Contenu connexe
Similaire à George W. Buckley, Chairman, President and CEO (20)
George W. Buckley, Chairman, President and CEO
- 1. George Buckley
Chairman of the Board, President, and CEO
3M Company
Continuing
On the Path to
Higher Growth
October 9, 2007
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 2. Higher Growth Is Fundamental To Our Long Term
Success
1. Rebuilding R&D to improve new product flow and impact
2. Complement the core through acquisitions
3. Financing the growth through supply chain re-engineering
4. Developing a more entrepreneurial and responsive culture
2
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 3. What Has Changed Since 18 Months Ago?
Early analysis quickly identified:-
The causes of slow growth
The way to accelerate it
Eighteen months ago, we told you what we were planning to do and,
since then, we’ve been simply executing
We’re building the plants, doing the acquisitions, investing in R&D and fixing
the things which were broken and selling those we don’t need or want
What is clearer to us now?
The vital importance of the supply chain initiative
The vital importance of 3M’s traditional core
The power of 3M’s enduring franchises .. And how to secure them
The fact we cannot rely only on big bets (e.g., Aldara) for growth
The fact we can finely balance growth, ROIC and margin
3
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 4. Growth Inspired by Our Customers, Balanced with
Operational Excellence
Growth Operational Excellence
Protect and Adjacency
Grow the Core Build Out
3. Solve Low
1. Factory Cost 2. Control Price
1. New Technology 2. New Products 3. M&A Reduction Leakage Turns Inventory
4. Breakthrough 4. Service & Quality
5. Localized, Simplified 6. Go to 5. Sourcing 6. Lean Six Sigma
Opportunities Revolution
Supply Chains Market
(BTO’s)
Organizational excellence within a growth culture essential
4
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 5. The Dynamics of Growth
Many companies covet growth and believe it to be the best
value creator
Companies that participate in broad markets will always, in
the absence of something special, tend to the mean growth
rate. Growth above market is not a right
A company cannot sustain higher growth rates than the
market unless it does at least one of three things:
Creates new markets at growth rates consistent with their long
term growth expectations. Saturation always happens
Penetrates new segments, e.g. international or the pyramid’s
lower levels
Moves to markets where the average growth rate is higher
Sustained growth above the average is therefore a very
challenging goal for corporations to achieve
5
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 6. Why Growth Naturally Runs Out; Market Saturation
Assume we grow at ≈ three times (10%) the market rate; here’s what happens
3M Share
3M Share 3M Share
Balance
Balance Balance
87%
91% Year 0 Year 5 Year 10
Market Grows Market Grows Market Grows
83%
@ 3% @ 3% @ 3%
17%
9% 13%
3M Share
3M Share
Balance
Balance
76%
66% Market Grows
Market Grows @ 3%
@ 3%
Market twice
Year 15 Year 20 the size
growing @
34%
10%
24%
6
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 7. Essentials of 3M’s Growth Plan
Rebuilding & extending the core; lowest risk and fastest results
Protect and defend the core; inventing a new future
Fixing chronic capacity issues
Broaden the product portfolio to become more important to customers
Invest in the future
R&D spending increases, protecting our flanks and reengaging the labs
Acquisitions, Break Through Opportunities (BTOs) and “feet on the street”
Improving supply chain speed and efficiency
Shortening most of our supply chains
Driving growth by going “local” with regional brands and manufacturing
Releasing working capital and lowering entropy costs and effective tax rate
Experiment with new markets
Emerging Business Opportunities (EBOs) and other adjacencies
Greater emphasis on International markets growth
7
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 8. A Visual Of Our Basic Strategy
Strategic
Thrust
Grow the Current Complementary Build New International
Core Business Acquisitions Businesses Growth
• Defend and extend the core • Follows core strategy • Seeded by small M&A • BRICP
• Build scale • Supports adjacencies • Mega Trends • No country left behind
• Build relative share • Mostly tuck-ins • Track and Trace
• Localization • Occasional transformation • Minerals extraction
