3M has closed 16 manufacturing sites and distribution centers since the start of the fiscal year and will make changes at 10 more facilities over the next 12 months, CEO William Brown said on an Oct. 20 earnings call.
The network consolidation comes as the industrial conglomerate conducts an operational overhaul that aims to simplify and standardize core business processes, streamline manufacturing and distribution, and reshape the company's business portfolio, per a securities filing. The initiative targets $1 billion in annual productivity gains by the end of 2027, Brown has told investors since launching the project a year ago.
Seven of this year’s factory closures, including two in the U.S., stemmed from 3M closing the sale of its Precision Grinding and Finishing business on April 1, Brown also told investors in April. He also said the company had closed another factory and planned to fully or partially close three more, reducing its total number of plants from 108 to fewer than 100.
Earlier, however, Brown warned investors that the payback from factory closures would take from three to five years.
"They don't happen overnight. And I think that's maybe why we didn't do it in the past," Brown said in March at the JPMorgan Industrials Conference. "They're hard to do. They're risky to do."
While shrinking its factory footprint, 3M has also reduced its distribution network, lowering days of inventory on hand, Brown said in March. In time, the company wants to lower the number from the high 90s to the mid-70s, with each day cut representing about $35 million.
Along with the network revamps, the company is investing more than $250 million over the next three years in standard, easy-to-replicate automation across factories and distribution centers, Brown told investors in April. The work includes automating warehouses and manual processes within factories.
By the end of the year, 3M expects to be at least halfway to its $1 billion target in annualized net productivity, Brown said in June at the Wells Fargo Industrials and Materials Conference. The savings have come in part from procurement and logistics, with the network consolidation expected to contribute to the rest by the end of FY2027.
The corporate overhaul started several months before 3M completed its exit from manufacturing contaminant PFAS at the end of 2025. The forever chemicals contaminated drinking water and led the company to agree in federal court to pay between $10.5 billion and $12.5 billion to settle claims filed by public water suppliers.
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