I am amazed how M&M can spin today’s announcements as a strong/healthy company taking actions to become even stronger/healthier. Please don’t buy this narrative, the reality is the company is financially unhealthy and is rapidly selling assets to hide how sick it has become. We heard the comment “reducing rooftops” and we also heard 3PL distributors. Essentially this means 3M will sell the assets it owns and pay the new owner more to do the same work. Basically for the rest of the year 3M will show better cash positions ( due to fire selling assets), but long term will pay the ultimate price in further eroding margins as 3M pays the middle man to do the work 3M should have done. Sad that these leaders will be gone long before the true negative impact hits 3M.
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Wordsmiths at work......
Remember, as discussed in many previous posts, Mike has made roughly $70M as CEO. Cumulatuve annual compensation for VP and above is several hundred million. What is our ROI on that??
Magic Mike is a poor car salsemen and poker player with pocket deuces. The shortsighted thinking that you can buy manufacturing cheaper in long run, and trust 3PL company's to sell your products is straight out of GE playbook. The increased 3PL and 3rd party providers alone in the sales channel means more cost, profit erosion, and likely lower sales unless you pay them more and discount the 3PL's cost significantly to feature your products. Errodes margins significantly and increases cost over time, and is desperate measure and cash grab for themselves by current management team. This mob looking to line own pockets. Management and failed leadership by executive team and lack of long term planning and thinking are dooming 3M and the employees
The math is simple:
US Q1 GDP growth will be positive 2 to 2.5%
EU Q1 GDP growth will be near zero.
3M Q1 sales: -9.0%
3M Q1 Operating income: -24.4%
That is the scorecard. Literally everything else is executive spin.