• Disruptive technologies • Oil & Gas
• Build long term competency • Food safety
8
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 9. Core Growth Remains The First Mission
Grow the
Current Core
Invent a
Extend The Core
New Future
• Constant reinvention
• Localization
• Imagine, dream and invent
• Differentiation
• Build first where we’re strong • Beat competitors to the future
• Build key partnerships
• Build scale & relative share • Plan for cannibalization
• Fill product “white spaces” • Licensing
• Be important to customers • Avoid NIH syndrome
Build Broad Long
• Use dual branding
Term Competencies
• International localization
• Local acquisitions
• Private labeling • Develop broad based long-term capabilities
• Acquire supporting technology with quality brands
• Build volume and scale
9
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 10. We Made Solid Progress in 2007
Reinvigorating R&D
11% increase over 2006*
Building on EBOs
New product vitality index up from 20% to 24%
Accelerated International Growth
Building local/regional brands
Pursued profitable adjacencies
Invest in a better Supply Chain
28% increase in Capex over 2006
Improving local source of supply
• Korea – New respiratory facility
• Poland – New optical facility
• Canada – New CHIM tape facility
• China – New Industrial tapes facility
Seed Further Growth in the Core via acquisitions
15 acquisitions YTD
*ex-pharma, Brontes in 2006
10
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 11. Capital Spending 2001-2007
+25%
CAGR
Supply Chain -20%
Optical and Film CAGR
Growth/Strategic
Sustain
2001 2002 2003 2004 2005 2006 2007E
Building the capital assets to drive growth
11
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 13. 3M’s Core Strength: Connecting Technology to Markets
A B P S
b i m m
A C E N P S
c e m t o u
A D F M P T
N
d d c i w p t
A D F F I M M O P V
r
m i e s s e o p p
A D F I L M M P R W
p e
n o i m m f r d
A E F I M P S W
e e o
s c l n d
3M Technology Capability
Technology-enabled
NPI
solutions
Voice of The Market
13
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 14. 3M’s Multiple Technology Platforms
Ab Bi Pm Sm
Investment
priority
Abrasives Biotech Polymer Specialty
Melt Materials
Processing
Ac Ce Em Nt Po Su
Acoustics Ceramics Electronic Nano- Porous Surface
Materials &
technology
Materials Modificat ion
Membranes
Ad Dd Fc Mi Pp Tt
Nw
Adhesives Drug Flexible Microbial Nonwoven Precision Track and
Converting Detection &
Delivery Materials Processing Trace
& Packaging Control
Pr Vp
Am Di Fe Fs Is Me Mo Op Process
Display Filtration, Integrated Metal Matrix Molding Vapor
Advanced Flexible Opto-
Design &
Separation, Systems Composites
Materials Electronics electronics Processing
Control
Purification Design
Pd Rp We
An Do Fi Im Lm Mf Mr Particle & Radiation Accelerated
Analytical Dental & Films Imaging Light Mechanical Micro-
Weathering
Dispersion
Orthodontic Processing
Mgmt Fasteners replication
Processing
Materials
Pe Se Wo
As Ec Fl In Md Sensors
Predictive Wound
Applicat ion Energy Fluoro- Inspection & Medical
Engineering
Software Components materials Measure- Mgmt
Data Mgmt
& Modeling
ment
Successful new product growth builds on uncommon connections
14
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 15. The Oldest Can Be Forever New - Abrasive Reinvention
FROM TO
Trizact™ Hook-it™
Super Abrasives
Cubitron™ Sandblaster™
Traditional mineral materials and market focus; Synthetic materials and specialized
metal finishing and wood-working applications; aerospace, healthcare,
composites
2003 OI Margin = 12% 2012 OI Margin = 25%
2003 ROIC = 16% 2012 ROIC = 45%
2003 Growth Rate ≈ 1% 2007 Growth Rate = 7.8%
Movement to higher growth, higher profit market zones
15
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 16. 3M’s Platforms Broadly Supported by Nanotechnology
Ce Ad Am Fi Nw Mr
Ceramics Adhesives Films
Advanced Nonwoven Micro-
Materials Materials replication
Nanotechnology
Nanomaterial Zirconia cubes
hardcoats 10nm
Silica spheres
75 nm
Nanoprocessing Nanocomposites Nanocatalysis Nanofabrication
Window Film Dental restoratives Filtration Drug Delivery
Reinventing material science through nanotechnology
16
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 17. Rekindling the Spirit of Innovation
Broad patent portfolio
Technology 140 Technology Platform Experts identified and recognized
leadership Subject Matter Expert roster published and available across 3M
