Manufacturing giant 3M on Tuesday announced another round of job cuts after the one in January this year. In the latest layoff round, as many as 6,000 employees of the company are set to lose their jobs. 3M’s layoff count has now rose to 8,500 as it had in January announced 2,500 job cuts.
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In total, the 8,500 jobs amount to over 9 per cent of the company’s total workforce of 92,000 as of the end of 2022.
The latest announcement pertaining to the firings was announced in its first-quarter earnings report on April 25. These 8,500 layoffs combined will cost 3M between $700 million and $900 million in pre-tax charges, about half of which will hit its bottom line this year. The company is, however, optimistic that in the longer run, the restructuring will generate about the same amount—between $700 million and $900 million—in pre-tax savings every year once complete.
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Why 3M showed exit doors to its staff?
According to the company, the first round of 2,500 layoffs focused on its global manufacturing workforce, as detailed in a full-year 2022 earnings report published in January. As for the 6,000 new job cuts, 3M said that it is taking restructuring actions that are intended to make it stronger, leaner and more focused.
“These actions are expected to meaningfully reduce costs and drive long-term improvement in margins and cash flow while enabling a more efficient and effective structure for driving long-term growth,” 3M said. The 6,000 additional cuts will hit “all functions, businesses and geographies”.
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3M CEO Mike Roman said that the corporate slimdown will help to “reduce costs at the corporate center, further simplify and strengthen our supply chain structure and streamline our go-to-market business models, which will improve margins and cash flow.”
Meanwhile, the manufacturing major reported steadily declining sales for the fifth quarter in a row. Since the start of 2022, 3M witnessed a significant drop in its sales. In the first quarter of 2023, 3M reported sales of $8 billion, down 9 per cent YoY, with organic sales decline of 4.9 per cent YoY.
