This Spring Festival holiday, with the outbreak of the epidemic, masks have become a hot commodity, especially 3M masks, which are “hard to find”.
In fact, masks are just the “tip of the iceberg” among 3M’s many products. Where we can see or cannot see, 3M’s products have already penetrated into daily life and industrial production. Many corners.
What kind of company is 3M? Let’s talk about it today.
01 Wrong start
It may be different from what everyone knows Too much, 3M started out as a mining company.
More than a hundred years ago, in 1902, during the mining boom, five businessmen (Henry Bryan, Hermon Cable, Dr. J. Danley Budd, John Dwan and William McGonagle) They got together and opened a company in Two Harbors, a village in northern Minnesota, USA.
This company has only one main goal: to mine corundum, a high-hardness material, for use in manufacturing grinding wheels.
This company is called “Minnesota Mining and Manufacturing Co.” (3M for short) .
These five people are a lawyer, a doctor, a market butcher and two railway company executives. They have nothing to do with mining and have no knowledge of mining. After two years of hard mining, what they got was not corundum, but anorthosite, which was soft and had no commercial value.
The start-up was suddenly in trouble, and the price of the stock traded in the barroom plummeted, and it took two shares to exchange for a glass of cheap whiskey.
The founders urgently adjusted their strategies, switched to making sandpaper, and moved the company to the port city of Duluth, Minnesota. However, due to the humid local climate, the sandpaper produced by 3M could not stay dry, and the company barely managed to stay in business, hovering on the edge of bankruptcy.
02 Transition
At this time a young man came, 20 William L. McKnight, 18, joined the company as assistant accountant.
McKnight is shy but considerate. He learned that the company’s financial situation was poor and proposed targeted ways to increase revenue and reduce expenditure. He was quickly appreciated and promoted step by step. Become a general manager.
McKnight also found that the quality of the company’s products was uneven, so he proposed to strengthen quality control, requiring sales staff to enter customer application scenarios, discover customer pain points, and strengthen sales staff and the company Communication between production to make the company’s products more suitable for customer needs.
In 1914, McKnight led the creation of 3M’s first research laboratory. Although it was just a 5×11-foot corner storage room, it laid the foundation for the company’s later development. Diversified innovation and development have taken a critical step.
It was also in this year that 3M’s first exclusive product, Three-M-ite abrasive cloth, was born. The company gradually got out of trouble and issued 6 cents per share for the first time in 1916. of dividends.
In 1920, McKnight received a letter from an inventor named Francis Okie asking if 3M could provide Mineral sand samples.
At this time, 3M had already switched careers and was no longer in the mineral business, but McKnight was curious about what the other party wanted the mineral sand samples for?
McKnight met with Oakey, who showed him the waterproof sandpaper he invented. McKnight quickly realized the business opportunities in it. The waterproof sandpaper was wet It does not produce harmful dust when used and can greatly reduce pollution in the production process, so McKnight immediately bought Okey’s patent and invited Okey to join 3M.
Soon this waterproof sandpaper became 3M’s first hit product, and Oji became an important inventor driving 3M’s innovation.
Looking back and thinking about it, if McKnight did not get to the bottom of the matter and rejected the other party directly, would 3M still be the 3M it is today?
This stubborn drive has also penetrated into 3M’s corporate culture and is reflected in the invention of the company’s products one after another.
One morning in 1923, a young employee of 3M named Richard Drew went to an automobile manufacturing plant to test samples of a new type of sandpaper. He heard complaints from body painters who were very dissatisfied with the tapes used to mask the paint. When these tapes were removed, they either took the paint away or stuck the glue to the body.
Drew then “bragged” to the workers and assured them that 3M could solve this problem.
This can be said to be a very “unprofessional” promise, because 3M’s main business at that time was only the production of sandpaper. But Drew spent two years studying this problem and finally invented “Scotch”>However, the other side of efficiency improvement is the decline in innovation capabilities. During this period, the contribution rate of new products to 3M’s performance dropped to 21%, and most of them were incremental innovations.