“Tech Time” with George
Executive Monthly meetings with CTO
support R&D executive leadership within every Big B
Top scientist (T6/T7) advisory board
Strengthening the innovation culture
2003 R&D opinion survey highlighted job fears, time pressures, and
3M Culture
emphasis on formal processes (e.g., Six Sigma)
2007 survey shows a committed technical community, encouraged to
collaborate, freedom to focus on new ideas
Continued recognition for innovation
Innovation Funding grants (e.g., Genesis, Alpha)
Circle of Technical Excellence and Carlton Society recognition
Technical Community is getting re-engaged
17
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 18. Stepping Up The Pace In New Products – Our Vitality Index
($MM)
$9,000
2005 Launches
$8,000
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
$5,000 2006 Launches
2005 Launches
$4,000 2004 Launches
2003 Launches
$3,000 2002 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast
18
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 19. Stepping Up The Pace In New Products – Our Vitality Index
($MM)
$9,000
2006 Launches
$8,000
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
$5,000 2006 Launches
2005 Launches
$4,000 2004 Launches
2003 Launches
$3,000 2002 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast
19
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 20. Stepping Up The Pace In New Products – Our Vitality Index
($MM)
$9,000
2007 Launches
$8,000
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
$5,000 2006 Launches
2005 Launches
$4,000 2004 Launches
2003 Launches
$3,000 2002 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast
2007 new products expected to deliver ~33% more than historical average
20
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 21. Stepping Up The Pace In New Products – Our Vitality Index
($MM)
$9,000
2008 Launches
$8,000
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
$5,000 2006 Launches
2005 Launches
$4,000 2004 Launches
2003 Launches
$3,000 2002 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast
2007 new products expected to deliver ~33% more than historical average
21
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 22. Stepping Up The Pace In New Products – Our Vitality Index
($MM) 75% of new product
$9,000 2009 sales expected
from products
2009 Launches
$8,000
already launched
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
$5,000 2006 Launches
2005 Launches
$4,000 2004 Launches
2003 Launches
$3,000 2002 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast
2007 new products expected to deliver ~33% more than historical average
22
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 23. Towards More Impactful New Product Launches
Tools & training developed for successful launch execution; ~90%
adoption rate
Trained 8,000 people globally on commercialization; established
Marketing University
Established a commercialization community for best practices with
15,000 members
Intense focus on top 2006 and 2007 new product introductions (NPI)
~45%
Top Product
Launches
1H2006 1H2007
Becoming more effective in new product introductions
23
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 24. The 3M Growth Strategy Is Taking Hold
8%
2%
6%
3M LC Revenue Growth
1%
Acquisition
6%
5%
Oil and Housing
Organic
Headwinds Plus a Slowing
GDP in US and Asia
03-05 06-07 YTD
Increasing growth, without favorable economic conditions
24
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 25. New Product Success Ensures Long-Term Market
Sustainability
Just Some of 3M’s New
Platforms
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 26. A Great New Emerging Platform: Optically Clear
Adhesives (OCA)
Light Extraction PSA for OLED
Protective film
Functional
Injected
PSA
Hole
Visible Light Photons
OLED Glass
ITO
(n=1.51)
Anode
Al/Cathode
Organic Layer Injected Electron
26
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 27. High Performance Window Film
Prestige and Crystalline Window Films Film + Nanomaterials Nanomaterial
hardcoat
HPWF 875
PSA
Liner
• Film offers IR reflectivity and the
nanomaterial hardcoat absorbs IR
resulting in rejection of up to 97% of the
sun’s IR energy
• Tiered global launch with a new business
model to meet service expectations – met
100% of sales forecast in 1st year
• Established a technology platform to
launch subsequent products (Prestige
Safety – 2007).
