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As the U.S. industrial multinational attempts to contain expenses in the face of declining consumer electronics demand, 3M Co. will eliminate nearly 6,000 positions globally in a second round of layoffs this year.
The multinational manufacturer announced on Tuesday that it would prioritise emerging growth industries like climate technology and next-generation consumer electronics and shift its focus to high-growth companies like vehicle electrification and home improvement.
In recent months, corporate America has become leaner due to the economy’s instability, rising interest rates, and persistently high inflation.
Since individuals are reducing their discretionary spending due to recession fears, 3M, a manufacturer of electronic displays for smartphones and tablets, has battled with the decline in consumer electronics demand.
According to Monish Patolawala, the company’s chief financial officer, sales of consumer electronics decreased 35% in the first quarter.
Consumers’ buying habits have changed compared to the first quarter of last year to include more non-discretionary purchases, and retailers have aggressively decreased their inventory levels, according to Patolawala.
The corporation stated that the restructuring would affect all businesses, functions, and geographical areas and reduce the number of management layers and the size of the corporate centre.
The corporation has already declared a decrease of 2,500 roles. With the second round of layoffs, the corporation has 10% fewer employees worldwide.
Approximately half of the pretax restructuring charges that 3M anticipates will be incurred in 2023, and the remaining in 2024 will total $700 million to $900 million.
“End-market dynamics appear mixed, but MMM continues to be prudent in managing cost/spending that should, over time, support profitability as the company navigates a slow macro environment,” Citi analysts wrote in a note.
The St. Paul, Minnesota-based business beat analysts’ estimates of $1.58 per share by reporting an adjusted profit of $1.97 for the quarter ending on March 31. The actual revenue of $8.03 billion exceeded expectations of $7.49 billion.
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