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3M Company (NYSE:MMM)

2014 Electrical Products Group Conference Call

May 19, 2014, 10:45 AM ET

Executives

Inge Thulin - Chairman, President and Chief Executive Officer

Analysts

Inge Thulin

Good morning, everyone, it's a pleasure to be here. As you just heard, it's actually the first time for me to be to this conference. And came in very late, yesterday night, from Europe and didn't recognize until this morning, what a beautiful place it is, when I look outside the window. So should stay a little bit longer. Maybe I should have come in a little bit earlier. It was nice place. So thank you for having me. What I will like to do here is talk a little bit about 3M of course, and then take your comments and questions.

And first of all, what I will like to do is just to pay attention to a division that we laid out as enterprise, a couple of years ago, because it's important link to the enablers, meaning six strategies in terms of where we try to go. And in terms of our vision, it's basically calling out what we do, how we do it and where we do it, which vision is all about. It should also be related to a competitive advantage you have should be holistic and should be authentic to you as an enterprise.

And when you think about 3M's portfolio, both in terms of product breadth and geographical depth, I think this vision is calling in and out very well. So this is about what we do, which is basically advancing, enhancing and improving. That's what 3M is for 112 years. We are waking up every morning and ask themselves, how they can do that.

The center of our plan is actually research and development of technologies, and you see, we do it by technology products and innovation. And then, where we can do it is basically with and for every company around the world, in and for every home, and in and for every life. And every life for us is of course healthcare, schooling, but is also around sustainability and is around sustainability and community.

In terms of every home, most people are thinking initially around Scotch-Brite, Scotch Filtrete, et cetera, but it's much more. These products going into homes, where we are specified into other company's product lines, we've got refrigerators, stoves, air conditions, et cetera.

And in terms of every company that's a very sophisticated company that are working with big platforms and/or smaller companies, we can always help them with solutions that are very cost effective for them. So for us in terms of division, it's important for us in order to guide the organization.

That is then enabled by six strategies and the strategies are important for us. The four first ones are all about growth. And then the articulation is important. You can see words that are like customer and you see the word relevance. You see market share and see profitable market share. You see global capabilities and build outs. You see operational excellence and you see people.

So the four first strategies are all around growth. The fifth one is around people, all of our employees. And the last one is around operational excellence. They are strategies from a high level, but they are all operationalized into the enterprise. Meaning, the metrics and tools are very clear, and in fact were developed by the organization after we launched the six strategies from top level.

Now, when you think about 3M, that's a couple of things that are fundamental strengths, and they are technology, manufacturing, global capabilities and brand. But let's pause for one second and just think about them. When we talk about technologies, this is our ability to combine different technologies in order to developed new product and solutions. So based on all 45 technology platforms, that's what we can do.

Technology platforms are not owned by any single division, they are owned by the company. Everyone can use them in order to find solutions with their customers. And this is fundamentally very important thing for 3M. 3M is the company that create technology platforms, develop technology platforms and also in many cases using them ourselves, but equally important, let our customers use them. That is what we call open innovation and we have done that for many, many years. It's a key element for 3M's primary or be active in order to give you a high return on your investments.

Manufacturing is an important element for us. We have a big footprint. And you can see there is a lot of process capabilities and many of them are trade secrets. One of the key element for us in order for us to produce a product that are very cost effective, but also adding value to our customers, and we do a lot roll-to-roll and are probably the best in word relative to the technologies around that.

The global capabilities is around the subsidiary network around the word, where everyone in the 3M world can use the capabilities that we have built for many, many years. Front-end and back-end is what is very important. So we can start our businesses, capitalize it around the world and every business or the certified division can utilize the infrastructure that is in place.