Superior heat rejection with low reflectivity
and high visible light transmission
27
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 28. New Consumer Products Inspired by Non-Woven
Technology
Non-woven
• New performance attributes
• Natural materials
• Sustainable and renewable
28
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 29. Microreplication Drives Abrasives - 3M™ Trizact™ Belts
3M™ Trizact™ Cloth Belts 3M™ Trizact™ Diamond Cloth Belts
Benefits
- Increases throughput
- Reduces down-time
- Improves quality
- Long lasting
- Lower overall cost
29
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 30. Advanced Materials Provides Basis for 3M Aluminum
Composite Conductor Composite (ACCR)
Key Features:
Key Features:
Capable of carrying 2-3x the
Capable of carrying 2-3x the
current of conventional, steel
current of conventional, steel
core conductors
core conductors
Strong like steel
Compatible with existing
Compatible with existing
Light weight like aluminum structures
structures
Highly conductive
Less sag
Less sag
Low thermal expansion
Almost no corrosion due to:
Almost no corrosion due to:
Metal matrix
Metal matrix
Chemically compatible
Chemically compatible
(inorganic)
(inorganic)
materials
materials
Environmental stability
Environmental stability
Aluminum-oxide fibers
Aluminum-oxide fibers
30
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 31. Advances in Ceramics Produce High Strength Glass Bubbles
• Stronger, Lighter, More Versatile
• Processing Advances and Capacity
• Building Blocks for Composites, Cements,
Insulation, Oil and Gas Fluids
Enhanced
Oil & Gas
Production
31
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 32. So What Makes 3M So Resilient?
3M’s Enduring Franchises
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 33. First, What Not To Do…
Growth First Requires Plugging The Leaky Bucket
Push into upper
middle level market
Competitors push into the lower
market … we refuse to defend
The objective is to bulwark and defend the
markets that we created, not just to grow
33
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 34. Then What To Do…
The Enduring Franchises of 3M
What similarities do Scotch tape, Post it Notes, Scotch-Brite,
Trizact and many other 3M “franchise” products have?
3M usually invented the basic technology
They serve all market segments from the bottom to the top
Customers make more money on them than we do
As the market commoditized, 3M served all segments as and
when they gradually emerged, steadily building market
competence and influence
They were built up over many years
In developed markets they almost always began at the top and
spread to the bottom of the market tier
34
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 35. A Good Example — The “Scotch Tape” Market Pyramid
Scotch Tape Success:
Services all market segments
Great aesthetic design
Superb management of price and
value laddering
World class service delivery
Outstanding account management
World’s leading brand
Consumer friendly technologies
Customers make higher profits than
3M
Several critical elements sustain enduring market success
35
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 36. Traffic Safety – Sustaining the Enduring Film Franchise
Traffic Safety sustained
the film franchise:
Moved the Engineering
Diamond Grade ™
Grade™ film down the
pyramid
High Intensity Grade ™
Launched new,
innovative products for
the top of the pyramid
Engineering Grade ™
Traffic Safety Division remains globally pre-eminent in traffic signage
36
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 37. Different Strategies for Different Situations
Developed
Type of market
Post-it® Notes
Expand the base Extend the core
Paint Application
Solutions
Developing
Create a presence Build a presence
Scotch-Brite™
Medical Tian Tu (Second Natural Fiber
Way) China Brand
Emerging Developed Wipes
Franchise strength
One size does not fit all
37
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 38. How We Think About Successful Franchises
Where 3M typically wins: Business Success Factors
Use of multiple Level of
Market Market Global
size structure Growth Margin technologies regulation adaptability
Not
