George W. Buckley, Chairman, President and CEO

George Buckley
Chairman of the Board, President, and CEO
3M Company

Continuing
On the Path to
Higher Growth
October 9, 2007

© 3M 2007. All Rights Reserved. 2007 3M Investor Conference

Higher Growth Is Fundamental To Our Long Term
Success

1. Rebuilding R&D to improve new product flow and impact

2. Complement the core through acquisitions

3. Financing the growth through supply chain re-engineering

4. Developing a more entrepreneurial and responsive culture

2

What Has Changed Since 18 Months Ago?
Early analysis quickly identified:-
The causes of slow growth
The way to accelerate it
Eighteen months ago, we told you what we were planning to do and,
since then, we’ve been simply executing
We’re building the plants, doing the acquisitions, investing in R&D and fixing
the things which were broken and selling those we don’t need or want
What is clearer to us now?
The vital importance of the supply chain initiative
The vital importance of 3M’s traditional core
The power of 3M’s enduring franchises .. And how to secure them
The fact we cannot rely only on big bets (e.g., Aldara) for growth
The fact we can finely balance growth, ROIC and margin

3

Growth Inspired by Our Customers, Balanced with
Operational Excellence

Growth Operational Excellence
Protect and Adjacency
Grow the Core Build Out

3. Solve Low
1. Factory Cost 2. Control Price
1. New Technology 2. New Products 3. M&A Reduction Leakage Turns Inventory

4. Breakthrough 4. Service & Quality
5. Localized, Simplified 6. Go to 5. Sourcing 6. Lean Six Sigma
Opportunities Revolution
Supply Chains Market
(BTO’s)

Organizational excellence within a growth culture essential
4

The Dynamics of Growth
Many companies covet growth and believe it to be the best
value creator
Companies that participate in broad markets will always, in
the absence of something special, tend to the mean growth
rate. Growth above market is not a right
A company cannot sustain higher growth rates than the
market unless it does at least one of three things:
Creates new markets at growth rates consistent with their long
term growth expectations. Saturation always happens
Penetrates new segments, e.g. international or the pyramid’s
lower levels
Moves to markets where the average growth rate is higher
Sustained growth above the average is therefore a very
challenging goal for corporations to achieve
5

Why Growth Naturally Runs Out; Market Saturation
Assume we grow at ≈ three times (10%) the market rate; here’s what happens
3M Share
3M Share 3M Share
Balance
Balance Balance

87%
91% Year 0 Year 5 Year 10
Market Grows Market Grows Market Grows
83%
@ 3% @ 3% @ 3%

17%

9% 13%

3M Share
3M Share
Balance
Balance

76%

66% Market Grows
Market Grows @ 3%
@ 3%

Market twice
Year 15 Year 20 the size
growing @
34%
10%
24%
6

Essentials of 3M’s Growth Plan
Rebuilding & extending the core; lowest risk and fastest results
Protect and defend the core; inventing a new future
Fixing chronic capacity issues
Broaden the product portfolio to become more important to customers
Invest in the future
R&D spending increases, protecting our flanks and reengaging the labs
Acquisitions, Break Through Opportunities (BTOs) and “feet on the street”
Improving supply chain speed and efficiency
Shortening most of our supply chains
Driving growth by going “local” with regional brands and manufacturing
Releasing working capital and lowering entropy costs and effective tax rate
Experiment with new markets
Emerging Business Opportunities (EBOs) and other adjacencies
Greater emphasis on International markets growth

7

A Visual Of Our Basic Strategy
Strategic
Thrust

Grow the Current Complementary Build New International
Core Business Acquisitions Businesses Growth

• Defend and extend the core • Follows core strategy • Seeded by small M&A • BRICP
• Build scale • Supports adjacencies • Mega Trends • No country left behind
• Build relative share • Mostly tuck-ins • Track and Trace
• Localization • Occasional transformation • Minerals extraction
• Disruptive technologies • Oil & Gas
• Build long term competency • Food safety

8

Core Growth Remains The First Mission

Grow the
Current Core
Invent a
Extend The Core
New Future
• Constant reinvention
• Localization
• Imagine, dream and invent
• Differentiation
• Build first where we’re strong • Beat competitors to the future
• Build key partnerships
• Build scale & relative share • Plan for cannibalization
• Fill product “white spaces” • Licensing
• Be important to customers • Avoid NIH syndrome
Build Broad Long
• Use dual branding
Term Competencies
• International localization
• Local acquisitions
• Private labeling • Develop broad based long-term capabilities
• Acquire supporting technology with quality brands
• Build volume and scale
9

