3M Company | Skyrocketing 1960s to Earthly Ups and Downs in the 1970s and 1980s
Skyrocketing 1960s to Earthly Ups and Downs in the 1970s and 1980s
In the 1960s 3M embarked on another growth binge, doubling in size between 1963 and 1967 and becoming a billiondollar company in the process. Existing product lines did well, and 3M's ventures into magnetic media provided excellent returns. One venture, the backdrops used for some of the spectacular scenes from the 1968 movie 2001: A Space Odyssey, earned an Academy Award. During the 1970s a number of obstacles interfered with 3M's seeming odyssey of growth. Among these were the resignations of several of the company's top executives when it was revealed that they had operated an illegal slush fund from company money between 1963 and 1975, which included a contribution of some $30,000 to Richard Nixon's 1972 campaign. Sales growth also slowed during the decade, particularly in the oil crunch of 1974, ending 3M's phenomenal string of averaging a 15 percent growth rate. 3M responded to its cost crunch in characteristic fashion: it turned to its employees, who devised ways for the company to cut costs at each plant.
The company also had difficulties with consumer products. Particularly galling was the loss of the cassette tape market, which two Japanese companies, TDK and Maxell, dominated by engaging in price-cutting. 3M stuck to its tradition of abandoning markets where it could not set its own prices, and backed off. Eventually, the company stopped making much of its own magnetic media, instead buying from an overseas supplier and putting the 3M label on it (3M instead focused attention on data storage media for the computer market). The loss of the cassette market was not overwhelming: revenues doubled between 1975 and 1980, and in 1976 3M was named one of the Dow Jones Industrial 30.
Unfortunately, price-cutting was not the only problem confronting 3M as it entered the 1980s. Major competitors seemed to face the company on all fronts: the niches of decades past seemed extinct. When Lewis Lehr became company president in 1981, he noted, "There isn't a business where we don't have to come up with a new technology." He promptly restructured 3M from six divisions into four sectors: Industrial and Consumer, Electronic and Information Technologies, Graphic Technologies (later renamed Imaging and combined with Information and Electronic), and Life Sciences, containing a total of some 40 divisions. He also established a goal of having 25 percent of each division's earnings come from products that did not exist five years before. Lehr's concern was not to keep the company going, for 3M was still well-respected, with a less than 25 percent debt-to-equity ratio and reasonable levels of growth. Shareholders, too, had little to complain about, for 1986 marked the 18th consecutive year of increased dividends. Rather, Lehr wanted to ensure that 3M would continue to develop new ideas. The major product to come out of the 1980s was the ubiquitous Post-it, a low-tech marvel created by Art Fry.