And then, finally, the brand. Global brand that is very important. If that's a corporate brand in terms of Post-it or Scotch or Filtrete or if it's a very specific brand into a special area, healthcare, Littmann Stethoscope, Micropore tape, Tegaderm dressing, et cetera. So whatever it is, the branding is an important element for 3M. So here's the four element that actually are the fundamental strings of 3M in a very vertical integrated model that we are using, and is a key to the success for many, many years of the return we have given to the shareholders.

Now, November 8, 2012, we gave you the new guidance relative to the five-year plan, and we are on track in order to move us towards that direction. And if you remember, we gave you a 9% to 11% EPS growth target, we gave you organic revenue growth of 4% to 6%, around 20% return on invented capital and then around 100% cash flow. That was the plan we laid out then for '13 and '17 and we are sticking to our plan. We do not change that and we are well on track in order to be able to deliver this. And I feel personally very good relative to our progress towards it.

Now, there is key levers for us for the future in order to even further increase the shareholder value. The first one is portfolio management and I will come back and make some comment around it. The second one is investing in innovation or research and development with outcome of innovation. And then thirdly, best business transformation, which is all about efficiency, productivity in a much more effective 3M, as we go ahead.

Those three key levers are very important for us as we move ahead, and in fact are imperatives in the company. So when you think about it, as we go forward to create more value, those three things will be very important for us.

If you look upon the businesses, you can see we have five business groups today and you can see their relative size of them from, industrial of $10.6 billion; healthcare $5.3 billion; consumer $4.4 billion; safety and graphics $5.7 billion; and electronics and energy $5.4 billion.

And you can see the target we have laid out in the plan is 4% to 6% organic local currency growth, and we see clearly a step-up relatively to come to that target as we move ahead. And I personally am very pleased of the performance we are having. You can also see for the different business, what we laid out in expectation as we move ahead, and most of them are right in the spots relative to the corporate guidance, but some like healthcare has slightly higher estimation as we move ahead.

Now, let me talk about the first lever. Corporate portfolio management, something we did two years ago, where we really looked back on the businesses and identified, and we categorized them in a couple of groups. One is the Heartland divisions, which is five divisions in the company, stands for one-third of our business and slightly more in terms of our profitability. Big sizable businesses, very profitable, utilize multiple 3M technology platforms, strong brand equity, global scale and leverage and very, very good businesses for us.

There are anyhow in businesses that are growing slightly slower as a marketplace, this is what 3M would like to do at the current pace relative to the 4% to 6%, as we move ahead. Push forward, our businesses that you can categorize very much like the Heartland division, with differences that they are a market that they're growing faster than we would like to move the company, and faster than the Heartland divisions.

We are relatively small on a global scale meaning that we have big opportunities as we move ahead and need to prioritize that as business opportunities and investments. And then we identify businesses on strategic review that when we started a process it was about $2.5 billion.

Businesses that are doing very, very well, but in relative terms to 3M and our return had lagged a little bit in the last five years. All are profitable, all doing well, and I would say many other portfolios maybe will be one of the start. For us, however, in the way of a competitive set, we try to view, went back and look upon them to say, why are they not at least able to perform at average of 3M.

Then you look upon the growth as we have laid out for the future and in the past, and we categorize them and develop them, developing economies, and you can see when we went back to 2003, 21% of our business at that time were in developing economy. As we speak today, that's 35%, so the build out of the businesses have really accelerated. And you can see as we move forward to 2017, we believe that's 40% to 45%. So an incredible plan in terms of making sure we capitalize one of our strings, which is our global reach and capabilities around the world.

Now, why that's important is that, all of us know, but it's not always the way we think about it, the evolution of an economy. And the economies evolution in every country is basically starting always with that, you have to build infrastructure. When the infrastructure is in place that is when manufacturing broad-based are willing to invest. When they get invest specifically from more developed countries, safety regulations are coming in place.

After that, when people have got incomes and they can spend money, the retail and consumer business start to take off. And then finally, the healthcare regulations start to build out. There have always been healthcare in those countries, but have been at a different level.