We Made Solid Progress in 2007
Reinvigorating R&D
11% increase over 2006*
Building on EBOs
New product vitality index up from 20% to 24%
Accelerated International Growth
Building local/regional brands
Pursued profitable adjacencies
Invest in a better Supply Chain
28% increase in Capex over 2006
Improving local source of supply
• Korea – New respiratory facility
• Poland – New optical facility
• Canada – New CHIM tape facility
• China – New Industrial tapes facility
Seed Further Growth in the Core via acquisitions
15 acquisitions YTD
*ex-pharma, Brontes in 2006
10

Capital Spending 2001-2007
+25%
CAGR

Supply Chain -20%
Optical and Film CAGR
Growth/Strategic

Sustain

2001 2002 2003 2004 2005 2006 2007E

Building the capital assets to drive growth
11

Elements of Growth


3M’s Core Strength: Connecting Technology to Markets
A B P S
b i m m

A C E N P S
c e m t o u

A D F M P T
N
d d c i w p t

A D F F I M M O P V
r
m i e s s e o p p

A D F I L M M P R W
p e
n o i m m f r d

A E F I M P S W
e e o
s c l n d

3M Technology Capability

Technology-enabled
NPI
solutions

Voice of The Market

13

3M’s Multiple Technology Platforms

Ab Bi Pm Sm
Investment
priority
Abrasives Biotech Polymer Specialty
Melt Materials
Processing

Ac Ce Em Nt Po Su
Acoustics Ceramics Electronic Nano- Porous Surface
Materials &
technology
Materials Modificat ion
Membranes

Ad Dd Fc Mi Pp Tt
Nw
Adhesives Drug Flexible Microbial Nonwoven Precision Track and
Converting Detection &
Delivery Materials Processing Trace
& Packaging Control

Pr Vp
Am Di Fe Fs Is Me Mo Op Process
Display Filtration, Integrated Metal Matrix Molding Vapor
Advanced Flexible Opto-
Design &
Separation, Systems Composites
Materials Electronics electronics Processing
Control
Purification Design

Pd Rp We
An Do Fi Im Lm Mf Mr Particle & Radiation Accelerated
Analytical Dental & Films Imaging Light Mechanical Micro-
Weathering
Dispersion
Orthodontic Processing
Mgmt Fasteners replication
Processing
Materials

Pe Se Wo
As Ec Fl In Md Sensors
Predictive Wound
Applicat ion Energy Fluoro- Inspection & Medical
Engineering
Software Components materials Measure- Mgmt
Data Mgmt
& Modeling
ment

Successful new product growth builds on uncommon connections
14

The Oldest Can Be Forever New - Abrasive Reinvention
FROM TO

Trizact™ Hook-it™
Super Abrasives

Cubitron™ Sandblaster™

Traditional mineral materials and market focus; Synthetic materials and specialized
metal finishing and wood-working applications; aerospace, healthcare,
composites
2003 OI Margin = 12% 2012 OI Margin = 25%
2003 ROIC = 16% 2012 ROIC = 45%
2003 Growth Rate ≈ 1% 2007 Growth Rate = 7.8%

Movement to higher growth, higher profit market zones
15

3M’s Platforms Broadly Supported by Nanotechnology

Ce Ad Am Fi Nw Mr
Ceramics Adhesives Films
Advanced Nonwoven Micro-
Materials Materials replication

Nanotechnology

Nanomaterial Zirconia cubes
hardcoats 10nm

Silica spheres
75 nm

Nanoprocessing Nanocomposites Nanocatalysis Nanofabrication
Window Film Dental restoratives Filtration Drug Delivery

Reinventing material science through nanotechnology
16

Rekindling the Spirit of Innovation
Broad patent portfolio
Technology 140 Technology Platform Experts identified and recognized
leadership Subject Matter Expert roster published and available across 3M

“Tech Time” with George
Executive Monthly meetings with CTO
support R&D executive leadership within every Big B
Top scientist (T6/T7) advisory board