Small <5% <10% Low Single
Discrete
Discrete
regulated
<$1B country
Trans-
Moderate Well-defined 5-10% 10-15% Medium Low
Moderate 5-10% Trans-
national
$1-10B overlaps
$1-10B national
>15% High High
Large Highly >10% Global
>15% High High
>$10B interrelated
Our best businesses fit with the majority of these factors
38
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 39. 3M’s Enduring Franchises Span the Company
3M franchises
Automotive
Tapes Office Display Safety Dental
aftermarket
Enduring franchises
are the majority of sales
Advanced Micro-
Adhesives Nonwovens Films Ceramics
materials replication
3M Technologies
Technologies provide the foundation
39
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 40. But Franchises Must Be Constantly Refreshed
1.0
0.9 Industrial
Relative market power
0.8
0.7
λ = 0.2
N(t) = Noe-λt
0.6
λ = decay constant
Consumer
0.5
No = starting point
0.4
0.3
Electronics
0.2
λ =1
0.1
λ=5
0.0
Time
Moving down the pyramid enables enduring franchises
40
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 41. Extending Our Optical Franchise
Four market elements; hand helds, monitors, laptops and LCD TV
Battery powered devices favor high performance films; high performance
films in plug-in devices produce better energy efficiency
Usage changes…. More movie watching on monitors drives recontenting
We anticipate the LCD TV market will follow similar dynamics we’ve seen
and experienced in other markets, but played at faster speed than most
The LCD TV market will exist for many years …. substitution not likely in
high volume for many years
And yes, it will see pricing pressure over time, but afterwards, stability and
recontenting opportunities emerge
Turbulence at the bottom of the market as new players enter and succeed
or fail
41
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 42. Extending Our Optical Franchise Brightness
Gain
DBEF + BEF 1.8
Current 3M
product focus
DBEF
1.6
BEF
1.5
Looking to use Comp BEF
film technology
1.5
leadership and
Microreplicated Gain Diffuser
scale to enter 1.4 -
all segments
1.2
Bead Coated Gain Diffuser
Participation in all segments is essential to maintain leadership
42
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 43. Acquisitions
Higher organic growth results from more
frequent acquisitions
Acquisitions are not only
about bulk, but are helpful
in:
Acquisitions
1. Strengthening the base by
filling in white spaces
2. May facilitate growth through
Growth
entry into a new market
3. May provide a key new
Base
technology or brand
4. Fast capacity acquisition
43
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 44. The Expanding Impact of M&A
~20
18
4
2005 2006 2007 estimate
10% Increase in acquisitions in 2007 following 350% increase in 2006
44
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 45. Thoughtful Acquisitions Accelerate Core Growth
Growth rate
19%
20%
Int’l
14%
15%
Int’l
US
7%
US
2004-2007 3M Sales CAGR 2006 Acquisitions* 2007 Acquisitions*
Acquisitions Enable Growth Beyond Market Averages
*Note: 1st year projected sales growth
45
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 46. M&A to Bolster Technology Portfolio:
Brontes Technologies
46
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 47. Building New Businesses
Emerging Business Opportunities (EBOs)
• Emphasis on high growth opportunities
where technical capability exists
~$3B
~20%
• Consolidate related activities into a single
~$1B
entity to gain economies of scale and focus
• Acquisitions and additional resources
2007 2012
provide momentum
Sales (MM)
Filtration Food Safety Mining & Mineral Track & Trace Renewable Oil & Gas
Extraction Energy
Market Center in
Division in I&TB BU in HCB Division in SS&PS BU in I&TB BU in I&TB
SS&PS
Great start: >20% growth in 2007
47
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 48. Renewable Energy EBO
Solar
- Films capable of concentrating
sunlight 500x
- Coatings to reduce dirt build-up
Ab Bi Pm Sm
- Encapsulation used to limit
moisture and film degradation
Ac Ce Em Nt Po Su
BioFuels
Ad Dd Fc Mi Nw Pp Tt
- Ethanol extraction membrane
Am Pr
Di Fe Fs Is Me Mo Op Vp
- 50% less energy in distillation
- 2X throughput
An Rp We
Do Fi Im Lm Mf Mr Pd