If you think about that evolution and I've lived many places around the world and I think this model was actually build on my own experience, as I saw countries build out over time. Our portfolio is following every step of the way in that evolution. It is traffic safety systems or our telecom business, when you're into infrastructure, if it's whole industrial business that is one-third of our business, when industries starting to invest in with its safety regulation where our personal safety business is, and whole way up to healthcare business, that is our most profitable business. This is very good for us, as we are building out the businesses and been able to prove that for many, many years that this is a model that is working very well for us.

Now, we also made a statement relative to investment in research and development. Research and development is the heartbeat of 3M and is an important element for us in order to continue to drive organic growth. And there is also one element why we are able to return premium to you as shareholders.

We have historically spent around 5.5% to 5.6% in research and development, and last year that was like $1.7 billion. And one thing that our model is not doing is to comprise our investment in research and development, because in a way that is a key element together with our people for the future in order to have a competitive differentiation.

We made a commitment to move that closer to 6% as we move ahead. And of course, we have three element we look into here. We look upon to develop products with existing markets. We are looking for new products for existing and adjacent market and then the new investment should go to new product for new markets and relative to investment for disruptive technologies.

Very important to make sure that this is happening and is actually investment on a corporate level, where we have made sure that the money is floating back into the laboratories in each division as we go ahead. As organic growth is the primary driver for 3M, this is a very important element that we continue for the future.

Now, we will complement with acquisitions as well as we go, and it will be build based on the portfolio prioritization that we have done. So that work is in place, and we know now very much where businesses are and what needs to be done as we move ahead. It should be in relevant targeted areas, should be high growth spaces and/or technologies that could be leveraged across the company. And then, as we now have enhanced the integration capabilities, we start to feel that we can do slightly bigger acquisitions than in the past.

If you recall that people had followed us the last six years up to 2012 or 2011 and we had done maybe 60 or 70 acquisitions, and most of them were smaller I would say. So it took a lot of time in order to integrate them. And we believe now as we move ahead based on the portfolio analysis we have done that we are ready to go slightly bigger, and with a good team in place that can take them and integrate them more effectively.

So to think about it, if you think about portfolio intent, should be Heartland boost of a technology and into adjacencies, and the push forward should be our ability to build out the penetration around the world. And we have also changed the process, where in the past the process was very much bottom-up, which we continued to do. But we have also accelerate top-down corporate structure in order to make sure that we can look upon potential opportunities that are crossing multiple business groups and divisions.

And then of course, we would like creates value and maximize that and be able to do that faster and that's also why we form these team in terms of integration. And those capabilities are now very good, I would say, and we had some practices around that.

The third lever is our business transformation enabled by the SAP system, and this is an important element for us in terms of efficiency as we move ahead. And you can see here it's very much also relative to planning for custom intimacy, but in addition is relative to efficiency and the back office and the whole organization. So this is an important element for us as we move forward and the end goal for us here is savings of $500 million in operating income and $0.5 billion in cash and it's a seven-year plan as we roll that out.

The other thing that we have done during the last 18 to 24 months is to step back and take a view relative to Lean Six Sigma. Operation and excellence is well-embedded in 3M and I think we can say that we are well-known for what we are doing and we are doing it very well. 3M is a company that are process-oriented and very good at the project management.

Relative to Lean Six Sigma, we are now focusing even more, and you can see, specifically, into manufacturing. We have a big manufacturing footprint and we believe here is even more opportunities for us as we move ahead. And we are doing that we are looking for Lean relative to wall-to-wall in the facilities and we are also looking in through the supply chain opportunity.

And you can see here that we have ramped up our Black Belt quite a bit since the ending of 2011 and up today. So we are adding more Black Belts, so we have closely to $500 million, as we speak.

And then when we are coming and talking about our shareholders and what we are giving back to the shareholders, you can see that we have a very good history relative to what we have done. We have for the last couple of years made sure, you can see here, for the cash dividend that we have returned $14 billion during the time, the past decade. You can also see that, 2014, we have a cash dividend estimation of $2.3 billion. And we all know that we have had increase for the 56th consecutive year, this year, relative to the dividends.

