Although viewed by many as a traditional industrial conglomerate, The 3M Company believes it is positioned right at the center of the current technology trend, particularly the electric car revolution.
“3M’s best days are still ahead of us,” chairman and chief executive Inge Thulin told CNBC’s Mad Money host Jim Cramer in a recent interview.
Thulin cited the 115-year-old manufacturer’s long-time involvement in the automotive, electronic and energy, and traffic safety industries.
“If you take those three elements together, that is where the future is going,” Thulin told Cramer.
Thulin said the company can capitalize on its expertise and market position in traffic safety, including vertical signage, license plates and pavement markings.
“That is where you need to regulate things going forward,” he said.
Speaking about electric cars, the CEO said: “As I look upon the future, that’s a market that will explode for 3M. That’s around US$6 billion addressable market with a growth rate of 8 to 10 percent … and we are now growing that business around 15 to 20 percent if you combine the three elements.”
He said the Scotch tape and Post-it notes manufacturer is investing heavily in innovation, noting that about 30 percent of its sales come from products that didn’t exist five years ago.
“We have 46 technology platforms, they are owned by the company, not owned by individual division or country; everyone can use it… With 8,100 scientists, we can then create value for customers as we move ahead,” Thulin told CNBC.
He said technology platforms, manufacturing capabilities, geographic reach and brand equity are the fundamental strings of the company, and he has managed to reorganize 3M’s various lines of business based on those strings.
“I found that many businesses inside of 3M did not meet those criteria, and, in fact, they were underperforming versus 3M’s average,” Thulin said in the interview.
“Our expectation is very high. The businesses that could not meet at least three of those four elements, we figure … they will be better off with a different owner. They were often smaller, the margin was lower, they were not growing as fast and we couldn’t create value. So we said, that’s not a personal issue, it’s a business issue. They can go somewhere else.”
At the same time, the group sought out businesses that meet those criteria.
“That’s also why we have bought some sizeable businesses. They are bigger, they are performing better, they are more profitable and the relevance for us in the market is very, very significant,” he said.
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