The Six Sigma approach introduced by McNairy attempted to turn the innovation process into a repeatable routine, during which 3M researchers had to fiddle with things for themselves, or An idea comes to you and you keep submitting reports and explaining reasons, but creation and invention are essentially a disorderly process that is unpredictable and unplannable.
3M’s innovative perpetual motion machine that has been running for a hundred years is spinning faster now, but it has lost its flexibility.
After taking office, several subsequent successors continued to adjust 3M’s system and constantly explored the balance point suitable for 3M between freedom and discipline, innovation and efficiency.
For example, after George Buckley took office, he terminated many of the proposals of his predecessor McNairy, abolished the Six Sigma system established for the R&D team, and gave them more room for creativity. .
05 Masks and performance
For many Chinese consumers , the recognition of 3M comes from 3M masks. Especially when the smog hit the city in 2013, 3M masks with professional dust-proof functions suddenly emerged and became people’s first choice for traveling in smog days.
But the sudden surge in demand also made it difficult for 3M to cope with it for a while. Before SARS in 2003, 3M masks were used for industrial sales. After SARS, they slowly entered the retail market, and their sales share slowly increased to 20%.
After 2013, the retail demand for 3M masks surged, and ordinary people became the main buyers. 3M masks sold more than 100 million US dollars that year. Due to limited production capacity, more A lot of market share has been divided up, including a large number of fake and inferior 3M products.
This time the epidemic is approaching fiercely, professional masks and protective equipment have become the most needed and scarce supplies for front-line medical staff. Just when some people think that 3M, which has made a lot of money due to the haze, has When it was time to make a “mask fortune”, a 3M China executive admitted in a circle of friends that factory stocking and raw material supply were done on a monthly basis. If the demand suddenly increased a hundred times, it would not be able to produce a year’s volume.
In fact, for 3M, masks account for a small proportion of many products. The impact of this wave of epidemic on performance is very limited. On the contrary, it may be affected by the negative impact of the epidemic on the economy. The spread of the impact can be found out from 3M’s latest financial report.
For the whole year of 2019, 3M’s total revenue was US$32.1 billion, a year-on-year decrease of 1.9%, and its net profit was approximately US$4.6 billion, a year-on-year decrease of nearly 15%.
In terms of departments, 3M products are mainly divided into four parts: safety and industrial products, transportation and electronics, medical health, and consumer products. In the fourth quarter of last year, the revenue of these four divisions was US$2.8 billion, US$2.3 billion, US$2.1 billion and US$1.3 billion respectively.
It can be seen that the consumer goods department where masks are located accounts for only 15% of the overall revenue.
Since last year, affected by trade frictions, slowdown in consumer electronics demand, and the cold winter in the global automobile market, 3M’s most important source of revenue, that is, its total revenue accounted for more than 60% The safety and industrial products and transportation and electronics sectors were hit, with revenue falling by 5% and 6% respectively.
At the same time, as part of a huge supply chain, 3M continues to be negatively affected by the global grounding and suspension of production of the Boeing 737 Max.
In addition, due to the production of highly toxic chemicals PFAS during the production process, 3M is also deeply involved in litigation. Four Seasons The report included US$214 million in pre-tax expenses for related chemical litigation, and legal costs will continue to face the risk of rising in the future.
Considering 3M’s dependence on the Chinese market, the epidemic in 2020 is expected to affect the sales of 3M’s other products except protective products, which will cast a shadow on the company’s prospects. .
3M expects that the company’s profits in 2020 will be lower than expected, and announced that due to the need to reorganize and simplify global operations, it will further lay off 1,500 employees worldwide, approximately 1,500 employees. 1.5% of the 96,000 employees.
Since the announcement of the financial report, 3M’s stock price has fallen by 10%, and its market value has also fallen below 100 billion US dollars. In the past year, the company’s stock price has fallen by nearly 40%. This century-old store has once again stood in the face of headwinds and faced multiple challenges.
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