- Potential for cellulosic and butanol
As Se Wo
Ec Fl In Md Pe
Wind
- Existing coating products to
improve hardness and reduce
fractures in composite blades
- Protective films for turbine
blades
Leveraging 3M capabilities to build businesses
48
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 49. Solar: Distinct Segments But Common Needs
Flat Panel Concentrating Solar Thermal Thin Film and
Photovoltaic Photovoltaic (CSP) Next Generation
(<25 kW) (> 50MW) (various kW)
(CPV)
(25 kW – 30MW)
Environmental Durability: UV Stability, Scratch Resistance, Self Clean, Moisture, Sealing, Cracking, Yellowing
Increased Efficiency: Improved materials, capturing more sunlight, heat management,
Lower Cost: Improved cost per watt, fabrication/mfg processes, reduced weight
49
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 50. Solar: Strong Capabilities & Technology Base
Optically Clear UV Micro-replicated Wavelength Selective
Barrier Films IR Reflective Films
Stable Fluoropolymer Films Lens Film Mirror Films
Metallized Anti-soil & Electrical Foil & Structural Tapes, 60 Years of Experience
Mirror Films Hard Coatings Connectors Sealants & Adhesives (Weathering Resource Center)
50
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 51. International Operations
Our Largest Growth Platform
Inge Thulin
Executive Vice President, International Operations
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 52. International Operations
$13.6B 2006 Sales*
$3.7B 2006 OI*
62% of 2006 3M Total
65% by 2012 $6.2
$5.4
$2.0
65 Subsidiaries
Latin America/ Europe, Middle
34 Laboratories Asia Pacific
Canada East & Africa
85 Manufacturing Sites
40,000 Employees
99% Local Nationals
Our Largest Growth Platform
*Excludes Pharma and special items.
52
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 53. International Recent Performance
Revenue* Operating Income*
$3.7
$13.6
$3.5
$12.2
$11.7 $3.2
$10.2
$2.4
’03-06 CAGR 10% ’03-06 CAGR 15%
'03 '04 '05 '06
'03 '04 '05 '06
Priorities Priorities
Gain share in West Europe and Japan Decentralized organization
Expand BRICP Productivity
Big 3M/portfolio management Price/margin management
Grow at more than 2.5X IPI Operational exellence/Lean Six Sigma
Localization Resource reallocation
*Excludes Pharma and special items.
53
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 54. 3M’s Subsidiary Network
Poland Switzerland
Norway
Hungary
Canada
Czech
Trinidad East Austria Romania
Republic Sweden
& Tobago Finland Ukraine
Puerto Rico
Russia
Germany
Dominican
Republic Kazakhstan
Denmark
Korea
Jamaica Netherlands
Belgium
Japan
United
Mexico
Kingdom
China
Guatemala
Portugal
Hong Kong
El Salvador
Spain Taiwan
Costa Rica
Vietnam
Panama France Pakistan
Colombia
Philippines
UAE
Morocco
Indonesia
Venezuela Thailand
Israel
Ecuador Italy Malaysia Singapore
Egypt
Peru
Greece Sri New Zealand
Australia
Lanka
Brazil Kenya
India
Chile Turkey
Uruguay Key
Argentina Sales & Marketing
South Africa
Manufacturing/Converting
Technical Capabilities
54
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 55. International Growth Dynamics
Developed
Central/East
West Europe
APAC
Europe
Canada
Developing
APAC
Latin America
Middle East/
Forecasted
Africa
Sales
CAGR
55 Current Sales
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 56. Cornerstones of International Growth Strategy
Outpace Local Economy by at Least 2.5X
International
Grow the Current Complementary Build New International
Core Business Acquisitions Businesses Growth
Growth
Four Cornerstones of the International Growth Plan
Portfolio Management
Brand and Reputation R&D & Supply Human Capital
and Geographic
Building Chain Localization Planning
Expansion
56
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 57. Managing International Growth
Cornerstones
• Play the Big 3M
• Increase Levels of Customer Intimacy – Key Accounts
Portfolio Management
• Develop and Launch Products to Meet Local Needs
& Geographic Expansion
• Borderless Customer Success
• Margin Management
• Building strategic and local brands
Brand and
• Government relations
Reputation Building
• Manage the brand pyramid
• Customer focused Supply Chain
• Capital Center-of-Gravity Shift
R&D and Supply
