3M will lay off 2,500 manufacturing workers worldwide as it works to better “align with adjusted production volumes,” the company announced on Tuesday.
The company experienced slowed growth over the past year due to rapid declines in consumer-facing markets and COVID-19-related production disruptions in China, Chairman and CEO Mike Roman said in the release. As a result, the company adjusted its manufacturing output and controlled costs to improve inventory levels.
"In a year impacted by inflation, global conflicts, and economic softening, our team took actions to position 3M for future success," Roman said.
The company continues to face multiple economic headwinds, including elevated raw material, energy and logistics costs, as well as market loss from the exit of its operations from Russia, executives said on a Q4 earnings call Tuesday.
3M took several actions in an attempt to manage those costs, including adjusting prices, lowering manufacturing output and “taking additional restructuring actions to streamline the organization,” said Chief Financial and Transformation Officer Monish Patolawala.
The company is now focused on cutting manufacturing costs further by aggressively managing production.
"With supply chain stabilizing, we are focused on improving manufacturing operations and driving working capital,” Roman said on the call. “These are our most significant opportunities to improve margins and cash flow.”
3M’s sales hit $8.1 billion during the fourth quarter, down 6% YoY. Annual sales for 2022 were $34.2 billion, a 3% drop from the year before, according to its Jan. 24 earnings announcement.
Among the issues causing the company financial headwinds is the phasing out of long lasting per- and polyfluoroalkyl substances (PFAS) from its manufacturing and products by the end of 2025. Exiting the PFAS market is expected to cost $1.3 billion to $2.3 billion, Patolawala told investors.
3M is hoping the layoffs will help to streamline the organization and further control costs in what it expects will be an economically challenging year.
“We are not satisfied with our performance and the expected start this year,” Patolawala said during the call. “We are working to aggressively address our operating performance in this challenging environment.”
Kate Magill contributed to this report.