Wednesday, pushed up the date to address rumors regarding asbestos litigation that last week drove down the company's stock price. McNerney said 3M has been named in asbestos lawsuits primarily because it is a big company that manufactures respiratory protection products, ``not because our products are in any way defective or contribute to asbestos-related diseases.'' 3M has successfully resolved about 200,000 claims and lawsuits over the last 20 years, with an average settlement of less than $1,000 per case, he said. ``We have substantial product liability insurance that covers the cost of the claims paid and defense costs,'' Burgstahler added, saying 3M officials believe asbestos litigation will have no material adverse impact on the company going forward. 3M is appealing a jury verdict in Holmes County, Miss., last year ordering the company to pay $22.5 million to six Mississippi laborers who were exposed to asbestos as far back as the 1950s. The company called that verdict an aberration. Securities analyst Clay Hoes of American Express Financial Advisors agreed that 3M appears to face little danger from exposure to asbestos litigation. The hit taken by 3M stock last week came as analysts began looking at any companies with a possible asbestos connection after Dow Chemical settled an asbestos case out of court. ``They started taking down everybody else who had an asbestos link,'' Hoes said. In addition to consumer products, 3M makes medical products and telecommunications equipment. The company has operations in more than 60 countries and serves customers in nearly 200 countries.