• Financial Optimization through Strategic Investments
Chain Localization
• Improve Productivity Levels
• Recruit, Retain, Enable the Best
Human Capital • All Employees Aligned Around Corporate Objectives
• Compensation for Performance
Planning
• Leadership For Growth
57
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 58. Four Cornerstones of the International Growth Plan
Portfolio Management Human Capital
R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
Brand & Reputation Human Capital
& Geographic
& Geographic Planning
Building Localization
Building Localization Planning
Expansion
Expansion
58
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 59. Developed Countries Most Important Today
Developing Countries Accelerating
41%
31%
28%
26%
59%
69%
72%
74%
2004 2005 2007 2012
Developed Developing
59
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 60. Opportunities in Developing Markets
Growth in Infrastructure Spending
Population growth and desire for basic services will fuel investment
in roads, power generation and distribution and other infrastructure.
Migration of Industrial Business
With infrastructure in place and political stability, manufacturing
migrates to developing countries in search of lower costs.
Emerging Middle Class
Growing employment base provides increased income and
standard of living.
Increased Health Care Spending
Growing middle class increases expectations and expenditures on
health care services.
3M Portfolio Meets Needs of Developing Markets
at Every Step of Their Evolution
60
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 61. Geographic Expansion: PLUS
The Future Is Here And Now!!!
Ukraine
Kazakhstan
Turkey
Vietnam
UAE (Dubai)
Indonesia
61
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 62. Long-Term Focus on Developing Countries Drives
Growth
Russia India
Deep Roots
Brazil
in BRIC(P)
China Poland
1950 1960 1970 1980 1990 2010
2000
Turkey Vietnam Ukraine
Indonesia
Investing in UAE Kazakhstan
our future
62
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 63. Four Cornerstones of the International Growth Plan
Portfolio Management Human Capital
R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
Brand & Reputation Human Capital
& Geographic
& Geographic Planning
Building Localization
Building Localization Planning
Expansion
Expansion
63
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 64. Strong Brands and Market Positions
Brand Equity and Investment Shared Among Businesses
64
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 65. Strong Brands and Market Positions
Mahindra
Abzil Industria
e Comercio Neoplast
Nylonge
DMS Chile
Building a Regional Presence Through Acquisitions
65
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 66. Four Cornerstones of the International Growth Plan
Portfolio Management Human Capital
R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
Brand & Reputation Human Capital
& Geographic
& Geographic Planning
Building Localization
Building Localization Planning
Expansion
Expansion
66
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 67. R&D
Localization Brazil
Europe and Latin America New Customer Technical Center in 2005
Technologies: Bio, Nano
Specialty M aterials: Hook/Loop,
M olding, Non-PVC Films, Acrylic Foam Tape
Russia
New Customer Technical Center – May 2006
Germany, France, UK Poland Focus: Abrasives, Automotive
Centers of Excellence (CoE): Optical Manufacture & Test Consumer & Office Center of Excellence
Automotive, Dental, Telecom, Medical & Consumer Healthcare Center of Excellence
Specialty Materials, Polymers,
Consumer, Oil & Gas, Drug Delivery
Asia
Japan
India
SEMS (software)
Customer Technical Centers (New Delhi, AOEM Design Studios)
Electronics, Automotive
Engineering Centers: Automotive, Corrosion Protection, Textiles
Technologies: Track & Trace,
Water filtration, fire protection
Microreplication, Liquid Filtration
Analytical development
China Singapore
Korea
New R&D Center – June 2006 Southeast Asia region: product localization,
Asia Display Tech Center
Global Labs: HV Electrical, SMS corporate research lab, medical product
Asia Tape & Adhesives
Asia Lab: Telecom development & regulatory