You can also see relative to our stock repurchases that we announced effective this year, a 35% increase, and that is coming after some very good history of what we have done in the past. So we believe we are on a good place relative to returning cash to shareholders and we have proven that over a long period of time and are happy to continue to do so as we move ahead.

When we look upon the result for the first quarter of this year, you can see the good thing for us was we had organic local currency growth in all geographical areas in all businesses, and for us that's a very good thing and its starting out to see that growth are coming both from a businesses and geographical perspective.

You can see that the healthcare led the way with a 6% organic local currency growth; and the industrial and safety and graphics both had 5%; electronic and energy 4%; and then consumer 3%. From a geographical perspective, APAC had 7%; Latin America, Canada 7%; Europe, Middle East, Africa 4% and United States 3%.

You can see that operating margins went to 21.9%, so an increase from last year on a very high base, meaning that our model is working. And then you can see we returned $2.3 billion of cash to shareholders via dividends and share repurchases. And we increased the dividend by 35% in the quarter.

So with that I'll hold it there, and then we take questions and try to answer them from here. So thank you very much.

Question-and-Answer Session

Unidentified Analyst

So you brought some strategic focus and prioritization to the organization that was lacking previously. What's the status update in terms of how you view the response of the organization? What's changing? How are things running differently? What are the benefits you're seeing materialized?

Inge Thulin

I think the response is very good. And I think one of the reason for that was the way it was laid out was basically a top-down method relative to where we needed to go, but also very early a total engagement from the whole organization relative to making sure that we got the right tools and metrics in place in order to able to deliver it.

And I, for once, believe in teamwork and I believe that was an important element for us to get the top leaders in the company together in order to take it on and start to believe in that. If you think about it from a message on a higher level, when you have a vision that is clear, you have six strategies that are articulated in a way that there is no doubt relative to what needs to be done.

And you talk about thee levers, portfolio management, invest in research and development and business transformation. When you have those three things together for an organization of 85,000-plus people around the world, people know what needs to be done and they understand why. And my message has been the whole time touring the organization I will not just like you to know what time it is, I will like you to know how the watch is working.

So I have a very comprehensive plan relative to our communication and buy-in. So I would say to your question, yes, it's going very well. People are behind it. And they understand what needs to be done. I will not say before that there was lack of discipline, there was a discipline, 3M is known for discipline, and we are known for processes and we are known for project management. But I think it was the clarity relative where we tried to go. And I personally believe it's very, very important.

I think some time people look upon a vision and type of just go on. We have made sure that it's talked about, people understand it, people can talk about it, and educate the rest of the organization. I also would like them to know, why certain of the investment are coming and some are not coming based on the prioritization. And 3M, I would say, generally speaking, if you talk about the DNA, we like that, we like clarity relative to what needs to be done and that's what we are trying to do.

So I feel good about it. People went on also relative to what needed to be done of portfolio management very specifically. And even businesses as you can imagine where you in a category of strategic review will, first, be a little bit surprised, when they understood it's not personal, it's just business, they went on it and worked very, very well in order to improve the situation. So I'm pleased with it and in my view it's going very, very well. Still work to be done.

Unidentified Analyst

I have two part of question regarding your M&A playbook. And the first one is, there has been this perception, and maybe it's a myth that within 3M, because of the R&D focus, there is a little bit of the, not-invented-here syndrome, that there is some pushback about buying new technologies from outside? So that's the first question.

And the second one is maybe this dispels that myth is the success with the Ceradyne acquisition. Just give us a sense on how that business has been integrated? How many different platforms are using that technology? And I know it's been a big success, but where has it fallen short of expectation? So two part question.