Strengthening the innovation culture
2003 R&D opinion survey highlighted job fears, time pressures, and
3M Culture
emphasis on formal processes (e.g., Six Sigma)
2007 survey shows a committed technical community, encouraged to
collaborate, freedom to focus on new ideas
Continued recognition for innovation
Innovation Funding grants (e.g., Genesis, Alpha)
Circle of Technical Excellence and Carlton Society recognition

Technical Community is getting re-engaged
17

Stepping Up The Pace In New Products – Our Vitality Index
($MM)
$9,000

2005 Launches
$8,000
$7,000
2009 Launches
$6,000 2008 Launches
2007 Launches
2005 Launches
2003 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009
Estimate Forecast Forecast

18

($MM)
$9,000

2006 Launches
$8,000
$7,000
2009 Launches
2007 Launches
2005 Launches
2003 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009

19

($MM)
$9,000

2007 Launches
$8,000
$7,000
2009 Launches
2007 Launches
2005 Launches
2003 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009

2007 new products expected to deliver ~33% more than historical average
20

($MM)
$9,000

2008 Launches
$8,000
$7,000
2009 Launches
2007 Launches
2005 Launches
2003 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009

21

($MM) 75% of new product
$9,000 2009 sales expected
from products
2009 Launches
$8,000
already launched
$7,000
2009 Launches
2007 Launches
2005 Launches
2003 Launches
2001 Launches
$2,000
$1,000
$0
2005 2006 2007 2008 2009

22

Towards More Impactful New Product Launches
Tools & training developed for successful launch execution; ~90%
adoption rate
Trained 8,000 people globally on commercialization; established
Marketing University
Established a commercialization community for best practices with
15,000 members
Intense focus on top 2006 and 2007 new product introductions (NPI)
~45%

Top Product
Launches

1H2006 1H2007

Becoming more effective in new product introductions
23

The 3M Growth Strategy Is Taking Hold
8%

2%
6%
3M LC Revenue Growth

1%
Acquisition

6%
5%

Oil and Housing
Organic
Headwinds Plus a Slowing
GDP in US and Asia

03-05 06-07 YTD

Increasing growth, without favorable economic conditions
24

New Product Success Ensures Long-Term Market
Sustainability

Just Some of 3M’s New
Platforms


A Great New Emerging Platform: Optically Clear
Adhesives (OCA)

Light Extraction PSA for OLED
Protective film
Functional
Injected
PSA
Hole
Visible Light Photons
OLED Glass
ITO
(n=1.51)
Anode

Al/Cathode
Organic Layer Injected Electron

26

High Performance Window Film

Prestige and Crystalline Window Films Film + Nanomaterials Nanomaterial
hardcoat
HPWF 875
PSA
Liner
• Film offers IR reflectivity and the
nanomaterial hardcoat absorbs IR
resulting in rejection of up to 97% of the
sun’s IR energy
• Tiered global launch with a new business
model to meet service expectations – met
100% of sales forecast in 1st year
• Established a technology platform to
launch subsequent products (Prestige
Safety – 2007).
Superior heat rejection with low reflectivity
and high visible light transmission

27

New Consumer Products Inspired by Non-Woven
Technology

Non-woven

• New performance attributes
• Natural materials
• Sustainable and renewable
28

Microreplication Drives Abrasives - 3M™ Trizact™ Belts

3M™ Trizact™ Cloth Belts 3M™ Trizact™ Diamond Cloth Belts

Benefits
- Increases throughput
- Reduces down-time
- Improves quality
- Long lasting
- Lower overall cost
29

Advanced Materials Provides Basis for 3M Aluminum
Composite Conductor Composite (ACCR)

Key Features:
Key Features:
Capable of carrying 2-3x the
Capable of carrying 2-3x the
current of conventional, steel
current of conventional, steel
core conductors
core conductors
Strong like steel
Compatible with existing
Compatible with existing
Light weight like aluminum structures
structures
Highly conductive
Less sag
Less sag
Low thermal expansion
Almost no corrosion due to:
Almost no corrosion due to:
Metal matrix
Metal matrix
Chemically compatible
Chemically compatible
(inorganic)
(inorganic)
materials
materials
Environmental stability
Environmental stability
Aluminum-oxide fibers
Aluminum-oxide fibers
30

Advances in Ceramics Produce High Strength Glass Bubbles
• Stronger, Lighter, More Versatile

• Processing Advances and Capacity

• Building Blocks for Composites, Cements,
Insulation, Oil and Gas Fluids

Enhanced
Oil & Gas
Production

31

So What Makes 3M So Resilient?

