According to 3M, this round of layoffs will help streamline corporate operations, simplify the company's supply chain and reduce management layers. A spokesperson for 3M claimed this is supposed to make the company "stronger, leaner and more focused."
This also comes on top of the 2,500 manufacturing jobs 3M laid off in January, and the several mass layoffs the conglomerate announced in 2019 and 2020. (Related: Recession fears surge as new job creation slows down, jobless claims rise.)
"These actions are expected to meaningfully reduce costs and drive long-term improvement in margins and cash flow while enabling a more efficient and effective structure for driving long-term growth," said the spokesperson.
3M Chief Executive Officer Mike Roman said the two latest mass layoffs will reduce the company's global workforce by about 10 percent and save between $700 million and $900 million in annual pretax costs upon completion.
"We're confident that these are the right actions about positioning us for growth and profitability as we go forward," said Roman in a conference call with analysts.
The company also declared several management changes and reported that its year-over-year sales slumped by nine percent to $8 billion. Its net income tumbled by 25 percent to under $1 billion during the last quarter.
As one upside, 3M noted that the supply chain concerns that doomed the manufacturing sector for the past few years following the economic restrictions instituted in early 2020 have largely eased. This means that backlogged orders have been shipped and the company and its peers in the manufacturing sector no longer need as much staff to handle the workload.
Unfortunately, the disappearance of many supply chain concerns has not changed the company's outlook for the year, as it anticipates that sales would fall by as much as six percent by year's end. This is in line with the sector-wide drop in demand for manufactured goods, as consumers spend less and less on goods due to high inflation and fears of a recession.
This also comes as the company announced that adjusted net sales declined across all four of the company's business segments – consumer, healthcare, safety and industrial and transportation and electronics – compared with the same period in 2022.
Chief Financial Officer Monish Patolawala reported that 3M's electronics-segment sales alone dropped by 35 percent year-over-year, with the downturn attributed to reduced demand for smartphones, tablets and televisions.
To try to prevent such a massive downturn in sales, the company said it would place more emphasis going forward on products that its customers are increasingly demanding, including products with emerging tech such as sustainable packaging, automated industrial products and supposedly climate-friendly tech.
Following 3M's announcement, the company's stock fell by 0.7 percent on Tuesday. This also comes after shares hit a 10-year low before bouncing back slightly in recent weeks.
3M's announcement of mass layoffs also comes as many other companies announce similar reductions in their workforces just this month.
Ridesharing company Lyft announced it was slashing 1,200 positions, or around 30 percent of its staff, as part of a shakeup to reduce costs and restructure the company. This restructuring involved the accession of new CEO David Risher, and the demotion of co-founders Logan Green and John Zimmer to board of directors roles.
Professional services conglomerate Deloitte also announced it was cutting 1,200 jobs, or about 1.5 percent of its staff, in the United States, mostly in the financial advisory business due to a decline in mergers and acquisitions this year.
Accounting giant Ernst & Young announced that it was laying off five percent of its U.S. staff, or about 3,000 employees, as part of its own internal reorganization to address "overcapacity."
Finally, bridal retailing giant David's Bridal announced that it was laying off over 9,200 employees across the U.S., a decision that comes as the company considers filing for bankruptcy amid a downturn in sales.
Other companies like internet media company BuzzFeed, home flipping giant Opendoor, clothing retailer Gap and Whole Foods have announced cutting several hundred jobs each.
Learn more about the collapse of vital sectors of the American economy at Bubble.news.
Watch this video of financial expert Gregory Mannarino discussing how corporate layoffs are increasing in preparation for a severe economic downturn.