Inge Thulin

I think on your first question, I think that when there is an enterprise that have been successful for so many years around research and development, in a way even if you don't like it to be there, I think that's something around -- well, we know how to do this better than anyone else. We have worked hard in the last eight years in order to change that and we are making good progress.

In fact, we formed a special office, maybe seven years ago, which is around placed in Munich, in Germany, relative to new business ventures, but we try to look upon technologies that we can add into the company. So I will say, generally speaking, I wouldn't hide to say, no, it's not there, I think it's in many, many companies, and of course, in 3M as well, which is one of the best in the world relative to technologies, but we are working on it.

Relative to Ceradyne, Ceradyne was a technology play if you like, so the front-end was more around defense and some other businesses, but it was a technology play and it's now rolled out in multiple divisions. So I think it's around nine divisions today that are looking into those opportunities. And I think that generally speaking, I am pleased with it.

I think again, where you eventually can do even better to move ahead is to make sure that you go back to the four levers that I talked about in terms of technology, manufacturing brand and global capabilities and make sure that you lever those opportunities faster. And I think you need to know them in order to be able to lever them as fast as possible in the process. But those four elements are also important when we look upon potential acquisition to say, well, where and how can we create more value through those four elements that are strings of 3M.

Unidentified Analyst

Just a question back on capital allocation, I mean I think you get big kudos for not being kind of hamstrung by the M&A environment, you've kind of chosen, almost in all of the above, the dividend, share repurchases, you aspire to do deals, but I do want to kind of come back around evaluations. And kind of the nature of my question is you're buying back your stock at roughly 5%, 5.5%, earnings yield, call it, and that's not hugely accretive arithmetically if you look over time.

And given that dynamic, does it kind of change your context on what you pay for deals. You kind of went through what you're looking forward for deals and how you'd integrate them, but really the economics or the arithmetic around the deals, is there any change in your view of what you would pay, how you would structure deals or anything along those lines.

Inge Thulin

Well, I think first of all we have very high confidence in 3M as we move ahead, right. So when you think about it in terms of share repurchases, first quarter, that was $1.7 billion. And today the stock is 141 or something, but it was at the level of 123 at the point in the first quarter, so I don't feel bad about that piece and we have high confidence as we move ahead.

Relative to the multiples on acquisition, I think it's important to think about they could be different relative what the real value will be for you. For us that will be businesses that are in market spaces where we will have a sustainable end market as we go ahead, where we can build out and become the leader in that business and connect it to the strings of our company.

If you take those four elements I talked about, that's what we need to have to look upon and say, okay, can we capitalize on this and what will the additional value be. And as we move ahead, the end market should be sustainable and solid as we move ahead that has a growth element into it and should be accretive in terms of growth for the corporation as we move ahead. Then I think in that space you will say, okay, are you willing to pay a little bit more or a little bit less. So I think those are the elements that you have to think about.

In terms of the five business groups, in terms of interest, we know how to do business very well in that industrial space. We know that. We are big. We can leverage our capabilities. We know how to do it. Healthcare is a big interesting portion for us as we move ahead, very high margins for us. We have a fantastic base in that whole business. And I don't think we will like to do our portfolio more volatile as we move ahead.

So volatility is not in the scorecard in terms of buying something. The rest, I would say, we are open to look upon it, but I need to make sure its linked into the strings of 3M and how we can create value in that space. Now, the multiples have been high and we are very careful relative to how we spend our money as we move ahead.

Unidentified Analyst

Inge, one of the things you've been talking about is regional sub-sufficiency and its initiating concept and buzzword, but I kind of don't get it, I mean, what is it -- how do you do this without duplicating R&D functions, duplicating some G&A, building up too much infrastructures. So you're not really levering the base, the home base, whatever regional headquarters you have in yet. Can you explain in maybe a little bit more detail?

