By Bryan Jung
The large U.S. manufacturer 3M said that it intends to cut more than 2,000 jobs as the economic outlook signals more turbulence this year.
The St. Paul, Minnesota-based industrial and consumer goods maker had about 95,000 employees at the end of 2021, according to securities filings.
The company’s CEO, Mike Roman, said he plans to cut about 2,500 manufacturing jobs, citing persistent economic hurdles and because of a poor annual profit forecast for 2023 that fell short of Wall Street estimates.
Fourth-quarter 2022 adjusted earnings per share and the adjusted operating margin for the same period also fell below most analysts’ estimates.
Such disappointment was reflected in the company’s stock price tumbling as much as 4.7 percent before the start of regular trading on Wall Street, reported Bloomberg.
“We expect macroeconomic challenges to persist in 2023,” Roman said in a statement on Jan. 24, and he believes that large economic challenges will likely persist this year.
3M’s planned job cuts are “a necessary decision to align with adjusted production volumes,” he said.
Maker of Post-Its Faces Downturn in Sales
The manufacturer of Post-it notes and one of the world’s largest makers of surgical supplies and touch-screen displays, projected that its full-year adjusted earnings for 2023 would range from $8.50 to $9.00 per share, excluding special items, which is below average estimates, says Bloomberg.
The Post-its supplier also said that its organic sales could fall as much as 3 percent.
3M twice cut its full-year sales and profit outlook for 2022, which was caused by a strong U.S. dollar and declining demand, along with financial pressure from high inflation and supply-chain issues, reported Bloomberg.
The latest news follows a difficult year for the manufacturing giant, as more turbulence appears on the horizon.
In addition to softening demand, the company is dealing with separate court battles involving two of its products, regarding class-action lawsuits brought by thousands of consumers.
3M Faces Billions in Losses After Losing Two Class-Action Lawsuits
3M is facing mounting risks tied to litigation over its allegedly defective combat ear plugs, which caused injuries to veterans, according to the federal court filing.
A federal judge recently ruled that 3M could not shift responsibility for more than $300 million in damages awarded to veterans over defective combat earplugs to a former subsidiary that filed for bankruptcy.
Aearo Technologies was put into Chapter 11 in July 2022 by its parent company in order to facilitating quicker and cheaper settlements of the earplug suits.
U.S. District Court Judge M. Casey Rodgers, in Florida, sanctioned the company by ordering it to accept all liabilities for the faulty ear-protection and slammed it for engaging in “brazen” litigation tactics.
Rogers accused 3M of attempting to switch its litigation position in bad faith, after a nearly four-year court battle involving more than 230,000 litigants affected by the ear products.
The manufacturer in turn accused the judge of unfair conduct, arguing in court filings that some of Rogers’s rulings made it impossible to defend itself, and of even refusing to allow the immediate appeals of her decisions.
Analysts say that 3M may face an additional $7 billion in liabilities over the faulty earpieces, plus the $300 million in damages.
“3M knowingly provided combat ear plus that didn’t provide anywhere close to protection stated, never warned the government, and now is playing a bankruptcy shell game to avoid paying veterans for lawsuits for hearing loss and tinnitus it caused,” said Alex Plitsas, a combat veteran who was affected by the faulty earplugs, in a tweet.
Meanwhile, the company also faces liabilities over contamination caused by its so-called “forever chemicals,” which in the face of regulatory pressures and lawsuits the company pledged to stop producing by the end of 2025.
3M will pay the first initial installment of $1 billion in damages later this quarter, and is expected to face up to $30 billion in longer-term liabilities, reported Bloomberg.