3M’s Enduring Franchises


First, What Not To Do…
Growth First Requires Plugging The Leaky Bucket

Push into upper
middle level market

Competitors push into the lower
market … we refuse to defend

The objective is to bulwark and defend the
markets that we created, not just to grow

33

Then What To Do…
The Enduring Franchises of 3M

What similarities do Scotch tape, Post it Notes, Scotch-Brite,
Trizact and many other 3M “franchise” products have?
3M usually invented the basic technology
They serve all market segments from the bottom to the top
Customers make more money on them than we do
As the market commoditized, 3M served all segments as and
when they gradually emerged, steadily building market
competence and influence
They were built up over many years
In developed markets they almost always began at the top and
spread to the bottom of the market tier
34

A Good Example — The “Scotch Tape” Market Pyramid
Scotch Tape Success:
Services all market segments
Great aesthetic design
Superb management of price and
value laddering
World class service delivery
Outstanding account management
World’s leading brand
Consumer friendly technologies
Customers make higher profits than
3M

Several critical elements sustain enduring market success
35

Traffic Safety – Sustaining the Enduring Film Franchise

Traffic Safety sustained
the film franchise:
Moved the Engineering
Diamond Grade ™

Grade™ film down the
pyramid
High Intensity Grade ™
Launched new,
innovative products for
the top of the pyramid
Engineering Grade ™

Traffic Safety Division remains globally pre-eminent in traffic signage
36

Different Strategies for Different Situations

Developed
Type of market

Post-it® Notes
Expand the base Extend the core
Paint Application
Solutions
Developing

Create a presence Build a presence
Scotch-Brite™
Medical Tian Tu (Second Natural Fiber
Way) China Brand
Emerging Developed Wipes

Franchise strength

One size does not fit all
37

How We Think About Successful Franchises
Where 3M typically wins: Business Success Factors
Use of multiple Level of
Market Market Global
size structure Growth Margin technologies regulation adaptability

Not
Small <5% <10% Low Single
Discrete
Discrete
regulated
<$1B country

Trans-
Moderate Well-defined 5-10% 10-15% Medium Low
Moderate 5-10% Trans-
national
$1-10B overlaps
$1-10B national

>15% High High
Large Highly >10% Global
>15% High High
>$10B interrelated

Our best businesses fit with the majority of these factors
38

3M’s Enduring Franchises Span the Company

3M franchises

Automotive
Tapes Office Display Safety Dental
aftermarket

Enduring franchises
are the majority of sales

Advanced Micro-
Adhesives Nonwovens Films Ceramics
materials replication

3M Technologies

Technologies provide the foundation
39

But Franchises Must Be Constantly Refreshed

1.0
0.9 Industrial
Relative market power

0.8
0.7
λ = 0.2
N(t) = Noe-λt
0.6
λ = decay constant
Consumer
0.5
No = starting point
0.4
0.3
Electronics
0.2
λ =1
0.1
λ=5
0.0
Time

Moving down the pyramid enables enduring franchises
40

Extending Our Optical Franchise

Four market elements; hand helds, monitors, laptops and LCD TV
Battery powered devices favor high performance films; high performance
films in plug-in devices produce better energy efficiency
Usage changes…. More movie watching on monitors drives recontenting
We anticipate the LCD TV market will follow similar dynamics we’ve seen
and experienced in other markets, but played at faster speed than most
The LCD TV market will exist for many years …. substitution not likely in
high volume for many years
And yes, it will see pricing pressure over time, but afterwards, stability and
recontenting opportunities emerge
Turbulence at the bottom of the market as new players enter and succeed
or fail

41

Extending Our Optical Franchise Brightness
Gain

DBEF + BEF 1.8
Current 3M
product focus
DBEF

1.6
BEF

1.5
Looking to use Comp BEF
film technology
1.5
leadership and
Microreplicated Gain Diffuser
scale to enter 1.4 -
all segments
1.2
Bead Coated Gain Diffuser