Labs: Nonwovens, RFID, Electronics,
Technologies/products: Nonwoven, Electronics, Fine Pitch Flex Circuitry,
Energy, Nano
67 Reactors, Medical, Corrosion Protection RFID, Cuno
Display backlight center
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 68. International Supply Chain Footprint - Current
Germany
UK
Poland Japan
France
Canada Korea
Italy
China
Spain
India
Mexico
Singapore
Brazil
68
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 69. International Supply Chain Footprint - Potential
Russia Russian
Estonia
Far-East
Poland
West Europe Japan
Turkey
Canada Korea
China
India
Middle East Vietnam
Mexico
Singapore
Central America Indonesia
Brazil
Current Supply Chain
Expanded Supply Chain Footprint
69
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 70. Four Cornerstones of the International Growth Plan
Portfolio Management Human Capital
R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
Brand & Reputation Human Capital
& Geographic
& Geographic Planning
Building Localization
Building Localization Planning
Expansion
Expansion
70
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 71. Human Capital Planning
Recruit, retain and enable the best employees
Significantly accelerate knowledge transfer to
developing and emerging countries
Move resources from back-office to customer-facing
and from foundational businesses to growth
opportunities.
5% front-line, 8%+ back-office productivity improvement
71
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 72. 3M International Summary
International growth continues to expand
Developed countries will grow through penetration and market share
gain
Developing countries accelerating
BRICP and PLUS strategy
Supply chain, brand and product localization
Strategic acquisitions provide locally-relevant brands and product
portfolio
All about execution starting with the customer!!!
Growth Possible in All “Corners” of the World
72
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 74. Financing Growth Through Supply Chain Improvements
The opportunity
3M’s history led to very complex supply chains
Average time to traverse global supply chain is ~100 days
Multiple plant hops, often backward and forward across continents, is the norm
at 3M
→ Structure drives up inventory and working capital usage and lowers fill rates
→ Led to expensive, if flexible, machine tools
→ Frequent machine set ups and high excess and obsolete inventory
Air freight, manual intervention and expediting are normal
Large numbers of SKUs complicate the picture, compounded by chronic
capacity shortages
Goal: Make it close to where we sell it
74
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 75. We Are Already Making Strong Progress
Russia Mfg Korea OH&ES
2007
2007
2007
China Suzhou LCD II
Poland Optical
UK Russia
Poland
2007
China Korea
Italy
Japan
2007
Taiwan
India
China CHJ III Mfg
2008
Poland Tapes
2007
2007 2008 China GuangZhou
India Industrial Tapes China Medical Mfg
75
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 76. Capacity Adds are Reducing Distance to Customer
Example: Maintenance Free Respirators and Laminating Adhesives
From US Supplying To Korea for APAC
the World
AverageAverage Distance to Customer ~3,000 ~1,000 miles)
distance to customer ~30% (or Miles
76
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 77. Our Emerging Manufacturing Footprint
“Super Hub” concept
Large factories ($400Million to >$1B SVOP) and distribution centers
Aligned to regional and area projected sales growth
Shared resources and infrastructure among businesses/divisions
Located in countries with maximum corporate and regional benefits
Benefits
Shared infrastructure and resources produces:-
• Lower risk to individual businesses; economies of scale
• Faster capital equipment installation and better resource utilization
• Regional centers supply chain expertise
Regional ‘ownership’ with increased customer responsiveness
Principal locations = China, South East Asia and the Middle East
77
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference
- 78. Globalizing the “Super Hub” concept
Super Hubs would produce at levels similar to Hutchinson facility
78
© 3M 2007. All Rights Reserved. 2007 3M Investor Conference