Flagging demands in the automotive and electronics industry including the economic issues in China and a grand jury subpoena has caused tremendous losses for 3M Co. To remedy the situation, it would lay off about 1,500 workers in two industries.
3M Co. would institute a company restructuring that would affect all its business groups, functions, and branches around the world. It would recast reporting lines and unify its manufacturing oversight, said an official statement released last Tuesday.
The announcement came with a declaration that the company would incur about 120 million USD per year on its pre-tax savings from the restructuring and other business changes. Last April, the company announced that it might also lay off 2,000 of its workers after suffering sales from its post-it notes and touch-screen products.
The company also cut back on its forecasts several times in the past year due to the China-US trade disputes that greatly affected its overseas operations. Among the other factors that caused turmoil for 3M included the economic problems in China, flagging demand of its services in the country, and the unhealthy business environment in the automotive and electronics markets caused by such trade disputes.
According to 3M's chief executive officer (CEO) Mike Roman, the company would be positioning itself to capitalize on a rebound. The said layoff would involve about 1.5 percent of the company's total workforce.
Roman revealed at a conference call with analysts that the organic growth for the company had yielded negative value during the fourth quarter of 2019. He then added that the company would still experience softness in some end markers including the automotive and electronics industries in China. He claimed that the economic problems in China significantly affect 3M's overall growth.
Furthermore, 3M were also served with a federal grand jury subpoena last December 2019. The decision showed that the company failed to comply with relevant permits for its Alabama facility. Additionally, 3M also had to pay pre-taxes worth hundreds of millions of US dollars that also adversely affected its financial status.
In other news, CNN reported that the industrial conglomerate would lay off about 1,500 workers globally including its China branches. It was then revealed that 3M had missed its financial forecasts on sales and earnings for consecutive months that caused the issue of an underwhelming business outlook for 2020.
The company is best known for its production of scotch tape, post-it notes, two of the worst performing products of the company in 2019. The company also produces auto parts for renowned carmaker BMW.