Participation in all segments is essential to maintain leadership
42

Acquisitions

Higher organic growth results from more
frequent acquisitions
Acquisitions are not only
about bulk, but are helpful
in:
Acquisitions
1. Strengthening the base by
filling in white spaces
2. May facilitate growth through
Growth
entry into a new market
3. May provide a key new
Base
technology or brand
4. Fast capacity acquisition

43

The Expanding Impact of M&A
~20
18

4

2005 2006 2007 estimate

10% Increase in acquisitions in 2007 following 350% increase in 2006
44

Thoughtful Acquisitions Accelerate Core Growth
Growth rate
19%
20%

Int’l

14%
15%

Int’l

US
7%
US

2004-2007 3M Sales CAGR 2006 Acquisitions* 2007 Acquisitions*

Acquisitions Enable Growth Beyond Market Averages
*Note: 1st year projected sales growth
45

M&A to Bolster Technology Portfolio:
Brontes Technologies

46

Building New Businesses
Emerging Business Opportunities (EBOs)
• Emphasis on high growth opportunities
where technical capability exists
~$3B
~20%

• Consolidate related activities into a single
~$1B
entity to gain economies of scale and focus
• Acquisitions and additional resources
2007 2012
provide momentum
Sales (MM)
Filtration Food Safety Mining & Mineral Track & Trace Renewable Oil & Gas
Extraction Energy

Market Center in
Division in I&TB BU in HCB Division in SS&PS BU in I&TB BU in I&TB
SS&PS

Great start: >20% growth in 2007
47

Renewable Energy EBO
Solar
- Films capable of concentrating
sunlight 500x
- Coatings to reduce dirt build-up
Ab Bi Pm Sm
- Encapsulation used to limit
moisture and film degradation
Ac Ce Em Nt Po Su

BioFuels
Ad Dd Fc Mi Nw Pp Tt

- Ethanol extraction membrane
Am Pr
Di Fe Fs Is Me Mo Op Vp

- 50% less energy in distillation
- 2X throughput
An Rp We
Do Fi Im Lm Mf Mr Pd

- Potential for cellulosic and butanol
As Se Wo
Ec Fl In Md Pe

Wind
- Existing coating products to
improve hardness and reduce
fractures in composite blades
- Protective films for turbine
blades

Leveraging 3M capabilities to build businesses
48

Solar: Distinct Segments But Common Needs

Flat Panel Concentrating Solar Thermal Thin Film and
Photovoltaic Photovoltaic (CSP) Next Generation
(<25 kW) (> 50MW) (various kW)
(CPV)
(25 kW – 30MW)

Environmental Durability: UV Stability, Scratch Resistance, Self Clean, Moisture, Sealing, Cracking, Yellowing
Increased Efficiency: Improved materials, capturing more sunlight, heat management,
Lower Cost: Improved cost per watt, fabrication/mfg processes, reduced weight
49

Solar: Strong Capabilities & Technology Base

Optically Clear UV Micro-replicated Wavelength Selective
Barrier Films IR Reflective Films
Stable Fluoropolymer Films Lens Film Mirror Films

Metallized Anti-soil & Electrical Foil & Structural Tapes, 60 Years of Experience
Mirror Films Hard Coatings Connectors Sealants & Adhesives (Weathering Resource Center)
50

International Operations
Our Largest Growth Platform

Inge Thulin
Executive Vice President, International Operations


International Operations

$13.6B 2006 Sales*
$3.7B 2006 OI*
62% of 2006 3M Total
65% by 2012 $6.2
$5.4
$2.0
65 Subsidiaries
Latin America/ Europe, Middle
34 Laboratories Asia Pacific
Canada East & Africa
85 Manufacturing Sites
40,000 Employees
99% Local Nationals
Our Largest Growth Platform

*Excludes Pharma and special items.
52

International Recent Performance
Revenue* Operating Income*
$3.7
$13.6
$3.5
$12.2
$11.7 $3.2
$10.2
$2.4

’03-06 CAGR 10% ’03-06 CAGR 15%

'03 '04 '05 '06
'03 '04 '05 '06
Priorities Priorities
Gain share in West Europe and Japan Decentralized organization
Expand BRICP Productivity
Big 3M/portfolio management Price/margin management
Grow at more than 2.5X IPI Operational exellence/Lean Six Sigma
Localization Resource reallocation
*Excludes Pharma and special items.
53

