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Most companies these days are focused on cutting back in order to brave this downturn. 3M (NYSE:MMM) has lowered guidance and announced it has cut 1800 jobs this quarter. On 3M’s recent conference call, company executives said they are restructuring and streamlining, while investing in water and solar infrastructure for growth. In terms of cutbacks, however, there weren’t many areas the company was willing to take the ax to. CEO George W. Buckley seemed fairly unruffled, saying he's been through these down cycles before:

It's one thing cutting the fat; we're going to get soon to a point, if we're at that point that you're just suggesting, we're going to be cutting muscle and bone. So there may be some things, candidly speaking, we just decide to stop doing, markets we get out of just because they're not economically viable. But I'm not ready to accept that we're at Armageddon yet.

Apparently not. From 3M’s Co.’s financial guidance call:

Q: On the inventory front. You'd indicated earlier your customers, with the destocking will take about three to four months to get through it, and then later on you had talked about how, because of your FIFO inventory accounting, we won't see much of a decline in your raw material expensing until the second half of next year. So it sounds like you've got some pretty fat inventories relative to, say, your customer levels… What can you do to maybe thin those down a little bit or what actions you may be taking on that?

A: Well, there's not many ways to thin it down other than to make things… and sell [them].

No plans to cut prices significantly:

Q: [In] past downturns what's happened to pricing and what gives you the confidence that you're not going to have to take prices down kind of in line with raw materials or even more so?

A: It's our objective to try to hang on to as much price as possible. Now, I think we'd be foolish to stand here and say that we're not going to get a lot of pressure from customers. But you have to look at that between, obviously, the volume scenario that you're looking at, and we have to look at it very much on a market-by-market basis.

So on the one hand we want to try to maintain as much as possible, but we need to make sure that we're not losing share because of our price position. But I think on a net-net basis, I think we've got enough in I'll call it material side reductions to kind of keep that net number okay.

Will 3M be cutting production or facilities or not?

It's fair to say that with volume coming down, some of the investments we've made, the actions we've taken here on facilities, don't take out the same capability that we're putting in. So our utilization rates are going to be down a little bit.

Now, to be fair, we've had some facilities that have been running seven days a week, so in some cases what we're looking at are bringing utilization rates down to a more normal work schedule as well.

But I don't think we're necessarily on a continuous basis reaching a point where we've got excess capacity and a utilization problem from a cost management standpoint. We will continue to work at rationalizing some plants. We'll continue to drive our supply chain strategy. Our supply chain strategy is as critical as ever, getting closer to customers, getting the right location, and then, especially with the dollar kind of moving the other way around, we've got to get some of our supply chains to move.

Q: There's no plans to significantly downsize the manufacturing footprint?

A: No... To be fair, a lot of facilities that we're addressing here are smaller in nature. Some of it was some of our acquisitions that we made that were part of our plans anyways. So most of these are not large-scale plants, no.

R&D, advertising and merchandising:

We intend as best as we can to hold our R&D spending intact, at least as a percent of sales, for as long as we possibly can.

A whole group of our colleagues would like us to really wind that up [advertising and merchandising]. I think it can have short-term benefits, but I still think that always a balanced blend of the advertising and merchandising and R&D spend is the right approach.

Source: Is 3M Too Calm in this Storm?