Inge Thulin

First of all, our strategy is a domestic strategy. So what we do, we invest around the world in order to capitalize under domestic market, so we never invest one place in order to export, based on low labor cost or flexibility and so forth. So prime thing for us, invest in the local market, and as we have done so over the years, we have expanded outside of United States. We never left United States. And to be honest, where I'm staying today, I am very pleased that the domestic strategy was around building out an international, not reducing in United States. So I think that's an important element.

Now, all customers by definition are local in the way of purchasing initiative and decisions. That is where you need to be able to hold them accountable in the local organization of what they are doing. But you should think about all businesses maybe in two elements, you have big global companies that are working with platforms around the world. They're expecting at a certain place, they're producing other places. That's one element.

That is where you have to make sure that you don't duplicate in your efforts in order to help and serve them from research and development. They have demand on you relative to supply chain and manufacturing need to be local. Then you have the other portion of our business, I would call the domestic local consumables, where you have to adapt very much to the local market. That is where you need to invest.

So you have a good point of saying, you cannot and we will not duplicate for the big platforms around the world with more than that the customers are asking us to do it, then that's the different thing. But I can tell you, unfortunately, I was one of the individuals in 3M that was sent to Europe 2002 to restructure West Europe at that time based on too much infrastructure. Fundamentally, that changed me as a leader. It was seven quarters of very little sleep and very emotional because you impacted a lot of peoples life, right.

So when I came there beginning of 2002, we had 22,000 employees and after seven quarters we had reduced them to 4,500. If you do that yourself, be part of that, you will whole time ask a lot of question relative to infrastructure, because you would not like to do it again and you wouldn't like to send anyone else to do it.

So you have a big -- and I think that's one of the thing that is very important for 3M is to stay lean. And I'm asking and the management asking the whole time, everything that is coming around things we're not sure if it add value. We'll have to ask the question, are the customers willing to pay for that. If the answer is no, don't do it.

Unidentified Analyst

If I think about your cost structure and your strategic investment, it seems like you've got quite a bit of flexibility in your cost structure, if for some reason organic growth were to slow. So I think about all the R&D, the restructuring, ERP, supply chain, maybe comment on the accuracy of that statement? And then secondly, when I went out and visited your Hutch facility a few weeks ago, big focus was Lean 2.0. So perhaps try to give us some thoughts around the opportunity with Lean, the second version of Lean across your portfolio?

Inge Thulin

Well, coming back to your first question, I would say that, when you think about what we have done over many years, we are able to deliver our promise on an annual base or quarterly base, and at the same time, taking action relative to our core strategic investment. And I think you called them out of, if you look upon lately, into the last quarter, we had investment in R&D, what we call I3. We had restructuring in some parts of West Europe. We had investment in the ERP system. And we had one other activities going on to the European supply chain initiative. That was an important element for us to do, at the same time, as we lever the quarter.

I think it's important for us to do those type of things. And you maybe right to say, if growth really, really was slowed down for us, maybe there is something that you could do, but ideally you will like to continue to invest for the future. So running a business is like putting on the glasses and you have on one side of the glasses, you have a telescope, the other side you have a microscope, right.

So that's what you have, telescope and microscope. And if you constantly run with microscope you will not invest in the future, which is good for shareholders and company. Well, you cannot run it with a telescope the whole either, so you have to do both and I think we have been able to successfully do that and I hope we can continue to do so.

I hope that we don't need to slowdown strategic investment due to lack of growth, but it's not only when growth note is coming, you squeeze everything. If you run a business, your growth note is coming, you're committed to deliver, you are squeezing everything. That's not a good place to be, right. So I hope we will not come there and I think we have very, very good momentum, as we speak.

And your second question?

Unidentified Analyst

[indiscernible].

Inge Thulin

Yes. So we are re-ramping Lean Six Sigma, specifically into manufacturing. And I believe and we believe there is big opportunities. And it's like, in one way it's just starting again after we have had many, and we went from Six Sigma initiative in the company that was absolutely imperative for everyone to do entail a movement of -- please, use it if you see it's adding value. What we are doing now is to move it back. It's a very important tool, specifically in manufacturing.