3M’s Subsidiary Network
Poland Switzerland
Norway
Hungary
Canada
Czech
Trinidad East Austria Romania
Republic Sweden
& Tobago Finland Ukraine
Puerto Rico
Russia
Germany
Dominican
Republic Kazakhstan
Denmark
Korea
Jamaica Netherlands
Belgium
Japan
United
Mexico
Kingdom
China
Guatemala
Portugal
Hong Kong
El Salvador
Spain Taiwan
Costa Rica

Vietnam
Panama France Pakistan
Colombia
Philippines
UAE
Morocco
Indonesia
Venezuela Thailand
Israel
Ecuador Italy Malaysia Singapore
Egypt
Peru
Greece Sri New Zealand
Australia
Lanka
Brazil Kenya
India
Chile Turkey
Uruguay Key
Argentina Sales & Marketing
South Africa
Manufacturing/Converting
Technical Capabilities

54

International Growth Dynamics

Developed
Central/East
West Europe
APAC
Europe
Canada

Developing
APAC
Latin America
Middle East/
Forecasted
Africa
Sales
CAGR

55 Current Sales

Cornerstones of International Growth Strategy

Outpace Local Economy by at Least 2.5X

International
Grow the Current Complementary Build New International
Core Business Acquisitions Businesses Growth
Growth

Four Cornerstones of the International Growth Plan

Portfolio Management
Brand and Reputation R&D & Supply Human Capital
and Geographic
Building Chain Localization Planning
Expansion

56

Managing International Growth
Cornerstones
• Play the Big 3M
• Increase Levels of Customer Intimacy – Key Accounts
Portfolio Management
• Develop and Launch Products to Meet Local Needs
& Geographic Expansion
• Borderless Customer Success

• Margin Management
• Building strategic and local brands
Brand and
• Government relations
Reputation Building
• Manage the brand pyramid

• Customer focused Supply Chain
• Capital Center-of-Gravity Shift
R&D and Supply
• Financial Optimization through Strategic Investments
Chain Localization
• Improve Productivity Levels

• Recruit, Retain, Enable the Best
Human Capital • All Employees Aligned Around Corporate Objectives
• Compensation for Performance
Planning
• Leadership For Growth
57


Portfolio Management Human Capital
R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
Brand & Reputation Human Capital
& Geographic
& Geographic Planning
Building Localization
Building Localization Planning
Expansion
Expansion

58

Developed Countries Most Important Today
Developing Countries Accelerating

41%

31%
28%
26%

59%
69%
72%
74%

2004 2005 2007 2012

Developed Developing
59

Opportunities in Developing Markets
Growth in Infrastructure Spending
Population growth and desire for basic services will fuel investment
in roads, power generation and distribution and other infrastructure.

Migration of Industrial Business
With infrastructure in place and political stability, manufacturing
migrates to developing countries in search of lower costs.

Emerging Middle Class
Growing employment base provides increased income and
standard of living.

Increased Health Care Spending
Growing middle class increases expectations and expenditures on
health care services.

3M Portfolio Meets Needs of Developing Markets
at Every Step of Their Evolution
60

Geographic Expansion: PLUS

The Future Is Here And Now!!!
Ukraine
Kazakhstan

Turkey

Vietnam

UAE (Dubai)

Indonesia

61

Long-Term Focus on Developing Countries Drives
Growth
Russia India

Deep Roots
Brazil
in BRIC(P)
China Poland

1950 1960 1970 1980 1990 2010
2000
Turkey Vietnam Ukraine
Indonesia
Investing in UAE Kazakhstan
our future

62


R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
& Geographic
Expansion
Expansion

63

Strong Brands and Market Positions

Brand Equity and Investment Shared Among Businesses
64

Strong Brands and Market Positions

Mahindra
Abzil Industria
e Comercio Neoplast

Nylonge
DMS Chile

Building a Regional Presence Through Acquisitions
65


R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
& Geographic
Expansion
Expansion

66

R&D
Localization Brazil

Europe and Latin America New Customer Technical Center in 2005
Technologies: Bio, Nano
Specialty M aterials: Hook/Loop,
M olding, Non-PVC Films, Acrylic Foam Tape