And as you think about all big manufacturing operation, there is good opportunities for us as we move ahead. And it's not specifically into one business or one division, it's broad-based. And we pointed, Jerome Hamilton, almost two years ago now to start to ramp that up.

And I believe we have big opportunities in international, specifically as we build out capabilities the last 10 years or so. And as you're coming up now, a slightly different model, if you like in developing economies, they need to drive more productivity and efficiency in the whole organization, but specifically in manufacturing.

Unidentified Analyst

Inge, we have three final questions all from buy-siders in the audience. The first one is just on market trends. Can you comment on where are you seeing the biggest pockets of strength right now and weakness globally?

Inge Thulin

When you look upon our first quarter and then I'll look out a little bit. In West Europe, we had a 3% organic local currency growth the first quarter. And we have guided a year flat to 3%. So when you go 3% in West Europe, even it's a low figure, that's pretty good. And that looked like we maybe can hold us there as we go for the year. And in the first quarter, industrial was very strong in West Europe, specifically automotive, abrasives and personal safety. And so it's type of industry-related. So that felt relatively good, I would say.

Asia had 7% growth for the quarter. And when we looked upon -- that's APAC, right, so you look upon China, China was 2% all-in, but 8% base business, which is a tick up versus last year. We had 7%, we went to 8%. It looked like that for the year will be mid-to-high single-digit for us.

Japan had a very good strong quarter. There was couple of things there happening. One, they had a change in the VAT system. That was also a comparison that was weaker. So I think as we go ahead for the year, maybe we should think about them as low-to-mid single-digit.

United States for us had a 3% growth, which was on the lower-end of our guidance. I am not overly concerned about that, because the impact of that was two things, one was construction business, and specifically for us, relative to traffic safety system. And then there was the traffic in the stores, right, what had another impact. And it looked like that's coming back.

Latin America is steady as we go. A little bit slower growth than in the past, but we had Mexico at 15%, we had Brazil at 11% and that's pretty good figures. So I think it looks good. We have 4.6% in the quarter, which is for me a relatively good start. And it came at the same level as we ended. We ended last year much stronger than we started, right. So I feel the momentum in terms of growth and it feels good just now, but again, who know what will happen.

Unidentified Analyst

Second question is around 3M has said in the past that it can be hard to split out divisions given how interlinked the businesses are, often on the technology or process front. How realistic is divestment for the ones that you've got in that lower left quadrant of your strategic review to overcome that?

Inge Thulin

Well, first of all, the objective, if you're in that corner, is not to be sold, the objective is to fix it, right. So we have a process in place, where we say, okay, can we fix it standalone, should we combine it with something else, why are you not relevant, and I think the last portion is you maybe have to divest. We divest the fishing business, it was very realistic, right, very realistic, it was there and it could happen.

But the objective is not to sell them, the objective is to move them forward. Now, again, if you go back to the four elements I talked about, that will be the answer to the question, how difficult will it be, right. In terms of the value of what we are adding there, but in some cases, maybe no one else can add as much as value as we can to that specific business.

Unidentified Analyst

Is there a hard and fast decision point that you're expecting in terms of the fix versus other options?

Inge Thulin

We have a process in place internally, as we have for acquisitions where we go through elements. So it's a very robust process in place where we make decisions relative to what it would take to stay in business. And I can tell you, if you're leading a business in 3M today, if you are in a category where you have a challenging situation -- honestly, people like that we paid attention, because they feel it like we helped them.

Right, so if you have a big enterprise, I think the worst thing -- I have led businesses many places around the world. If you're not successful over here, the worst thing is when management do not really pay attention and try to help out, we are doing that, so that's why also I feel that there is very good momentum in the company. But the process is very much improved during the last two years.

Unidentified Analyst

Inge thanks so much. We appreciate having you.

Inge Thulin

Thank you.

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