Russia
New Customer Technical Center – May 2006
Germany, France, UK Poland Focus: Abrasives, Automotive
Centers of Excellence (CoE): Optical Manufacture & Test Consumer & Office Center of Excellence
Automotive, Dental, Telecom, Medical & Consumer Healthcare Center of Excellence
Specialty Materials, Polymers,
Consumer, Oil & Gas, Drug Delivery

Asia
Japan
India
SEMS (software)
Customer Technical Centers (New Delhi, AOEM Design Studios)
Electronics, Automotive
Engineering Centers: Automotive, Corrosion Protection, Textiles
Technologies: Track & Trace,
Water filtration, fire protection
Microreplication, Liquid Filtration
Analytical development

China Singapore
Korea
New R&D Center – June 2006 Southeast Asia region: product localization,
Asia Display Tech Center
Global Labs: HV Electrical, SMS corporate research lab, medical product
Asia Tape & Adhesives
Asia Lab: Telecom development & regulatory
Labs: Nonwovens, RFID, Electronics,
Technologies/products: Nonwoven, Electronics, Fine Pitch Flex Circuitry,
Energy, Nano
67 Reactors, Medical, Corrosion Protection RFID, Cuno
Display backlight center

International Supply Chain Footprint - Current

Germany
UK
Poland Japan
France
Canada Korea
Italy
China
Spain
India
Mexico
Singapore

Brazil

68

International Supply Chain Footprint - Potential

Russia Russian
Estonia
Far-East
Poland
West Europe Japan
Turkey
Canada Korea

China
India
Middle East Vietnam
Mexico
Singapore

Central America Indonesia

Brazil

Current Supply Chain
Expanded Supply Chain Footprint

69


R&D & Supply Chain
R&D & Supply Chain
Brand andReputation
& Geographic
Expansion
Expansion

70

Human Capital Planning

Recruit, retain and enable the best employees
Significantly accelerate knowledge transfer to
developing and emerging countries
Move resources from back-office to customer-facing
and from foundational businesses to growth
opportunities.
5% front-line, 8%+ back-office productivity improvement

71

3M International Summary
International growth continues to expand
Developed countries will grow through penetration and market share
gain
Developing countries accelerating
BRICP and PLUS strategy
Supply chain, brand and product localization
Strategic acquisitions provide locally-relevant brands and product
portfolio
All about execution starting with the customer!!!

Growth Possible in All “Corners” of the World
72

Financing Growth Through Supply Chain Improvements
The opportunity
3M’s history led to very complex supply chains
Average time to traverse global supply chain is ~100 days
Multiple plant hops, often backward and forward across continents, is the norm
at 3M
→ Structure drives up inventory and working capital usage and lowers fill rates
→ Led to expensive, if flexible, machine tools
→ Frequent machine set ups and high excess and obsolete inventory

Air freight, manual intervention and expediting are normal
Large numbers of SKUs complicate the picture, compounded by chronic
capacity shortages

Goal: Make it close to where we sell it
74

We Are Already Making Strong Progress
Russia Mfg Korea OH&ES

2007
2007

2007
China Suzhou LCD II

Poland Optical
UK Russia
Poland
2007
China Korea
Italy
Japan

2007
Taiwan
India
China CHJ III Mfg
2008
Poland Tapes

2007
2007 2008 China GuangZhou
India Industrial Tapes China Medical Mfg
75

Capacity Adds are Reducing Distance to Customer
Example: Maintenance Free Respirators and Laminating Adhesives

From US Supplying To Korea for APAC
the World

AverageAverage Distance to Customer ~3,000 ~1,000 miles)
distance to customer ~30% (or Miles
76

Our Emerging Manufacturing Footprint
“Super Hub” concept
Large factories ($400Million to >$1B SVOP) and distribution centers
Aligned to regional and area projected sales growth
Shared resources and infrastructure among businesses/divisions
Located in countries with maximum corporate and regional benefits
Benefits
Shared infrastructure and resources produces:-
• Lower risk to individual businesses; economies of scale

• Faster capital equipment installation and better resource utilization

• Regional centers supply chain expertise

Regional ‘ownership’ with increased customer responsiveness
Principal locations = China, South East Asia and the Middle East

77

Globalizing the “Super Hub” concept

Super Hubs would produce at levels similar to Hutchinson facility
78

George W. Buckley, Chairman, President and CEO

George W. Buckley, Chairman, President and CEO

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